Management Turnover as Change Agent

Wednesday, April 8, 2009

CEO Watch - Ken Lewis, Bank of America, Update #5

Ken Lewis gets a surprise vote of confidence from highly regarded analyst, Meredith Whitney. Whitney, who recently formed her own company, was quoted in Sean B. Pasternaks’s Bloomberg story,

Lewis “has done a great job” except for the Merrill Lynch deal, said Whitney, speaking to reporters today before appearing at a panel discussion in Toronto sponsored by Sprott Asset Management Inc. She called the Merrill Lynch purchase Lewis’s “one major mistake acquisition.”

Whitney was also quoted in SmarTrend in which she stated,

… she thought Lewis’ one mistake (Merrill acquistion) was due to his error in acting like a good citizen than a good chief executive with shareholder interests as his first priority.

While one may understand where Whitney may have come to her conclusion about Lewis, considering what was happening to the financial markets particularly Lehman at the time of the Merrill acquisition, her conclusion appears misguided. Lewis deserves to take full responsibility for his decision to acquire Merrill and, more importantly, for his subsequent failure to follow-up the initial decision with adequate due diligence as regards to Merrill Lynch.

Whitney’s latest pronouncement of support has come out at the same time that rumors have been growing about potential successors to Lewis. According to a story by Debra Cassens Weiss for the ABA Journal,

The lawyer (Brian Moynihan) who is leading Merrill Lynch & Co. could end up replacing Bank of America Corp. chief executive Kenneth Lewis.

Lawyer Brian Moynihan took over at Merrill Lynch in January after the ouster of John Thain…

We will just have to wait and see how this all plays out.

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