Bank of America Corp CEO Kenneth Lewis announced he was retiring, after months of being dogged by a series of government investigations into the company’s acquisition of Merrill Lynch last year that had become a major distraction for the biggest US bank.
The reputation of the 62-year-old Lewis had been badly bruised by massive credit losses and the need for two government bailouts. But experts believe it was the intense scrutiny from federal regulators, state attorneys general and the courts that forced his hand.
“It’s a good thing for the company to make a clean break and move forward,” said Walter Todd, portfolio manager for Greenwood Capital Associates.
PHOTO: REUTERS
He said regardless of the reality, “the perception is, everything that happened with the Merrill transaction was his fault, and for Bank of America to move beyond that, Lewis would have to go.”
His retirement by the end of the year — which Lewis characterized as voluntary in a letter to employees — sets up a struggle within the bank’s ranks to be his successor, with six possible candidates seen vying for the job, including recently named wealth management chief Sallie Krawcheck, consumer banking chief Brian Moynihan and chief financial officer Joe Price.
His departure underlines the dramatic change there has been at the top of the nation’s banks in the past two years. Only Lloyd Blankfein, the head of Goldman Sachs Group Inc, and Jamie Dimon, CEO of JPMorgan Chase & Co, have survived. Some lost their jobs as their banks collapsed or were taken over. Others resigned or were forced out as results suffered.
Lewis’ planned retirement could raise new questions about the staying power of Citigroup Inc chief executive Vikram Pandit, who, like Lewis has been under pressure from regulators after his bank received a massive taxpayer bailout.
In addition to Krawcheck, Moynihan and Price, leading candidates to eventually replace Lewis include mortgage lending chief Barbara Desoer, investment banking chief Thomas Montag and Greg Curl, chief risk officer, bank spokesman Bob Stickler said.
Known as a dealmaker, Lewis built the largest US retail banking franchise through aggressive acquisitions.
Yet his last deal appears to have been his undoing.
In September last year, the bank announced a US$50 billion buyout of Merrill Lynch & Co at the height of the financial crisis.
At the time, Lewis and the bank were heralded as saviors of the financial system.
But they began to draw public ire when questions arose early this year about how the bank publicly disclosed roughly US$3 billion in accelerated Merrill Lynch bonus payments, and billions in Merrill Lynch losses during the fourth quarter of last year in advance of a shareholder vote on the deal.
In a letter to employees, Lewis said his retirement was at his decision, and not the result of outside pressure, either from the board, or regulators and the government.
A successor will be selected in advance of Lewis’ retirement, and there will be an unspecified transition period before his retirement at year-end, Stickler said.
While some investors still believe the Merrill deal will be a long-term success for the bank, in the short term it spawned on-going investigations into what senior executives, namely Lewis, knew about the deal and failed to disclose publicly.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS