CEO Watch Bank of America CEO on the Hot Seat
Bank of America Corp.’s first quarterly loss in 17 years, coupled with the troubled purchases of Countrywide Financial Corp. and Merrill Lynch, has put the bank’s chief executive, Ken Lewis, on the hot seat, according to several reports.
The Charlotte, North Carolina-based bank dropped 14 percent in New York trading last week after news of the quarterly loss, despite a capital injection of $138 billion from the U.S. government to help absorb losses from Merrill Lynch, valued at $15.3 billion in the last quarter.
“He’s made so many just grossly wrong projections or statements in the public press over the last 18 months,” Jon Fisher, an analyst at Fifth Third Asset Management, told Bloomberg News. “I’m sorry, I don’t think he should have a CEO title if he can’t forecast his own business or he can’t understand his own financials.”
Bank of America shares have already fallen 41 percent in 2009.
Lewis has stoked shareholder fury for accepting an agreement to buy Countrywide Financial and Merrill Lynch.
"All the explanation in the world is not really going to assuage calls from many of his shareholders for his head," Gary Townsend, president of Hill-Townsend Capital, hedge fund specializing in financial companies, told Reuters "Is there someone else who can step in and run the company at this point? I should hope so."
Lewis has defended the acquisition of Merrill Lynch, saying the brokerage house is strategically important to Bank of America, despite mounting credit losses and writedowns at the brokerage.
Lewis recently told investors that Bank of America will rebound strongly when the economy emerges from its malaise.
“This company will generate huge amounts of profit when we get a normal economic environment, not even a great one, just a normal one,” said Lewis, according to Bloomberg News.
But Lewis will remain on the hot seat, as bank shares continue to plummet. Analysts have pointed out several candidates to replace Lewis, including Bank of America mortgage chief Barbara Desoer and general counsel Brian Moynihan, according to Reuters.
