Instead Of Worrying About Credit Risk...

So while the bank is losing tens/hundreds of billions....they still have time to promulgate an extracurricular POLITICAL CAMPAIGN.

For more on this very topic visit my killer classic post - Bank of America's Ken Lewis - Socialist Hero, Shareholder Villain.

Recall when Al Gore's sci-fi motion picture came out - A Convenient Myth - Kenny had them screening the movie, at work, all day long!

Look at that graphic above again.

Melvin Dwork???

Did God make him gay? Or did the people who named him? Seriously.

Perhaps it would have been wise for him to take his mother's last name.

Then again, perhaps he did!

For the record, I don't care who's in the military - SO LONG AS THEY CUT IT IN HALF budget-wise.

Thank Goodness For $20+ Billion In Losses?

This week Bank of America - make that *Ken Lewis' Bank of America* - announced some $20 billion in losses due to its savvy investment in Countrywide Financial.

Hmmm...

Is this the same Countrywide that Ken Lewis' bank was raving about merely 2 years ago?

I'll enlarge the last line:

"THANK GOODNESS WE HAVE IT", i.e. Countywide!!!

And they said that, not only after OVER-PAYING for the subprime lender, but AFTER having many months to scrutinize the books.

Here's what I wrote/predicted 3.5 years earlier, in January 2008:

Ken is not simply paying $4 billion (on top of the $2 billion that already vanished); he is assuming the debt of a company whose liabilities exceed $120 billion. Even with a light recession and slightly higher Treasury rates, his gamble could easily cost BoA $20 billion!

How prescient am I!

And guess what....I'll predict ANOTHER $20 billion in Countywide Losses from here. Look, they lost all that money already and interest rates actually WENT DOWN. What's going to happen to these toxic loans when borrowing rates inevitably uptick???

Revisit my on-target prediction and enjoy one of my all-time most popular posts here:

Bank of America's Ken Lewis - Socialist Hero, Shareholder Villian

Morons Retaining Moronic Lawyers

Yesterday, in - Wall Street Scalping - I discussed the plight of embattled Ken Lewis, former skipper of that financial Titanic Bank Of America.

Recall that when first grilled as to why he spent $40 billion for a bankrupt Merrill Lynch, Ken essentially said the government forced him into the bad deal. And this idiot even invoked *patriotism* as a reason he bent (shareholders) over. See - Ken Lewis - Interview Follow-up from exactly one year ago.

Alright, he was supposedly bullied into it - at least that was his initial, fall-back defensive position.

But what about now?

Here's his Moronic attorney Mary Jo White, from that same Zerohedge post:

...Lewis is being "public vilified by the political search for accountability for the financial meltdown." White also said that despite the initial problems with the merger-including the mounting losses that led to the government bailout-the merger has turned out to be an "unmitigated success for BofA." Merrill Lynch trading operations, like the trading operations of the other big banks, have taken advantage of historically low interest rates and borrowing costs to earn billions of dollars in profits, helping the banks to smoothe out losses from consumer and commercial real estate loans that continue to mount as economic conditions remain weak.

Did y'all get that?

At first he was *forced* into a bad deal.

But now, he's going to assert that Merrill is *earning billions*, i.e. that it was a good deal, that therefore he can't be guilty of misleading his shareholders.

Obviously, the Moron hired a real dunce to represent him! How fitting!

Here's my take:

At first, a reluctant Ken was indeed gulled into considering buying Merrill by the most savvy crooks on this over-heated planet.

But then, his greedy, egomaniacal eyes were popping with dreams of *stealing Merrill Lynch*, with dreams of running the largest financial concern in the world. Recall that he was always a hopelessly naive perma-bull; every red quarter he saw he figured to be *the bottom* - as far back as Q4 of 2007! So these *firmly held beliefs* triumphed over any concerns about shareholder disclosure. I still don't get why he didn't lower the price, at least a little bit.

And now he's got the gall, and the gap, to not only submit that Merrill Lynch is making money hand over fist (*billions* in trading), but that he should get credit for this homerun of a deal.

Believe me, Merrill Lynch IS NOT making any meaningful, sustainable money. Just y'all watch, when debt markets come to their senses....all sorts of *inherited*, *legacy* losses will materialize from Merrill, yet again. Remember, this is a company that lost $19 BILLION between July 07 and July 08. Wikipedia sums it up nicely, that's "...$52 million daily"!!!

In all likelihood Merrill's so-called profits today are merely *unrealized gains* on the fixed income junk they wrote down last year. Bond markets boomed in 2009; AND these banks were given license to mark the *assets* to whatever the bleep they felt like. In summary, Merrill still has the junk, still has the risk, and is hiding it *off the balance sheet* a la Wells Fargo and JP Morgan. See - Capitol Thievery.

For my Ken Lewis master link - click here.

Wall Street Scalping

The public desperately wants a Wall Street scalp, or twenty...

So an incumbent Big Government will eventually toss the plebs a bone.

And it looks like that bone, to start with, is Ken Lewis - the rube who was gullible and Moronic enough to do Hank Paulson and Ben Bernanke's (read: Goldman Sachs'!) dirty work.

I know Ken, probably better than he knows himself, and Ken probably thinks he's got the *goods* on those two shysters - that if he's going down, he'll bring them down as well. Or at least that he has enough to save his own a$$.

Except that's probably not going to happen. He's most certainly going down. He may seem like an unfortunate scapegoat, but he's more than sufficiently culpable.

Tyler Durden of Zerohedge nails it:

To be sure, he is guilty of not simply stepping down when he was put in the position of having to decide between his job and lying to shareholders, which is precisely what happened in those fateful days in December of 2008. For his choice to proceed with the government's plan and to betray his fiduciary responsibility, he should be punished...

I'd advise all would-be on-pilers to get a head start. Because once the market, and BAC stock, starts to collapse anew....everyone is going to jump on Ken - not only because it's warranted, but also because it'll serve as yet more timely smokescreen for the bigger criminals, i.e. Goldman Sachs and their government apparatchiks.



For my master Ken Lewis link - click here.

And thanks to West Coast Tom for sending me the link!

Ken Lewis - Insistent Idiot!

CHARLOTTE, North Carolina, Dec 2 (Reuters) - Bank of America Chief Executive Kenneth Lewis said he does not believe housing will face another big downturn, as some fear.

"We don't see it," Lewis said.

Ken, slated to retire very soon, is going out like, well, George Bush!

I could offer many refreshers here on things Lewis has said in the way of erroneous economic predictions....but in the interests of brevity, I'll just offer one.

Let me ask y'all a question - How's the high end of the housing market doing near you?

Yeah, totally dead and bidless, with plenty of shadow supply on the banks books. See - Mr. M.

Recall that nearly a year ago, Ken Lewis' Bank of America aggressively jumped into the jumbo mortgage market and became the nation's biggest such lender!

See - Who's A Jumbo-Sized Moron?.

Ken doesn't see another big downturn in housing....and that alone ought to make every over-leveraged homeowner homeborrower in America pretty darn scared.

Bank Of Deception

I guess I have to keep commenting on my buddy Ken Lewis and his circus act departure.

Two days ago, BAC annouced they would *repay the TARP* money that was half-forced on them by the government.

Now there're a whole lot of things happening here so the event has to be carefully dissected.

Earlier this year, as BAC stock spiraled to $2.50 a share (!), Ken Lewis was out there saying that he *never should have taken so much money* that some of it was *forced on him*....and that they'd *pay back the money by the end of the year*. Most of this whining was ridiculous; a CEO shouldn't care about stock price fluctuations. It's simple, if your stock unfairly goes to 2.50, then management (or private equity) should be buying it back - at least all of those dilutive shares it grants itself each year!

So here it is the end of the year and it Ken is paying back the TARP money.

Or is he?

More accurately, I submit that CURRENT SHAREHOLDERS are paying it back since they are being diluted to the tune of $19 billion.

At this very moment, Bank of America is trying to find a successor to the embattled, Moronic Lewis. The details of which were covered in - Titanic Can't Find Willing Skipper. Essentially, a cadre of idiot pundits and whatnot believe that having borrowed (more) money from the Federal government, that such a yoke was making the open CEO job unattractive to the *good candidates*.

Side Note - Do y'all think ANY veteran from the banking industry, ANYWHERE, over the past several years has displayed the acumen needed to head Bankrupt of America?

I certainly don't. They need a perspicacious, Captious outsider.

You see, whether BAC shareholders(!) pay back the TARP money now or not is beside the point. The Feds have demonstrated that they can be tapped, whenever, with impunity, henceforth!

Okay, moving on to the dilution.

I'm no forensic accountant, but apparently even those dudes can't understand the financial legerdemain that's being passed off by the likes of BAC, JPM, WFC, C, et al.

But think of it this way - BAC needed $19,000,000,000 in NEW CAPITAL - over and beyond what it had left from the initial Fed, TARP loan.

Minimally, that implies that Bank of America LOST $19 billion in the past 12 months or so.

I say 'minimally' because these banks are leveraged - probably at somewhere between 5 to 10 times its capital base (if not way more).

So a $19 billion capital injection, to my amateur accounting intellect anyway, implies that BAC LOST or *wrote down* at least $95 billion in its assets over this period.

And, mind you, these are merely the recognized losses in a time where the banks have been given license to mark-to-myth their assets. Just imagine how big this dilution would be otherwise.

I've read a bunch of the media reports on this recent news and clearly, nobody really got what happened.

The idea that BAC paid back the money because *they no longer need it* is a complete joke.

As was this little *can't find a new CEO....ergo we have to dislodge from the Federal teat* soap opera.

The fact is, Bank of America is losing money hand-over-fist; they raised capital because they NEEDED CAPITAL - and they'll need plenty more.

Luckily for shareholders, the stock has magically tripled off its March low - otherwise the dilution would have been exponentially far worse.

Another important thing to remember is that this wasn't a classic case of *raising money...to invest money*. No, the money they raised is already gone, already sent back to the Feds. BAC's balance sheet hasn't improved a lick from this transaction.

All it did was jam the shareholders....

And give the board/management the cover to go on doing the things they did which got them into this mess in the first place!

Titanic Can't Find Willing Skipper

On the wire today:

Nov. 22 (Bloomberg) -- Bank of America Corp.’s board may extend its search for a new, permanent chief executive officer into 2010 if directors can’t settle on a candidate in the next four days, according to people familiar with the matter.

Some candidates are reluctant to wade into disagreement between board members and the government over the bank’s future strategy, said Rochdale Securities LLC analyst Richard Bove, citing large shareholders briefed on the matter.

“The government and perhaps some of the new directors want the bank cut back in size, while the old core Bank of America people don’t want to do that,” Bove said.

Dropping Out

O’Neill, a former chief financial officer of predecessor BankAmerica Corp., withdrew from consideration after talking with search-committee members because he felt they didn’t fully grasp how serious regulators are in their demands for change, the people said.

O’Neill told the committee members that the company needed to increase the size of its banking operations and shrink its trading business, one person briefed on the talks said. The committee members responded that such a shift would be unproductive because it would abandon the strategy set when Lewis bought Merrill Lynch & Co., the person said.

Compensation is another obstacle, because Bank of America’s $45 billion bailout puts the CEO under the purview of paymaster Kenneth Feinberg. Lewis agreed in October to forgo any pay for 2009 after being advised to do so by Feinberg.

At least four of those on the Finger list subsequently said they weren’t interested. They are O’Neill; former JPMorgan Chase & Co. investment-banking co-head William Winters; U.S. Bancorp CEO Richard Davis; and Eugene McQuade, a former Freddie Mac president who now oversees Citigroup’s largest banking subsidiary, according to people familiar with the matter.

Two executives not on the list, Bank of New York Mellon CEO Robert Kelly and BlackRock Inc. CEO Laurence Fink, have told colleagues and friends they’re not interested.

Aside from Moynihan, 50, other internal candidates include Chief Risk Officer Gregory Curl, 61. Lewis, 62, favors Curl, one person familiar with the matter said earlier this month.

Outside Candidates

Federal Reserve officials, who questioned Lewis’s judgment when he considered backing out of the bank’s $29 billion purchase of Merrill Lynch, are pressing for an outsider because they want more drastic change, a different person said.

Lewis has indicated to associates that he would remain as CEO on an interim basis if asked by the board, according to a person familiar with his thinking. Rochdale’s Bove wrote in a Nov. 20 note that several large investors support the idea.

Hah!

I find it hard to believe that NO ONE wants to eat the $hitpile that Ken Lewis has prepared.

It's unbelievable that Greg Curl's name is in the mix. He's nominally the *chief risk officer* for Bankrupt of America. But more than that, he was supposedly the *brains* behind all of BoA's mergers. How'd they work out again? Furthermore, topping out his uncredentials....as the article states - LEWIS FAVORS HIM!

I say go with Moynihan. I met the guy socially several years ago. He had the perfectly firm handshake!

ANYONE but extending Ken Lewis.

Although admittedly, Lewis hanging on because no one wants to inherit his job would have plenty of deeply ironic, entertainment value. A captain, by all rights, should go down with the ship, no?

RIP - Ken Lewis

Even though I have turned a deaf ear to the crazy irrationality that is the stock market these days....

I did hear late yesterday that my boy Ken Lewis has *retired* - effective December 31st of this year.

That characterization couldn't help but remind me the time Randall Cunningham also *retired*....when, in fact, there wasn't a team in the entire NFL that was interested in signing him!

But even in the unlikely event this über-Moron wasn't *forced* out by self-serving, Big Government scapegoaters....

I submit that Ken would be leaving now anyway.

After all, look at his bank's stock - he thinks he's getting out on a *high note* a la George Constanza.

Would you want to be him, after all the sh*t he took last year, heading BAC for the inevitable crash?

I sure wouldn't.

It will be an interesting sideshow, however, to weigh the pile of crap thrown at him on the way out the door. A lot can happen in two months.

When BAC and the rest of the stock market pigs tank again, no one save me and my fellow, bloodied shorts, is going to remember, no less be thankful for, the BS bear market rally of 2009.

No, everyone will be rampaging about with un-lubed pitchforks.



Down 70% from it's all-time high, shares substantially diluted, the dividend *suspended*, enough buried losses for the coming decade.....

Some *high note*!

Ken, I'd seriously consider a remote village in South America. Enlist the services of those who hid Steve Bartman or something.

I've written a bunch on Ken Lewis - click here.

And, as my South Philly jabronis would say, *not for anything*, but I identified Ken Lewis for the immense Moron that he was long before the rest of those clowns like Mike Shedlock and Barry Ritholtz did.

Stay with me kids, I'll keep y'all a few steps ahead of the game....

Who's A Jumbo-Sized Moron?

If you live in a tony northeastern locale, as I do, you're surely aware that the high-end of the housing market is utterly falling apart. Inventory is piling up rapidly....and demand is absolutely *bid-less*. Homes in towns near me that would have sold for $1.6 million recently are now languishing at $1.2 million without any buyers in sight. And homes that would have sold for $1 million 18 months ago are now hitting the low 800s without moving.

To ask a stupid question:

Why are luxury homes in the process of falling off a cliff?

Well, look no further than this recent news item:

Bank of America Corp. was the largest jumbo lender in the first quarter, with almost $9 billion in new loans, followed by Citigroup, according to newsletter National Mortgage News. JPMorgan ranked sixth. San Francisco-based Wells Fargo & Co. was the top overall mortgage originator, followed by Bank of America, JPMorgan and Citigroup, the newsletter said.

So, just as jumbo borrowers were about to have their collateral walloped....

Ken Lewis decided to become the largest jumbo lender in the country!

Remember, this is the same guy who jumped head-first into subprime lending (er, legacy toxic debt) in July 2007 right when that market was starting to implode.

More:

Barbara Desoer, head of Bank of America’s mortgage unit, said in a March interview the bank was seeking to make more jumbo mortgages, offering "extremely competitive" rates to consumers. The Charlotte, North Carolina-based bank "has balance-sheet capacity and we’ve allocated it to jumbos given our presence in some of the states and regions where that’s important," she said. "We’re very much open for business."

Bank of America doesn’t now make jumbo mortgages through brokers or so-called correspondent lenders, only its "retail" channel, though that’s "under regular evaluation," said spokesman Rick Simon.

Let me ask y'all another question:

Is Bank of America in any position to be strutting *extremely competitive* on anything?

This Ken Lewis is an out-of-control lunatic....one whose ability to *read the cards* is non-existent. I'm sorry, you can't run a bank, no less one of the largest in the world, if you CAN'T GAUGE COLLATERAL.

This is the guy who declared 2007's fourth quarter the worst his company would ever see.

This is the guy who bought the less than worthless, aforementioned Countrywide.

This is the guy whose firm wrote over $110 billion in unsecured HELOCs in 2006 alone.

This is the Moron who paid a premium(!) for the disaster Merrill Lynch.

All one has to do is see his bets du jour to know where the next shoe's going to drop.

High end homes in *important areas*....see ya later!

See also - Refi'ing A Bubble.

And, for the master link on Kenny, my third favorite Moron - click here.

Bank Of America - Being Run Like Government!

As I mentioned in that previous post, I was out boozing on Friday night.

I met someone that works for Ken Lewis' Bank of America.

BACEmployee - Guess what....They (the Bank) are giving all the low end employees 2% raises across the board.

Okay. First of all, nobody at that bankrupt, bailed-out bank should be getting raises.

Secondly, bear in mind that *across the board* means that every employee between the pay range of $0 and, I don't know, maybe $50,000 in annual income is getting a bump. It means even if someone is a horrible employee on probation, their manager has to call them in and give them the *good news*. In other words, there are no doubt hundreds if not thousands of employees in this category about to be fired or laid off that will be wondering aloud soon, "How could that be? I just got a raise!"

Think about it. Automatic percentage pay hikes....what does this smell like?

To me, it smells like a creeping, de facto *unionization*.

The only rationale that Moron Ken Lewis could possibly have for doing this, is *politics*.

He doesn't run a bank; he runs a Big Government lending operation that's wholly dependent on tax breaks, continual bailouts, Federal Reserve liberality, and taxpayer largess ignorance.

He's not managing assets and liabilities; he's not managing loans and collateral....

Instead, he's managing *image* and *powers-at-be*!

Note that Ken Lewis is one of my favorite Morons. Click here to get started.

Maybe He'll Start His Own Bank?

Have y'all been watching The Office this season?

If you haven't, one plot development has been the firing of Michael Scott and his venture into building a competing *paper company*.

Anyways, I couldn't help but think of the show and the Michael Scott Paper Company when walking past the following sign in Charlestown, MA last night:



I've written quite a bit on the embattled Moron who heads Bank of America.

Click here to find much of it.

Ken Lewis - Liar, Moron, Or Both?

Here's an excerpt from my February 7th analysis of Ken Lewis' interview:



And here's what I just came across tonight:

J.P. Morgan Chase Chief Executive James Dimon said…that March was a little tougher than the first two months of the year….Bank of America…CEO Kenneth Lewis also said that March had been a tougher month for his bank.

I fully expect these banks to lie and report *profits* on their next earnings releases.

But it will only take about 2 minutes for bloggers to find where they fudged, again.

Marginalizing Revenue

Recently a friend of mine, a proprietor of a small but highly lucrative consulting firm, told me:

"Business is good. My revenues are much higher this year but my profits are down."

My eyes rolled. Who gives a bleep about *revenues*?

His *revenues* are higher simply because he hired more consultants and billed more hours. His profits are down because he got lazy and did less of the work himself. Knowing his still lofty income and the toil of weekly travel I don't blame him for disengaging a bit.

As a trader, my *revenues*, my proceeds from broker and barter exchange transactions, were in the multi-million dollar range last year - as they always are. It's too bad I have those annoying multi-million dollar *cost bases* to account for!

But the misplaced obsession with revenue these days is rampant - especially in corporate America.

In the current witch-hunt against million dollar bonus recipients Wall Street has in unison defended its right to compensate - not profit producers - but *revenue producers*. Here's one exec:

I think there's a lot of emotion around bonuses, and legitimately so," said Robert P. Kelly, chairman and chief executive of Bank of New York Mellon Corp. "If you think about the average American, their house price is down, and they don't have the same level of job security that they had in the past, so people are angry."

But Kelly said increased scrutiny should be directed at top executives and policy makers at companies, not "revenue producers" like traders, who are effectively following the orders of higher-level managers.

Likewise, Citigroup only wants y'all to look at its revenue:

In a letter sent to employees Monday, Citi Chief Executive Vikram Pandit said the first-quarter performance so far has been the bank's best since the third quarter of 2007 -- the last time it recorded net income for a full period. Based on historical revenue and expense rates, Citi's projected earnings before taxes and one-time charges would be about $8.3 billion for the full quarter.

Pandit declined to say how large credit losses and other one-time items have been that would at least partially offset profit.

If only *credit losses* PARTIALLY offset profits!

And what does he mean by *one-time items*? Does he mean those that take a bite out of profits ONE TIME PER QUARTER - EVERY QUARTER?



Ken Lewis weighed in on *revenue producers*:

I don't feel good about the $500,000 cap. And it's not about me—I'll take $500,000. However, you will have talented individuals, particularly revenue producers, going to foreign banks and other asset management firms. That's a problem.

And he's weighed in on *revenue* for his entire bank:

Looking forward to this year, Bank of America should generate....close to $50 billion in pre-tax, pre-provision earnings( 2009).

There they are again with those nettlesome loan provisions.

So why the misplaced obsession with *revenue* from employees all the way up to upper management?

Because *net profits* are not their concern. That's the annoying, disjoint business of stake-holders. It's a problem for equity and debt holders.

We can also indict the revenue fetish this way - consider that Big Business has descended to the mindset Big Government with its single emphasis on top-line confiscation:



Also, there's this perverse obsession with mere revenue because that number, and that number alone, sets the parameters for SKIMMING.

For more on *skimming* visit:

Marginalizing Analysts

The Skim Biz Takes A Hit

Skim Biz Update - Fidelity Investments

Fidelity - A Mess

Ken Lewis - A Marked Man

Ken Lewis, incompetence incarnate, was in Boston last week.

Someone I know who heard his speech told me that he looked *absolutely terrible*; he was thin, ragged, and frayed around all the edges; but this is only fair...

....as he's made millions of brokerage statements also look absolutely terrible!

I've been informed that he now has five full-time bodyguards.

And that the entire city of Charlotte wants to kill him - figuratively speaking of course.

Then again, he does have all that *security*.

One has to realize how many BAC stockholders there are down there who just gotten hammered as the stock's come down 90% from its peak.

The other day I randomly met someone who works for Ken Lewis' bank. Without being too specific, let's just say he's doing a lot of merger integration work with Merrill Lynch. He's traveling almost everyday to NYC (from Boston), often for a week or two straight. Let's just say that he's beyond depressed.

First of all, his BAC stock holdings have been effectively wiped out. Secondly, he's working his tail off with no shot of a bonus or a raise EVER on the horizon. Mere job security is his best outcome.

Lastly, and *worstly*, he says his Merrill peers, into whose department he's been consolidated, he said that they all earn *3 times* what he earns - and that they got paid 90% of their target bonuses last year.

I got the stark impression that this guy was going to quit pretty soon. So add to the vast collateral damage of Ken Lewis' idiocy the loss of one *cheap*, *hardworking* employee. [And then multiply it by a suitably large number.]

If only Ken had the best *mindguards* money could buy....

To see everything I've exposed Ken Lewis on - click here.

Sometimes It's Better Not Knowing

Here's my buddy, the embattled Ken Lewis trying to comfort shareholders Friday as Bank of America's stock plunged as low as $2.53(!) at one point:

"Speculation about nationalization is based on a lack of understanding of our bank's financial position as well as a lack of appreciation for the adverse ramifications for our customers and the economy,"

Now I would never *defend* this buffoon; he's indefensible!

Nor is this the time for jokes about Ken and *lack(s) of understanding*.

But let's examine this situation fundamentally. Why is Ken Lewis out there, seemingly every other day, reacting to fluctuations in his bank's stock price?

Put it this way, if your bank - BAC, C, WFC, JPM, or whoever - wasn't a public company, and didn't have an easily researchable share price, how the heck would you know about any balance sheet woes?

How could you possibly know if there was a *silent run* on it?

You wouldn't.

Consider a *private* bank like USAA where my wife and I actually have some money.

I have no freakin' clue about its finances. Their website says they give out HELOCs and mortgages just like all the other amassers of *poopy collateral*.

So what's worse, being in the dark like depositors at USAA or watching the daily horror show that is the financial news these days and wondering about your nest egg at a, at least for now, publicly traded bank?

While it won't improve the financials, taking away the volatile tickers from the public dialogue will help people sleep at least, maybe.

Though really, just think how how much worse Ken Lewis might have managed the Bank if he didn't have at least a little *sunlight* on him at all times.

I know, it's sort of defies the imagination.

I've written a bunch on Ken - click here.

Ken Lewis Interview - Followup

Though I did tape the buffoon's CNBC interview yesterday I have to admit that I have no desire to watch it. The scapegoating and predictable, clichéd optimism I find too boring to bear. And I did hear right, Bank of America's Ken Lewis did invoke *patriotism* as a factor in him bending over for Merrill Lynch's John Thain:

He said that he and his executives eventually came to agree with the government's position: "They said, 'We strongly advise you that it is not in your best interest or the country's best interest to walk away from this.'"

Yeah, right.

"We're going to get on with doing business," he said. "And frankly, we had a pretty good January."

Yeah, right.

How much do you wanna bet that on the next disastrous *earnings* report, he blames a *pretty bad* February or March?

In the memo, Lewis called the company's performance in January "encouraging." The "extreme dislocations in the capital markets we suffered last quarter seem to have moderated" but "credit costs continue to be a big issue."

Oh,....but if not for those nettlesome *credit costs*!

That'd be like a football coach saying his team practices well, works hard on defense, plays together, knows the plays,.....just has a minor issue *outscoring their opponents*!!!

*Credit costs* = BIG LOSSES, BIG MISTAKES....they are hardly just an item in a balance sheet.

Firing former Merrill Lynch CEO John Thain is "ancient history," Mr. Lewis said. Mr. Thain, 53, left his post as head of Bank of America's investment banking and wealth-management units on Jan. 22. "I'm sorry it happened. It's never pleasant."

With much of Merrill's senior leadership departed, Mr. Lewis said it's better for officials of acquired companies to leave sooner rather than later. ""Nobody executes better than we do. This plays to our strength," he said.

Nobody *executes* better than Ken Lewis?

How about nobody *commits suicide* better???

[I pulled those quotes from a variety of sources. The full transcript is here - and it's an annoying PDF.]

Here's a more accurate picture of Bank of America:



Consignments and donations welcome!

[The disrepair is more apparent if you click on the image. This building is on route-41 in Naples.]

Ken Lewis Interview

The steward of the bankrupt Bank of America will give an extended interview on CNBC at 11am today.

The Moron is expected to say he bought was hoodwinked into buying Merrill Lynch because he was *patriotic*. Seriously.

Of course he's going to say that. You didn't think he was going to *admit a mistake*, now did ya?

How exactly does this guy still have a job? Shares of his company hit 3.77 yesterday!

John Thain Sodomizes Ken Lewis - In The Public Square!

The wires today are abuzz with reports of Ken Lewis ousting Merrill head honcho John Thain. (Remember the firms merged this month.)

Here's what I said two months ago:

But it's time now for Ken Lewis to walk away from this deal. He's been duped by the more sophisticated Wall Streeters on this one. John Thain appealed to Ken's gargantuan ego and it worked like a charm. Lewis may as well have been a fanny-pack wearing tourist at a professional poker table - he was bent over that easily.

Here's the post-bend-over kiss-and-tell from today's Charlotte Observer:

Lewis' loss of confidence in Thain was due to a combination of factors, according to a source familiar with the matter. Merrill had been losing executives, and the bank heard concerns about his leadership from employees and investors. In addition, Lewis learned of Merrill's rising losses from the Merrill transition team, not Thain himself. When Lewis later talked to Thain, he didn't seem to have a good explanation, the source said.

Thain also went to Vail, Colo., on vacation in December at a time when Merrill's problems were emerging. Although Thain was working on the trip, the move was not perceived well at Bank of America, the source said. Thain also had planned to fly this week to the World Economic Forum in Davos, Switzerland, even though some Bank of America officials had signaled he shouldn't go.

Thain's payment of bonuses to Merrill employees before the deal closed also has emerged as a new black-eye for the bank.

Bank of America spokesman Scott Silvestri said today that Thain made the decision to pay the bonuses in December instead of the normal time of January. Merrill was an independent company at the time but informed the Charlotte bank of the decision, Silvestri said. He declined to say when the bank learned of Thain's decision.

December was a critical month for the merger. The bank has said it learned of rising losses at Merrill in the middle of the month, after shareholder approval on Dec. 5 but before the acquisition closed Jan. 1. Bank of America CEO Lewis last week said he considered backing out of the deal, but proceeded under the urging of regulators.

Last week, Bank of America said Merrill posted a fourth-quarter loss of more than $15 billion, largely because of writedowns related to the fallen value of securities. That loss, though, wasn't counted as part of Bank of America's own $2.4 billion fourth-quarter loss.

The bank wouldn't say how much Merrill paid in bonuses. Merrill disclosed compensation and benefits expenses of $15 billion for 2008, down 6 percent from 2007.

So, let's see....

Thain *hid* losses from Ken Lewis.

He went on vacation in December to Vail when the losses were coming to light AND just before the close of the merger.

AND, worst of all, he engineered a looting of the company by its employees at the midnight hour.

HOW THE 'EFF CAN MERRILL'S TOTAL COMPENSATION ONLY BE DOWN 6 PERCENT FROM 2007?!?!?!?!

Now almost as bad as what Thain and Merrill Lynch did to shareholders and taxpayers is the shameless scapegoating from Ken Lewis.

He's trying to get the blame-fingers pointed at Merrill, Thain, and the *regulators* who ALLEGEDLY made him do the deal. Ken Lewis, with all this smoke and his BAC stock purchase is doing his very best to keep the focus off him and the fact that BAC is trading at $5.71 today - an 18 year low.



For sure, John Thain screwed Ken Lewis. But Kenny Boy showed up commando in a pink mini-skirt, wore a blonde wig, and toted a bottle of lube.

Sorry for the graphic imagery, but if you want a whitewash of this heinous crime you're going to have to look elsewhere.

Everyone Knows But Ken Lewis

"There are some hand grenades on the balance sheet that are going to blow up on Bank of America," said James Ellman, a former Merrill Lynch money manger who is now president of San Francisco-based SeaCliff Capital LLC. "The cost savings are going to be nowhere near what they’ve already promised."

Read the entire scathing article here.

Executives including Rick Wagoner of General Motors Corp. and Ford Motor Co. CEO Alan Mulally have agreed to work for $1 a year. Asked by a shareholder whether he would agree to work for $1 a year for the next three years, Lewis replied, "No." He noted that Bank of America earned $5.8 billion during the first nine months of 2008.

Earned $5.8 billion?

Yeah, Ken, only if you throw all - including the heretofore FLIMSIEST - accounting standards out the window.

By the way, I didn't need to be a former *money manager* at Merrill to discern that Ken Lewis bought a ticking bomb.

I just used my Captious intuition!

Why Passive Investment Is Doomed

So today both Merrill Lynch shareholders and Bank of America shareholders voted on the proposed combination.

There was never a doubt that this deal would be approved. From Merrill's standpoint, shareholders realize they are bankrupt without a lifeline.

And from Bank of America's standpoint, all dissenters have long since sold their stock.

According to Bloomberg, all the directors skipped the votes. What a cravenly display by these Morons!

Every Merrill Lynch & Co. board member except Chairman John Thain skipped the final act in the 94-year-old firm’s history, failing to appear for a shareholder vote on its sale to Bank of America Corp.

The board has presided over an 88 percent plunge in Merrill’s stock price from its high in January 2007. Writedowns on subprime mortgage-related bonds stuck the firm with five straight quarterly losses totaling $24 billion.

In Bank of America’s hometown of Charlotte, North Carolina, board member Meredith Spangler was the only director apart from CEO Kenneth Lewis to attend a separate meeting today where the bank’s shareholders approved the purchase. Bank of America has completed more than $100 billion in takeovers during the past seven years.





Note that Meredith Spangler is some 70 year old *old bag* on BoA's incompetent Board of Directors. Why don't investors sue her and the rest of them for gross fiduciary negligence? Did she really make $942,774 for sitting on the Board last year?

Okay. Moving on.

The apathy and infamy of absented directors at these shareholder meetings demonstrates far more than the fact that such positions are merely *politically correct* sinecures.

This sorry spectacle proves that public companies - as they are structured today - fail to protect the *passive investor*. The whiny masses and the socialists from Big Media often inveigh against corporate *management* - how it's a bastion of cronyism; how executives are only out to enrich themselves in the short run.

While I'm AGAINST class warfare and those who traffic in envy, I have to agree in part with that sentiment.

BUT, corporate malfeasance is only half of the equation.

No one can rob you if you don't tote a wallet in their presence.

The fact remains, Morons blindly dump money into index funds and mutual funds every month, and every year. They just want to sit back and trust the fund manager or the government to do what rightfully should be their own due diligence.



Click to enlarge the chart.

Bank of America traded down to 10.01 two weeks ago - a near 17 year low. Ken Lewis still has his job. If that doesn't tell you the system stinks I well don't know what would.

The analogy that comes to mind is Massachusetts and its elected-for-life politicians like Barney Frank and Ted Kennedy. The socialists up here drove away all free enterprise and in doing so, they effectively solidified their control.

Say you're a large institutional shareholder of Bank of America. You think a proposed takeover is stupid (e.g. Countrywide, Merrill, MBNA, Lasalle Bank, US Trust,...). Sure you could raise hell at a shareholder meeting or drum up some negative publicity but what exactly would that accomplish? A profoundly stupid deal implies profoundly stupid management. You may well succeed at blocking the dumb business decision du jour but what kind of long term plan is that? Once someone (Ken Lewis) has revealed himself as a complete Moron, it's only a matter of time before another disastrous business decision. One must read the writing on the wall and sell the stock.