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Govt. Puts BofA's Board Under Pressure: Why Is Ken Lewis Still CEO?

Posted May 15, 2009 11:14am EDT by Aaron Task in Newsmakers, Banking
Related: BAC, JPM, GM, XLF, FAS, C, DIA
The U.S. government is putting pressure on Bank of America to revamp its board "by bringing in directors with more banking experience," The Wall Street Journal reports.

Although current chairman Walter Massey - who took over when shareholders stripped CEO Ken Lewis of the title - is a former college president, it's a bit of a red herring to say BofA's board lacks industry insight since it also includes the former CEO of FleetFinancial.

As Henry and I discuss in the accompanying video, other possible explanations include:

  • Regulators are chagrined at the board's ongoing public support of Ken Lewis, despite his numerous gaffes. The fact there's a lot of Bank of America employees (current and former) on the board may also have something to do with the government's efforts to shake things up.
  • Government regulators, led by FDIC chair Sheila Bair, is stepping up its oversight of corporate governance at banks that have received bailout funds. This seems totally appropriate given the situation, although the risk of too much government involvement exists and Bair is getting some pushback from the Fed, Bloomberg reports.
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