Being Bank of America and Merrill Lynch

Kenneth Lewis, CEO of Bank of America, and John Thain, former CEO of Merrill Lynch, are not new to this blog. I have written of both of them here before. Perhaps now justice will be served for the apparent unethical dealings that both of these men seemed to have been engaged in. According to the New York Times federal judge, Jed. S. Rakoff, "on Monday sharply criticized the bonuses that Merrill Lynch hurriedly paid out before it was acquired by Bank of America last year and pointedly questioned a federal settlement that had seemed to put the issue to rest."

Is it not high time that Wall Street be held accountable for its unethical business practices with the money taxpayers gave them which was used to pay out big executive bonuses of $3.6 billion? Obviously Judge Rakoff thought so. He "was scathing about the settlement, in which the S.E.C. accused Bank of America of misleading its shareholders...Bank of America and Merrill Lynch...'effectively lied to their shareholders.' The $3.6 billion in bonuses paid by Merrill as the ailing brokerage giant was taken over by the bank was effectively 'from Uncle Sam.'"

Congress and the American people spoke out against the bonuses. But is Congress not culpable? Why didn't they restrict these bonuses before a bailout was given or the acquisition by Bank of America allowed? Merrill Lynch "lost $27 billion dollars" the year before the bonuses and bailout were given. By the way, Bank of America made off like bandits with two portions instead of one of the multi-billion dollar bailout at low government interest rate while not changing the interest rates of its customers. The yield curve is great.

Instead of limiting bonuses, we heard a lot about the important of maintaining previous contracts, as if as without a bailout and merger Merrill Lynch such contracts would have even been significant. With such loses, Merrill Lynch would have been no more. Plus, who gets a bonus in the real world for bankrupting their company? Judge Rakoff asked a very pertinent question. "Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion?"

Being Ken Lewis

Ken Lewis, CEO of Bank of America, came to Detroit last year and before the Detroit Economic Club said, "I think there's one too many" automakers. (Are others thinking the same of banks right now?) After the speech, Mr. Lewis also said, in a rather pedantic self-righteous tone, "I think the American people are suspect of just giving more money and buying more time. They want to see that the companies have in fact changed and the strategies have changed."

After the original bailout of $25 billion, Bank of America was recently back to the Treasury Department for an additional $20 billion. Do you think someone needs to remind Mr. Lewis of his own words? Should Treasury have withheld the additional $20 billion? Speaking of accountability, where did the original $25 billion go? Bank of America got the additional $20 billion without being held accountable for the first $25 billion. This is insanity.