Bloomberg's Reilly Calls for Ken Lewis' Head

David Reilly a news columnist for Bloomberg earlier today suggested that Bank of America’s chairman and CEO Kenneth Lewis should be forced out or at a minimum should give up one of his positions.  According to Reilly,

Kenneth Lewis gambled big. He lost. Now taxpayers have to pick up his tab.    

For that, the Bank of America Corp. chief executive officer probably needs to go. At the very least, Lewis, who also is chairman, should give up one of his posts to bring greater accountability to the bank. 

Reilly is not particularly focused on BofA’s acquisition of Merrill and the subsequent difficulties that have resulted as the main reason for his call but rather Lewis’ series of ill-fated acquisitions (Countrywide etc.) and business steps that have all come together to force the bank to go to the government for money to complete the Merrill transaction.  Reilly went on to say,

Now the Charlotte, North Carolina-based company is staring into the abyss. The bank’s stock fell about 18 percent yesterday following reports that it told the government in December that it wouldn’t be able to close the Merrill deal without assistance because of bigger-than-expected losses at the brokerage.    

The government may now have to inject more capital into the company or backstop losses on a portion of its assets, or some combination of the two. The government has given Citigroup Inc. a similar guarantee against losses on some assets, although that hasn’t kept investors from fleeing its stock. 

I suspect Lewis will remain CEO and may be forced to give up the chairmanship but we will just have to see how this all plays out.  

For more:

UK Telegraph

Portfolio.com  

New York Times

Clusterstock

Dealscape 

Suggested Reading - B of A CEO Lewis The Next to Fall?

More and more financial CEOs and CFOs of battered financial firms find themselves the topic of rumors or conjecture. Just today, George Bowser, Jr. wrote a piece for Seekingalpha.com in which he speculated that Kenneth Lewis the CEO of Bank of America BAC (NYSE) might be the next top financial executive to get his walking papers. Bowser bases his speculation on the Lewis' decision to buy and go through with the acquistion of troubled mortgage lender Countrywide Financial CFC. Bowser based his speculation on the recent fall of Kenneth Thompson the CEO of Wachovia who was forced out after his expensive acquisition of mortgage lender, Golden Financial. In his piece Bowser stated,

I believe that if BofA does proceed with the Countrywide merger, Ken’s future at the bank may come to a swift end. BofA will continue to report quarterly losses, just as others in the financial sector. The stock price will suffer and they may have to cut jobs and the dividend rate to conserve capital.

While the Lewis' Countrywide acquisiton may create financial difficulties for Bank of America, I am not convinced Lewis' position is at serious risk. Stay tuned and make sure you keep a close eye on key decisions Lewis and BofA mnakes over the next few months.