Shareholder Rebellion at Bank of America
I'm having a busy day with other media. Aaron Nathans of the News Journal tapped me for a quote on the ouster of Kenneth Lewis as chairman of Bank of America—a development I described as "astonishing." It's extremely rare for a chairman to be ousted at an annual meeting. I've got a piece up at the Guardian on the same topic:
In a display of stunningly bad timing, BofA bought Countrywide just before the collapse of the sub-prime mortgage market. The brand became so tainted that BofA dropped the Countrywide name earlier this week, only 10 months after spending $4.1bn for the financial equivalent of toxic sludge.I'll be on the air with Allan Loudell of WDEL, 1150 AM, this evening at 5:05 to discuss this and other news, perhaps Joe Biden's swine flu gaffe or Justice Myron Steele's unfortunate e-mail.
The Countrywide blunder was followed by an even bigger debacle. Late last year, Federal Reserve chairman Ben Bernanke and then-Treasury secretary Henry Paulson pressured Lewis into buying Merrill Lynch. New York attorney general Andrew Cuomo is investigating Lewis for lying to Congress about the timing and size of bonuses paid to Merrill Lynch executives at the end of the year. More seriously, Lewis didn't disclose the size of the losses at Merrill Lynch before seeking shareholder approval of the deal.
The final blow may have been rumours of the results of the stress test being administered to banks, which are set to be released next week. If BofA's balance sheet is found wanting, the bank will have to boost its capital, further diluting shareholder value.