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Ken Lewis followed the lead of many other bank CEOs. The head of Bank of America (NYSE: BAC) will take no bonus for last year. BAC will also miss its financial forecasts for 2008.
There is still a very substantial question about how bank boards handled the credit crisis and the M&A deals some large firms did in the wake of the trouble. Bank of America bought Countrywide just as other large banks picked up rivals at bargain prices.
But, were they bargains? There is a good deal of analysis emerging that JPMorgan (NYSE: JPM) may struggle to integrate Bear Stearns and other acquisitions. The balance sheets of the bank's targets may be worse than first realized.
Even if Countrywide was a relatively good deal, integrating it takes management time away from running the BAC core businesses which are likely to suffer heavy losses due to credit write-offs from consumer and business loans.
Lewis was the architect of the BAC M&A deals. He seems to be paying a relatively low price for the extent to which they have damaged the bank. The firm's board does not appear to care much about that.
The buck of bad decisions is being passed around at BAC and shareholders will probably end up with it.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
1-07-2009 @ 8:10AM
BHarrison said...
The phony economic boom era of the last decade is over. There is no legitimate basis for the obscenely exorbitant salaries and compensations for CEOs and upper management.
The CEOs and upper management aritficially and fraudulently pumped up, and mis-stated the financial reports, in part, as justification for their excessive salaries and compensations . . . What they were actually doing was "defrauding our economy" . . . and they damn well knew what they were doing.
It is past time to fire ALL of the CEOs who were in charge of orchestrating and perpetutating the pyramid and Ponzi frauds that have caused this economic debacle, and to substantially reduce the salaries and compensations for CEOs and upper management personnel.
The imbalance of the upper management salaries and compensations is NOT commensurate with the past performance of management . . . the salaries and compensations certainly far exceed the "value" of the FAILED managment performances. It is time for a new generation of managment to be guided by ethics and sound business principles.
The American people are not going to blindly invest in corrupt and manipulated markets and corporations after their previous experiences and losses.
The paramount lesson of the past is that adequate and prudent "regulation", coupled with effective "oversight" of the FIs and the corporations is CRITICALLY ESSENTIAL to maintain the INTEGRITY of our capitalistic economy.
1-07-2009 @ 11:05AM
Mike said...
I agree with we need to fire also add prosecute and send to Jail like Skilling - problem is you also need to go deeper to the root - it was the Dems, Fanny and Freddie created a false housing bubble for all, nothing down, no payment required.
No reality money in the Deals.
Dems created the legislation then got corp donations - they all screwed us all. BO is going to add to it.
It will get alot worse. Cash and good credit will be kind. Will be the same as the old S&L mess in the late 70 & early 80 in Texas - took 10 years to wash it clean.
1-08-2009 @ 6:25AM
david Caever said...
As a stock investor Lewis and other should be fired by the goverment who gave them money carte blanche. they ran a fraud with worthless bonds.that said countrywide will turn out very well ifd the asswhole lewis can have the right management and goverment backing for loans.