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Time to Fire Ken Lewis of Bank of America

Posted By Barry Ritholtz On January 14, 2009 @ 9:14 pm In Bailouts,Credit,Derivatives,Federal Reserve,M&A | Comments Disabled

Step right up to the bar here in Bailout Nation, 2009 version. Open 24 hours, we never close. No bailout too big, no investment/money pit too dumb. Yes folks, we can handle your bad assets, recapitalize your bank, no muss, no fuss. Yes, here in America, we cannot be bothered with things like plans and strategies and maximizing returns for taxpayers.That’s right, we avoid the planning, and pass the savings onto to you, the home viewer!

Really, how the hell did we ever win WWII?

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[1]So the horrific deal Citibank cut with Treasury was a blueprint, an example for the next foolish investment — and here it is: Bank America, a supposed good bank, that couldn’t wait to get their hands on Merrill Lynch, now a bad bank.

And now that we all see what a terrible decision that was by supposedly sophisticated private sector players, well, then rather than take the hit, BoA has their grubby hands out begging for some taxpayer loot to paper over their idiotic decision-making. First they bought that giant manure pile CountryWide, and now they own another stinking pile of enzyme-free donkey-fazoo, Merrill Lynch.

I say, fuck ‘em. Why do I have to pay for their bad judgment?

Enough already! Fire Ken Lewis, he’s a bum. He’s made several horrific acquisitions, and needs to serve up his head on a platter for his god-awful lack of judgment. Toss out the entire Board of Directors, too, as they all suck. They’ve bankrupted the company, its time they all need to go.

Making matters even worse, this shitpile has been building up since last month. The WSJ reports:

The U.S. government has agreed to commit billions in additional aid to Bank of America Corp. to help the nation’s largest bank by assets close its acquisition of Merrill Lynch & Co., according to people familiar with the situation.¬† Discussions over these funds began in mid-December when Bank of America approached the Treasury Department. The bank, already the recipient of $25 billion in committed federal rescue funds, said that it was unlikely to complete its purchase of the ailing Wall Street securities firm because of Merrill’s larger-than-expected losses in the fourth quarter, according to a person familiar with the talks.

Hey Lewis, you bought it, its yours, leave us out of your mess!

Don’t look now, but here comes the year’s most overused phrase: systemic risk:

“Treasury, concerned the deal’s failure could affect the stability of U.S. financial markets, agreed to work with the Charlotte, N.C., lender on the “formulation of a plan” that includes new capital from the $700 billion Troubled Asset Relief Program, according to the person familiar with the talks. The terms are still being finalized, this person said. Details are expected to be announced with Bank of America’s fourth-quarter earnings, due out Jan. 20.

Any possible arrangement might protect Bank of America from losses on Merrill’s bad assets. There would be a cap on the amount of losses the bank would have to absorb, with the federal government being on the hook for the remainder, said one person familiar with the matter.”

What a joke this has become. Are we supposed to be somehow comforted that the Federal Reserve and the Federal Deposit Insurance Corp., alongside the Treasury, are involved in the negotiations? They  do not seem to have clue.

Time for an orderly liquidation: Start with Citi, move on to BofA, fire the execs, toss the Board, spin out the assets to competent managers who now how to manage risk and avoid excess leverage.

ENOUGH ALREADY ~!

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Sources:
Bank of America to Get Billions in U.S. Aid [2]
Deal Is Said to Be Reached on Fresh Bailout Cash; Lender Told Government It Needed Funds to Absorb Ailing Merrill Lynch
DAN FITZPATRICK, DAMIAN PALETTA and SUSANNE CRAIG
WSJ, JANUARY 15, 2009

http://online.wsj.com/article/SB123197132814683053.html


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[2] Bank of America to Get Billions in U.S. Aid: http://online.wsj.com/article/SB123197132814683053.html

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