Thursday, October 01, 2009

Ken Lewis cashes out

As a former employee of Bank of America, I have a few thoughts on the news of CEO Ken Lewis's retirement.

First, when I worked there, Lewis seemed to be a reasonable CEO. He always seemed to do what was best for Bank of America, from fostering internal growth after the Hugh McColl era of heavy acquisitions (including the NationsBank/Bank of America merger), to eventually doing some good acquisitions of his own, including MBNA and Fleet.

But last year was the beginning of the end for Lewis. First there was the head-scratching acquisition of Countrywide. Why acquire a subprime mortgage lender in the middle of the mortgage market's meltdown?

Then there was the Merrill Lynch acquisition. While I don't entirely blame Lewis for that fiasco, he should have been more upfront with investors. If he had doubts, and made them public, it would have put pressure on Ben Bernanke to not take punitive actions against Bank of America. Instead, Lewis became spineless at a time when Bank of America needed strong leadership.

Frankly, I don't have any sympathy for Lewis.

As for Lewis's successor, the Board of Directors is allegedly looking internally for a successor. Of the names mentioned so far, I cannot really speak to them, as I don't have any real experience working for any of them there, nor have I heard anything that would lead me to a reasonable speculation on their chances of success.

However, I would throw one name into the mix: Floyd Robinson, president of Bank of America's consumer real estate and insurance services division. I worked under him when he was involved with marine and recreational vehicle dealer financing. While he was meticulous, arguably to an extreme, he got results. Generally speaking, Robinson was the kind of executive you would bring in when you needed to make an organization more efficient and profitable.

While he might not be popular with the shareholders (he is NOT charismatic), I personally would feel safer as a shareholder if they elevated Robinson to CEO. He would clean up Bank of America and make them leaner and more profitable. That said, I doubt he will get it, although I would buy stock in Bank of America if he did.

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