Work Hard, Play Fair, Get Hosed

or "Ken Lewis's Career in Six Words or Less"

Ever wonder what would happen if you spent 40 years of your life building a company from a small regional bank into a national powerhouse...and then ticked off some liberals?

Ken Lewis (known to leftists as "Scapegoat") could give you an earful on that subject. He came to Bank of America's predecessor, North Carolina National Bank, as a credit analyst in '69. He was serving as the head of both international and domestic operations when it became NationsBank in 1991, and ten years later took the reins as CEO, President, and Chairman of what was by then known as Bank of America.

2001, as you may recall, was an inauspicious year to begin such a high-profile job. The dotcom bubble of the late 90's had burst, and the economy had begun to contract even before the attacks of 9/11 temporarily paralyzed the country. Mr. Lewis weathered the storm with aplomb, making Banker of the Year. By focusing on increased efficiency and financial discipline rather than his predecessor's aggressive acquisition-making, Mr. Lewis brought the bank through the rough patch quite well. During the first two years under his management BofA returned over 40%, while the Dow Jones TSMI reported a 35% loss over the same period.

Over the next seven years, BofA continued to prosper with Mr. Lewis at the helm. Each succeeding acquisition, from FleetBostonFinancial in '04 to the troubled Countrywide Financial in July of '08 broadened the reach and scope of the bank to finally become the largest asset-holder in the country. Mr. Lewis was made Banker of the Year...again. A high-profile bid to purchase struggling giant Merrill Lynch propelled him into the media's open arms, with a warm and fuzzy 60 Minutes interview.

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Widely lauded by the media as a savior of the economy in the wake of last year's crash, they none the less turned on him swiftly when the newly-acquired Merrill Lynch was sent reeling by a whopping $15 billion loss in the fourth quarter. Mr. Lewis proposed ditching the deal in December, but was reportedly threatened with his job by government officials if the deal didn't go through. It went through a month later, and has been an albatross around Mr. Lewis's neck ever since. He wouldn't go quietly into the night, though.



The media-driven furor over bonuses coupled with now scathing coverage of the deal began a downward spiral that culminated in Mr. Lewis's resignation, announced September 30th. This development was triumphantly cheered by certain segments..

“This was a necessary and overdue change,” said Michael Garland, a spokesman for Change to Win, an investment group that has been pressing for Mr. Lewis’s ouster for months. “The onus is now on the board to engage with shareholders to name a successor who can quickly restore Bank of America’s credibility with regulators and investors.”

Investment group? What an innocuous way for the NY Times to put it..

The Change to Win Coalition was formed in 2005 by seven activist unions dissatisfied with the the A.F.L.-C.I.O.'s failure to reverse organized labor's long decline. Led by Andy Stern, the president of Service Employees International Union..

SEIU? Where have I heard of that outfit before? I sense a pattern here...


Now the sneering elitists are gloating over the down and out rube from the South..

At the time, I couldn't help but think that Lewis was another out-of-towner who had been pickpocketed near Times Square.

..so twanged the urbane Daniel Gross of Slate, who apparently has a problem with Republicans..

In dealing with the new regime in Washington, the out-of-towner was at a disadvantage compared with the New York crowd. Unlike the heads of New York-based investment banks, Lewis had never been part of the local, which is to say, Democratic, power structure. The two big winners of Survivor Wall Street: 2008-09 are Goldman Sachs CEO Lloyd Blankfein and JPMorgan Chase CEO Dimon, both active Democrats with close ties to the Obama administration. (Check out Blankfein's and Dimon's donations here and here.) By contrast, Lewis' political donations show he was tight mostly with North Carolina politicians and mostly with Republicans. (What unmitigated gall.)


Ironically, while most industries have been shedding faster than my cat, BofA has actually added 46 financial advisers to the Merrill Lynch division and begun a new $20 million advertising campaign. Since I began writing this article, even more positive news has come out.

"Now it seems that Merrill is hauling in up to 30 percent of BofA's profits."

Bloomberg reports:

Merrill's businesses contributed $1.8 billion to Bank of America's first-half net profit of $7.5 billion, or 28 percent, even after the bank posted $27 billion in loan charge-offs and higher loan-loss reserves, according to company filings. Those businesses are likely to account for 25 percent to 30 percent of the bank's profits over the next three years

The share of the bank's revenue that came from investment banking and wealth management rose to 47 percent in the first half, after the Merrill acquisition, from 29 percent last year, according to the bank.

That oughta stick in a few craws. Fabulous.