Krawcheck to Run BofA by 2010? NY Post's Decambre Says Lewis Won't Survive the Year

A 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.