Tuesday, April 28, 2009

Lewis Threw Shareholders Under The Bus

The news hasn't reported it yet but Ken Lewis, BofA Chairman and CEO, was surely one of the first to contract the Spine Flu. His decision to acquiesce to Paulson and Bernacke, to the detriment of his shareholders, and follow through with the Merrill Lynch acquisition, at the original price, is deplorable. In the military you are not required to obey an unlawful order. Bowing to the pressure from Washington is tantamount to obeying an unlawful order. He should have said no thanks, my obligations are to my shareholders and I need to either walk away from this bad deal or renegotiate the price. He did neither. He caved. He contracted Spine Flu.

Lewis shamefully flushed his shareholders money, under pressure from D.C. He also recently stated that BofA wanted to begin to pay back the TARP money. Now news reports are saying that the stress tests show BofA and Citi are short of capital and will need to dilute shareholders further. Some of that potential dilution may not have been necessary had Merrill not been acquired.  Does Ken Lewis know how to run his bank? 

Why is he still at the head of America's largest bank? It's not because he's taking care of his current shareholders. Could it be because he took care of his soon to be largest shareholder?

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