The Whipping Boy of Wall Street
In 2008, Bank of America CEO Ken Lewis was feted as Banker of the Year by an industry magazine. He shouldn't expect a repeat this year. During the financial meltdown of September 2008 in which Lehman Brothers perished, Lewis engineered his company's takeover of a flailing Merrill Lynch, a deal originally valued at $50 billion. He was a hero for saving the storied investment bank. But he might have just been another greedy executive looking for another trophy to place on in his corporate mantle — or just plain dumb. Merrill's losses were astronomically higher than Lewis thought. The SEC alleged that Bank of America did not disclose to its shareholders that it would allow $3.6 billion in bonuses to be paid to Merrill execs, even though taxpayers had provided $45 billion to keep the combined firm afloat. Nice. Bank of America's stock tanked, the SEC said it would take Bank of America to court over the bonuses, and an embattled Lewis said he would retire at the end of the year. Then, in early December, Bank of America announced that it would repay the $45 billion in aid that it had collected from the government. A big chunk of the money would come from profits at Merrill. A redemption for Lewis? Maybe. Those profits largely came from trading — the sort of risk-taking that helped get us into this mess. Plus, even as taxpayers cheered the payback, Bank of America shareholders didn't have as much to celebrate. By issuing nearly $19 billion in additional stock, the bank guaranteed that anyone who currently held shares suddenly owned less.