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Krawcheck to Run BofA by 2010? NY Post's Decambre Says Lewis Won't Survive the Year
Posted Aug 25, 2009 07:30am EDT by Peter Gorenstein in Investing, Recession, BankingA year ago Ken Lewis was the toast of the town. While Wall Street was melting down, the North Carolina native and Bank of America CEO, briefly became the King of New York, by purchasing Merrill Lynch – saving it from a fate similar to Lehman Brothers.
Now Lewis is fighting to save his reputation and his job, a battle New York Post Wall Street reporter Mark Decambre believes is already lost. "Ken Lewis is not going to be the Bank of America CEO by the end of the year," DeCambre declares, suggesting he will be replaced by Sallie Krawcheck, the former Citigroup chief financial officer, and the new head of BofA's global wealth and investment management business.
Lewis has fallen victim not so much for the decision to buy Merrill, but actions taken in the deal's aftermath.
On Monday, the firm was forced to defend the fairness of the $33 million settlement it struck with the SEC over the $3.6 billion in bonus payments made to Merrill Lynch executives last year.
Federal District Court Jed S. Rakoff had dubbed the settlement “strangely askew,” and questioned the SEC’s decision to charge the bank at the corporate level vs. individual executives, The NY Times reports.
Bank of America defended its actions and the SEC settlement in a court filing on Monday, declaring: "There was no false or misleading statement or omission" in a proxy statement for shareholders voting on the BofA-Merrill merger. Beyond bonuses, this speaks to the bigger issue of whether BofA failed to disclose material information to its shareholders, including the size of Merrill's losses and the secret "negotiations" Lewis was engaged in with then Treasury Secretary Hank Paulson, who "persuaded" Lewis not to invoke a material adverse clause and scuttle the deal last November.
"It's a huge distraction that doesn't go away," Decambre says. "This has been too much of a black eye and a problem."
Just this week, BofA agreed to pay $150 million to settle a class action suit brought by two Louisiana pension funds, "accusing Merrill Lynch of issuing misleading prospectuses in 2006 and 2008.” Judge Rakoff granted preliminary approval on that settlement, The Business Insider reports.
96 Comments
munthir - Tuesday August 25, 2009 07:41AM EDT
Great finaly he is leaving, this will the best for all BOA shareholders.
Yahoo! Finance User - Tuesday August 25, 2009 07:46AM EDT
BofA is up 24% ytd since the Merrill deal closed. As a shareholder I loathe the massive dilution that has taken place this year. Shares outstanding have exploded to 8.7 billion. But it's pretty clear the Merrill acquisition was a big win for BofA shareholders. We'll be toasting Ken Lewis in a few years when the stock is materially higher.
grego - Tuesday August 25, 2009 07:49AM EDT
BOA = SNAKE. . . .I warned you Kenneth. You scamming piece of crap.
Yahoo! Finance User - Tuesday August 25, 2009 07:54AM EDT
If he is not CEO, my shares will go elsewhere. Why would we want to go with someone from Citi where their shares are selling for less than $5. Ken has my vote.
Yahoo! Finance User - Tuesday August 25, 2009 07:56AM EDT
When is...Bank Of America.....Filing For....BANKRUPTCY.....Soon....I Hope.
alphamicro - Tuesday August 25, 2009 07:57AM EDT
Let's put Paulsen in charge of BOA! At least he will be a crook we know, and can reasonably predict the amount of $$$ that his banker buddies will be ripping off the US Taxpayer.
Rey - Tuesday August 25, 2009 08:13AM EDT
Bank of america is sinking again / come to the rescue Dumbama and give then another 50 billion dollars because they are too big to fail / keep devaluating the dollar / I Don't Have money in any bank I pay with money orders and I keep my money under the mattress. Eventually there will only be a handfull of banks standing / this market is in for a rude awakening when they realize the reality of this economy
Yahoo! Finance User - Tuesday August 25, 2009 08:15AM EDT
I agree with VJ, this is idle speculation and/or irresponsible journalism. Hugh McColl was criticized for buying BOA (and others) but turned it into a financial powerhouse, a trend which Lewis continues. Lewis has done a great job at the helm and shouldn't be criticized for the failure of an overleveraged economy that was more the result of an antiquated regulatory system and greed driven Wall Street than anything the traditional banking industry did. Sallie may be great, but she's been on the job about 2 weeks.
Melissa E - Tuesday August 25, 2009 08:28AM EDT
Forbes magazine recently listed Ken Lewis as the second most effective corporate boss - behind Steve Jobs of Apple - for enhancing shareholder value mainly due to the acquisition of Merrill Lynch. The magazine said, "there is little connection between the public perception of whether a boss is doing well and an objective analysis of his or her results." Go Ken!
John - Tuesday August 25, 2009 08:28AM EDT
Sallie was CFO at Citi during years of the irresponsible financial behavior that led to their meltdown and our tax money being needed to bail them out. She should be banned from the banking industry, not become CEO of BofA!
John - Tuesday August 25, 2009 08:29AM EDT
Sallie was CFO at Citi during years of the irresponsible financial behavior that led to their meltdown and our tax money being needed to bail them out. She should be banned from the banking industry, not become CEO of BofA!
Yahoo! Finance User - Tuesday August 25, 2009 08:38AM EDT
Wild speculation? Or strategic planning to pump it up? Lewis was turned into some Satanic figure and many of you posting agreed with the label. They now exorcise the demon and allow the biased media to deify the successor. Note the replacement is a female ... Who will attack this woman? Who????
Yahoo! Finance User - Tuesday August 25, 2009 08:39AM EDT
For so called discussions its alright to accuse Ken Lewis or BofA's misleading financial practices. In a capitalist economy one should be left alone to make money legaly and loose it legaly. The question needed to be asked did BofA or Merill make money for the investors!!! The answer is obviously NO. Therefore, if BofA lost money where on earth you can afford to pay such an astronomical compensations. This just shows deceptive practices, and then you are begging to be saved. My god this insane, in acctuality the rightfull thing to have happened is Govt. should not have bailed them out in first place and then copensation should be directly realted to investor's return.
H - Tuesday August 25, 2009 08:48AM EDT
Stand up now while you still have somewhat of a chance!! Please stop being sheeps and stop following others down a bottomless pit. Some will say oh the market is up I'm in, well good luck with that buddy because when your ass is panhandling don't look for me to help you brother remember you wanted in will u got it. For the others who think with their head, DO NOT ENTER THE MARKET IT WILL DOUBLE DIP. YOU'VE BEEN WARND!!!
Gofish - Tuesday August 25, 2009 08:53AM EDT
Wow - what a lesson in bias the headline alone represents. Put all the shock value words to the front: "Ken Lewis Out, Sallie Krawcheck in" and push all words of context to the end: "by 2010, DeCambre Says". Amazing. Dismaying.
Yahoo! Finance User - Tuesday August 25, 2009 08:54AM EDT
Great Article for those who believe this rally is based mainly on smoke and mirrors..............http://www.ritholtz.com/blog/2009/08/boom-and-burst-dont-be-fooled-by-false-signs-of-economic-recovery-its-just-the-lull-before-the-storm/
FlirtyDaisy1003 - Tuesday August 25, 2009 08:55AM EDT
so0me of you people are lunatics ,if lewis goes so do i .getting a female from a defunct broker wont help /what willhelp tho is getting allthese judges and hanging them on broadway and leaving them tothe buzzard .lewis saved boa he didnt rob it blind like some of the friends of these judges who wsalked away with millions laughing at stock holder.things have to change government is now in control of loafers whowant to live off of hard waorkers back
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VJ - Tuesday August 25, 2009 07:38AM EDT
Is this wild speculation or what? Its irresponsible journalism at best.