The cavalier use of brute government force has become routine, but the emerging story of how Hank Paulson and Ben Bernanke forced CEO Ken Lewis to blow up Bank of America is still shocking. It’s a case study in the ways that panicky regulators have so often botched the bailout and made the financial crisis worse.
Good link.
Predictably, the WSJ seems to have the facts mostly right, lashes out in righteous contempt at the poor behavior of the “political class”, and studiously refuses to consider the contributory role of the “bankers” in all of this.
Just two, among many, other things the WSJ might have raised:
Who was that thuggish fellow at the Treasury that forced Ken Lewis, the BofA CEO, to actually have to choose between (a) what he did: opportunistically going along to get along (and to keep his job) and (b) what he didn’t do: do his duty to his shareholders and obey the securities laws (but potentially lose his job) ?
Why, non other than a former Goldman Sachs “banker” (whose crude, but highly-effective, negotiating skills were developed on Wall Street, not in Washington) !
The WSJ says “the men who nearly ruined Bank of America have some explaining to do.”
Among the first of those men to do “some explaining” would be Ken Lewis (a competent accountant but for a long time in way over his head as a CEO of a major financial firm) who drove BofA into financial insolvency and thereby offered it up to the vagaries of increased (and inevitably ham-fisted) federal intervention.
Karmic kickback can be sometimes unpleasant (but almost always clarifying).
I have been wondering why the media keep referring to B of A’s bad ‘loans’ when it seemed to me they needed money because of their taking on Merrill at the behest of the Feds. Could they have survived on their own without the merger? I wonder, considering the home base of California and its real estate bubble.
Brad
Remember that today’s BofA, while using using A. P. Giannini’s original charter, is really NationsBank of Charlotte, NC, which bought California’s BofA over a decade ago — when it was (yet again) in trouble due to its extra-California operations. Mr. Lewis was a NationsBank executive back to its North Carolina National Bank days.
[url=http://pastorzip.blogspot.com]spt+[/url]
ex-pat Californian
Worst thing that happened to Bof A was when its president at the time (all I remember is that he was from Orange Co.) sold Bof A, a San Francisco and Calif institution, down the river to that cowboy from No. Car., Hugh whats-his-name.
It’s really hard to remember all the buy-high, sell-low moments at the original BofA. A realist might even suggest that the Wall Street Journal’s depictions on the mechanisms and inherent righteousness of large corporate interests in bringing societal salvation bear as much relationship to the actual activities and effects of big business as the creeds and catechism in the BCP bear to the operational theology of the TEC.
[i] Edited by elf. [/i]