Today the Wall Street Journal published a story that gave background to the tale of the purchase of Merrill by Bank of America. One might reasonably ask how a retail bank’s rescue of an investment bank falls into the category of High Crass, as it seems almost run of the mill during these troubled times of bankstas and their antics, but I assure you that it does.
As it turns out, Ken Lewis, head of BoA was loathe to make the acquisition. An analysis of Merrill’s books showed billions upon billions of pretax losses, making any deal a big loser for BoA.
Yet, at the same time, Treasury Secretary Hank Paulson and FedHead Bernanke were exerting a substantial pressure on poor Mr. Lewis to not walk away from the deal. They told him that it would be a “death sentence” for Merrill, and would reflect badly on BoA itself. But Mr. Lewis, demonstrating his conscientious devotion to the well being of his bank, and in service to the interests of his shareholders, argued that BoA had a legal right to walk away, and “interpreted (the government’s) comments as a signal that the government was willing to work out a compromise”.
Apparently this was not the case, and the principled Mr. Lewis was all set to leave the table when words were spake that shook Lewis to his core…
“A Federal Reserve official warned that if Mr. Lewis did so (let Merrill die) and needed more government money down the road, Bank of America could expect regulators to think hard about their confidence in management. Mr. Lewis was told that the government would consider ousting executives and directors, people close to the bank say.”
Oh, well, since you put it that way, then of course, we’ll be happy to cooperate and buy Merrill, says Lewis.
After all, if a banksta has anybody’s interests at heart, they are surely his own. Bank of America, Merrill, America, the world, you, me and everybody we know be damned, Ken Lewis stood to lose HIS job!
Now I get it. That IS crass!
