Wednesday, June 17, 2009

Ken Lewis and BofA's shotgun marriage

Missed PBS's Frontline piece, "Breaking the Bank", primarily about the Bank of America/Merrill Lynch shotgun marriage, and starring BofA CEO Ken Lewis? Check it out online at

The hour-long program is a nifty behind-the-scenes look at how the two entities got joined, and how Lewis tried to un-join them at the 11th hour. Former BofA chief Hugh McColl gets some face time on the program too. But it's Lewis and his counterpart at Merrill, John Thain, (with Then-Treasury Secretary Hank Paulson) who are the central characters in this drama.

There are quite a few moments to relish, including a pivotal one where officials of the top banks were summoned to Washington and "forced" to take TARP money. The hierarchy of seating arrangements even came into question, with Lewis wondering why he was seated at the end of the table (he said he finally determined it was alphabetical). Interestingly at the meeting, Lewis was agreeable to taking the money as a patriotic move; leaders of Wells Fargo, which now owns Wachovia, were adamant they wouldn't. Eventually, everyone did. And some economists said that was the beginning of nationalizing the banks.

It's an intriguing piece, and an interesting character profile of Lewis. Even his ability to smile (or rather his difficulty in doing so) was spotlighted. It's worth a watch.


Michael said...

There are too many people taking the bailouts and forced bailouts of our financial institutions far too lightly.

I think we were never really on the edge of doom and the hysteria was manufactured to give government even more control over the economy. The badly run institutions should have been allowed to fail, that is how captialism is supposed to work. A lot of people want to blame greedy capitialism for much of our problems, but what we have experienced is not true capitialism. We've been told these institutions were "too big to fail". If that's really the case, then they shouldn't be allowed to get "too big". Has any of that changed?

I think the government purposely added to the panic, which pummled big bank stocks and created a run on deposits, forcing some banks into even more trouble. That made it easier for the government to put pressure on these banks to take TARP money. Why force the banks to take the funds? It's about *control*.

If that's not the case, then the other scenerio is just as bad. By giving companies that have been run badly bailout money, the government has not allowed the dead weight to be tossed aside... they have rewarded failure. In capitialism, the weak, the failing must be allowed fail. It allows the healthy well-run businesses to grow and flourish. The good companies are rewarded. Our government has rewarded failure and/or manipulated the siuation, and let there be no doubt- it is about *control*.

This is not good for us or the long term health of our economy.
Not to mention the massive budget deficits that have occured because of these bailouts. I don't think most Americans have any clue about the enormous size of our deficits and what it really means for the future of this Nation. If ever there was true doom to be worried about, it is the looming insolvency of our treasury. We better hope the Chinese keep buying our treasury bonds, we are at their mercy.

It hurts me to see what has happened to our country. This isn't about being a Republican or a Democrat, both have contributed to the massive problems we face... you are truly ignorant if you can't see that.