With Trading Gaffe, BofA's Lewis Contends With New Black Eye
07 3월 2009 - 5:44AM
Dow Jones News
Bank of America Corp. (BAC) Chief Executive Kenneth Lewis once
referred to the acquisition of Merrill Lynch as "the strategic
opportunity of a lifetime." He might now be reconsidering.
The Charlotte-based bank confirmed Friday it discovered a
trading irregularity during a recent probe into Merrill Lynch's
trading positions in London. BofA did not quantify how much money
might have been lost.
The disclosure is the latest black eye for Lewis since he agreed
to buy Merrill Lynch as the credit crisis flared last year. The
agreement rescued the troubled brokerage from the kind of collapse
that toppled Lehman Brothers, but has caused Lewis one headache
after another since the Sept. 15 agreement was made.
And, analysts believe the soap opera that has entangled BofA
since the merger shows no signs of ending. In fact, the culture
clash within America's biggest bank only seems to be heating
up.
"Opportunity of a lifetime? This is turning into the nightmare
of a lifetime," said Nancy Bush, a banking analyst and founder of
NAB Research. "I don't think Lewis helps himself by not owning up
to responsibility for this. The Street is looking for a mea culpa
on his part."
The news has been nothing but negative since BofA completed its
acquisition of Merrill on Jan. 1. Shares have plunged 75% during
that time, with investors stunned that Merrill reported a
wider-than-expected $15.8 billion loss during the fourth
quarter.
The bank also came under fire after John Thain, former CEO of
Merrill Lynch, made eleventh-hour bonus payments of $3.6 billion to
Merrill employees before the BofA deal closed. The bonuses not only
have caused friction as the two banks have integrated, but caused
New York Attorney General Andrew Cuomo to launch an investigation
into the matter.
Both Lewis and Thain have been paraded into Cuomo's offices in
downtown Manhattan as part of a stream of subpoenas issued to
executives. Seven more executives are on tap to give depositions in
the coming weeks.
Meanwhile, dissatisfaction with BofA leadership has led the
investment vehicle for seven labor unions to demand Lewis'
replacement. CtW Investment Group, which manages 33 million shares
for unions like the International Brotherhood of Teamsters, is
expected to address Lewis personally at the bank's annual meeting
on April 29 in Charlotte.
"Recent events have fatally undermined investor confidence in
Bank of America," CtW Executive Director William Patterson wrote in
a letter.
There is no indication that Lewis, 61, would step down from the
company where he became CEO in 2001. Analysts believe Lewis still
has a chance to prove to investors he's helping the bank right
itself, especially when the company reports first-quarter results
next month.
A spokesman for Bank of America declined to comment.
-By Joe Bel Bruno, Dow Jones Newswires; 201-938-4047;
joe.belbruno@dowjones.com
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