Posts filed under “M&A”
The WSJ reports on Congressman Edolphus Towns unearthing of emails documents in which the Fed Chief trashes Ken Lewis’ attempt to squirm out of the Merrill acquisition.
Federal Reserve officials sharply criticized Bank of America Corp. and its Chief Executive Kenneth Lewis in emails to each other after the bank tried to pull out of its deal to buy troubled investment bank Merrill Lynch, according to documents unearthed by congressional investigators.
During the December standoff between the big bank and top government officials, Federal Reserve Chairman Ben Bernanke dismissed the threat as a “bargaining chip,” Fed attorneys called the bank’s arguments “not credible” and a top examiner said Mr. Lewis’s own position “seems somewhat suspect. . . ”
The emails confirm Mr. Bernanke was willing to threaten Mr. Lewis’s removal as CEO if he reneged on the Merrill deal and later sought assistance. They also suggest Fed officials had a dim view of bank management, with the Fed’s top lawyer noting at one point that Mr. Lewis “can be reckless.”
Reminds me a bit of what happened to Henry Blodget: He publicly had put buys on certain covered firms, but criticized his firm (Merrill!) for bringing junk public.
Too bad the Fed Chief could not have been more forthcoming about the asshats running Bank of America before we gave them $25 $45 billion plus another $250 billion in guarantees . . .
Emails Show Fed Officials Critical of BofA, CEO Lewis
MICHAEL R. CRITTENDEN
WSJ, June 10, 2009, 4:28 P.M. ET
I have repeatedly mentioned Too Big To Succeed as a cause of the most recent crisis, but have you ever wondered HOW we got that way? One obvious suspect has been the easy M&A environment of the past 20 years. Instead of a very competitive market where mergers for sheer size sake is discouraged, the…Read More
“Regulators are supposed to tell you to obey the law, not to disobey the law. If you’re the CEO, your first obligation is not to your regulator, it’s to your institution and shareholders.”
-Jonathan R. Macey, deputy dean of Yale Law School
I have not commented on the allegations by Bank of America CEO Ken Lewis that he was forced into making a disastrous acquisition of Merrill Lynch.
Why? Because they appeared to me be utter and shameless nonsense, an attempt to worm out of responsibility. Indeed, the very statements by Bank of America CEO Ken Lewis appeared to be excuse-making for a lousy acquisition (which Bof A has quite the history of). Its the sort of weasely responsibility evading CEO speak we have come to expect these days. To be blunt, I was astonished anyone took them very seriously.
Yet they were taken seriously, by quite a few people — including a huge front page Wall Street Journal article. The mere accusation means that we are likely to see former Treasury Secretary Hank Paulson — a major cause of the credit crisis and a horrific bailout steward — up for a major grilling in Congress.
This morning, in the same WSJ venue, we learn that many of the statements Ken Lewis made under oath were directly contradicted by former Merrill CEO John Thain (but not under oath). Thain claims these understandings were in in writing.
One of these two CEOs is lying, and if its the guy who was doing so in sworn testimony, he may have a very big problem on his hands.
Hmmmm: Sun Microsystems Inc. surged the most ever in German trading after the Wall Street Journal reported International Business Machines Corp. is in talks to buy the company for at least $6.5 billion. Sun Microsystems jumped as much as 61 percent to 6 euros in Frankfurt trading. The offer would value Sun’s stock at more…Read More
Fascinating front page WSJ article on the tactics used by Fed Chair Ben Bernanke, Treasury Secy Hank Paulson to “persuade” Bank of America CEO Ken Lewis who the new sheriff in town was: “Kenneth Lewis is getting a hard lesson in the new balance of power between Washington and Wall Street. The Bank of America…Read More
Caterpillar: 20,000 Pfizer: 19,000 (10% reduction), plus additional layoffs due to merger with Wyeth: Sprint Nextel: 8,000 Home Depot: 7,000 Philips: 6,000 jobs ~~~ Bloomberg reports 74,000 job cuts today alone as “sales withered and construction slowed amid a global economic recession.” Before today, at least 15 companies announced they planned to eliminate 93,000 positions…Read More
Wednesday night, I suggested it was Time to Fire Ken Lewis of Bank of America. Since then, several other people have come out to echo those sentiments: David Reilly, Bloomberg notes that the bad bet on Merrill follows a bad bet on China Construction Bank and an even worse bet on Countrywide: Kenneth Lewis gambled…Read More