Management Turnover as Change Agent

Friday, March 27, 2009

CEO Watch - Ken Lewis, Bank of America, Update #3

Henry Blodget wrote a piece for Clusterstock today that questions (as I have been doing for quite some time) why Ken Lewis continues to remain as the CEO of Bank of America. Blodget stated,

Ken Lewis may be an excellent banker. He may be the pillar of his community. He may be a kind, considerate, Ken Lewisand fair boss who is admired by his troops. He may, generally, be a real asset to his company.

But Ken Lewis just screwed up. Massively.

Ken Lewis screwed up so massively that he single-handedly demolished at least half of the value his shareholders’ spent decades accumulating–through a knee-jerk decision to buy the sinking super-tanker known as Merrill Lynch. Six months ago, in one tense weekend, Ken Lewis let himself get duped into thinking that if he didn’t bid now and bid high for an imploding Merrill Lynch, he’d lose the prize he’d had his eyes on for years.

Lewis continues to have the “confidence” of his board which seems to defy reality. He continues to try and redeem himself in the eyes of the public. Today, before meeting with President Obama, he was quoted by Bloomberg making what appears to be a valuable suggestion. Lewis stated,

… the U.S. should consider separating commercial lenders from investment banking activities.

While he is probably correct his suggestion is not enough to give him a pass on the damaged he overseen to BofA. Stay tuned.

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