BofA's Lewis In Dissidents' Sights

Just months ago, he was heralded as banker of the year by American Banker for his deal to acquire Merrill Lynch.

Just months ago, he was heralded as banker of the year by American Banker for his deal to acquire Merrill Lynch. Now he's the target of a group of angry shareholders, who want him ousted at the upcoming annual meeting, according to a story in the New York Post. Will BofA CEO Ken Lewis survive the next few months, or will he get the boot like so many other banking CEOs? Jerry Finger—a BofA shareholder and the lead plaintiff in an ongoing class-action lawsuit against Lewis and other BofA directors—says he has a lot of support for a number of governance changes he's proposed. He mostly feels that Lewis and other directors did not protect shareholders' rights when they struck the deal to purchase Merrill last year.

The trouble really began brewing after Merrill reported surprising new losses in the fourth quarter. Lewis probably hoped to save his hide with his recent ouster of former Merrill CEO John B. Thain—the implication being that the magnitude of trouble remaining on the books when they did the deal was hidden from him—but Thain has spoken out in his own defense.

The Atlantic blogger Megan McCardle says Lewis probably did the Merrill deal, despite the garbage remaining on Merrill's books, because he couldn't say no to the Treasury or the Fed and thought that, in the end, their support would be enough to allow the bank to weather this financial crisis. "More than a few people of my acquaintance have suggested that taking this deal was not quite bright, knowing as he did that Treasury was very likely about to change hands. But when the two most powerful men in American bank regulation come to you with a request, it's got to be awfully hard to say no, sorry, I'd really rather not. Lehman, after all, shows what happens to those who didn't have Bernanke's and Paulson's backing when the chips were down." The blogger continues, "But 'making the best of a bad situation' is rarely enough to save CEO jobs. I suspect that neither a good excuse, nor a substitute victim to feed shareholders, will provide Lewis much protection in the long run-if the shareholders don't get him, the nationalization probably will."

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