Breaking News that Bank of America's Beleaguered Chief Has Failed.
Ken Lewis, the pugnacious, hysterical and surly boss of the deeply doomed Bank of America, now announces that he made a mistake with the Merrill deal and the Merrill bonuses and that he will depart his enterprise when he repays the Treasury the TARP $45 billion. This is good news for those of us who require candor and proportion in the economy before we can restore confidence to the nation. The markets are in a panic. The SPX is broken at 750 and will now fall helplessly toward 600 and even 450. It is useful to spend the time of panic on shooting the traitors, the enemies of the state, and Ken Lewis is in the first ranks. He erred when he acquired Merrill, he erred when he let those bonuses go out to Merrill's captain early, and he erred when he told the House and Senate committees in March, during the fools on the Hill episode, that BofA was solvent and stable. Bunk. And he erred the last time when he asked the board at BofA to support his leadership and continue his contract in January. Ken Lewis claims that he made a "tactical mistake" with TARP, that he took too much because he wanted a cushion. Bunk. He stuffed cash in his pocket and got out of Washington, and now he realizes it was a mistake? Bunk.
"I want to repay the Tarp money before I go anywhere, and by then I think we will be seeing the success of the Merrill Lynch acquisition," he said. "It would be very easy to disappear into the sunset but we have to slug through this."
The Enemy
Ken Lewis is part of the problem. He boasts that he will leave BofA when he repays the TARP the $45 billion. Go now. You are a disgraced captain of a foundered schooner. Go now. And we look forward to the details of your exit package. Go now. This will be funny. Go tonight. How many millions for the Marie Antoinette figure who is your spouse? How many millions for your retirement? What needs happen is that the Treasury bills you personally for the Merrill plunder. And your cronies. And your golf clubs. Ken Lewis is an enemy of the state, not because he is well-to-do but because he wrecked his company and made the people pay for it. The rude term is "thief." The only wit slap-funnier at the moment than that Ken Lewis will repay anything to anyone is that the moral hazard incarnate Tim Geithner is the people's bill collector. Better to outsource the job to Fagan of Twist than to wait for The Miniature Banker to collect on squandered billions just printed last night. The only irony deeper in the news than that Ken Lewis will join the ranks of the disemployed is that the Obama administration is a day closer to acknowledging that there are no enemies of the state left, and the enemy of the state is us. (Hat tip Pogo)
Commentary: Bank of America's CEO seems out of touch McClatchy Washington Bureau
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Wall St hits lowest level since 1997, FTSE at six-year low
John - You're being too hard on the man. There's nothing any mortal can do in this present anti-business, anti-American climate except run for the hills. The rules of conducting business in this country have changed drastically. Part of the problem we're having is that most of us still operate under the old rules. It's far too easy to laugh (or expend any emotion) on any resulting blunders.
As for the new rules? They haven't been posted yet. We are beginning to get a sense of what these are - and most of us don't like it. The question is, what are we going to do about it? Our present system of governance requires at least two years to elapse before we can even think of drafting an appropriate correction. 'Till that time, we may just have to put up with the sad spectacle of watching our now dismembered circus clowns hobbling about the ring and falling all over themselves as they attempt to perform their now obsolete tricks. I, for one, won't be the first to throw banana peels.
Would it be wrong to rob a robber? I think it is about time we go to these peoples homes and take back what is rightfully ours since they took it from us in the first place.
I just hate to see politicians, many of whom have prospered mightily as bankers have profited, getting away scot free by playing the class warfare card. Obama may be a fresh face, but, most of Congress (most particularly democrat members since republicans have been swept out) have presided over this entire debacle. I won't be satisfied until we string up congress with the rest of the scoundrels. In fact, I'd prefer them to go first b/c the ponzi schemes called social security, medicaid/medicare, exceed anyting the bankers have concocted.
Better save a few feet of that rope necktie for the author of these passages from National Review Online:
"Since taking the spot at the Fed last February, Bernanke has stopped inflationary fevers while laying the groundwork for what is virtually a runaway bull market." http://tinyurl.com/bbz4f7
"But the bears would have us believe the sub-prime credit virus heralds the end of the world. They are wrong. Remember this: Our free-market capitalist economy is resilient and durable. It has proven time and again that it can take a punch." http://tinyurl.com/ag8pjk
"Too much is being made of both the sub-prime credit problem and the housing downturn." http://tinyurl.com/2xppc5
Can anybody guess the author? Choose one of the following:
a) Edgar Cayce
b) Nostradamus
c) Larry Kudlow
It's a tough one, I know, especially since two of the above actually guessed right once in a while. Still, no fair Googling the answer!
Lewis may have been more stupid or arrogant than villainous. John Thain and Angelo Mozilo just pulled the wool over Lewis eyes and he did not the due diligence. In fact he may claim and I would not believe that he is not telling he truth that certain government officals made some assurance to Bank of America to take on Countrywide and Merrill Lynch.
SNL got it right with the Sandlers who got Wachovia to pay $24 billion for their sub prime garbage. The Sandlers and Pritzkers are the ones who need some explaining to do.
By the way NY Times repoting that some of the MBS can not be tracked and thus foreclosures have not gone through. So the bankers were really having a good time.
Also on subject of CDOs who much were the audit firms discounting the receivables for the credit card banks. Gee would you not think the individuals making minimum payments were lilely to default. Thanks to Biden and the democrats in 1885 for making it more difficult for these individuals to declare bankruptcy. But in any type of settlement on these accounts , the borrower should be able to get most if not all finance charges dismissed and reduce the userous rate that the banks charged.
Ken - I won't spoil it for the others but I've been listening to what he's been saying. He's been trying to sound optimistic but seems to be getting less and less so. Frankly, he's a hold-out. When this guy finally does sound the smoke alarm, the whole country will know what Obama is all about.
IN DEFENSE OF KEN LEWIS
Yes, KL overpaid for Countrywide and Merrill Lynch and has hurt the balance sheet of BofA -- but only for the short term. Countrywide is now helping BofA become profitable because of all the refinancing that's being done. Remember, BofA was only able to buy these two sinkholes because KL, apparently, kept other toxic assets off BofA's balance sheet. KL, personally, has also recently bought a tremendous amount of BofA stock, which shows a belief in his own company.
Had KL not bought Countrywide or Merrill, do you seriously think this country would now be better off? KL helped Wall Street (and himself) when no one else, except for Warren Buffet, was willing to spend a dime to stop a financial catastrophe. And no one else - not Treasury, not the Fed -- had a strategy to help out the economy.
Jamie Dimon was hailed as a hero because Treasury/the Fed allowed JP Morgan Chase to buy Bear Stearns for $2 a share -- which was so outrageous it had to be upped to $10. KL got no such deal and BofA and Merrill and Countrywide will survive, anyway.
KL should have been praised by Congress for what he did -- not scolded by Congressmen who, in their own way, spend as recklessly as the bankers they criticize.
Yes, the giveaway of was-it-billions? in bonuses to Merrill employees was/is a crime, whether or not it broke any laws. Hopefully, NYS AG Cuomo will make whoever is responsible pay.
But KL's purchase of Merrill and Countrywide should be seen as the kind of private purchase of toxic assets, (yes, assisted w/billions in TARP money), that Turbo Tax-Challenged Geithner is trying to promote. It seems reminiscent of how the Greenspan Fed helped Long Term Capital Management unwind all its toxic assets many years ago. And, if this method were used to save Lehman a few months ago, we all wouldn't be in the mess we're in now.
The irony here is that w/the inconsistent and ever-changing government policies -- such as new upcoming tax laws, the capping of salaries, stopping golf tournaments & the naming of stadiums, etc -- the government has shown itself to be an unreliable partner. So TTC Geithner will now have much more trouble enlisting the private capital he's trying to get to help Treasury solve the still unsolved toxic asset problem.
John - Do you have any information about what (or who) may have triggered the massive withdrawal of money market funds that scared Bush into supporting TARP, thus setting into motion all that we have seen since?
Friend of the family is an auditor at a very very large insurance company in the news. He saw this coming years ago. Noone thought this would bring down the US and European markets.
Financial Wizards will try every financial trick possible, inventing financial instruments to hide debt and increase assets, and the same is true about losses and profits.
Sarbanes-Oxley was a good start, Laws may need to be updated to prevent the transfer of risk to another company that cannot possibly accept such risks.
Andersen was brought down over Enron, Will Moodys and S&P be brought down over CDOs, and who gave the Imprimatur on Credit Swaps?
-Wisdom
Also of note was Kudlow saying that there was nothing to worry about regarding subprime mortgages, people were adults and knew what they were signing. This was said on the JB Show just before the hiatus.
Fast forward to today. Jim Rogers, a frequent guest on the show, says that the big banks should just be allowed to fail. The problem is that it's not that simple or easy. The government bailed out AIG to keep the system from collapsing (a prudent move, in my opinion) meaning the taxpayers now own AIG and therefore bear all the counter-party risk, a large part of which could become reality if Citigroup or another large bank were allowed to truly become insolvent.