Gross Negligence

Last night I sent some of my friends this story, with the subject line “April Fools?”
Bank of America Corp., recipient of $163 billion in U.S. rescue funds and loan guarantees, should retain Chief Executive Officer Ken Lewis even after his “mistake” in acquiring Merrill Lynch & Co., analyst Meredith Whitney said.

Lewis “has done a great job” except for the Merrill Lynch deal, said Whitney, speaking to reporters today before appearing at a panel discussion in Toronto sponsored by Sprott Asset Management Inc. She called the Merrill Lynch purchase Lewis’s “one major mistake acquisition.” “

Nope – it’s not from The Onion – and even more surprisingly, it’s from the extremely well informed Meredith Whitney – who is one of the best regarded financial analysts right now.

I would have been less surprised to see the headline “Democrats Say Bush Did Great Job As President” than the headline “Bank of America Should Keep Lewis After “Mistake,” Whitney Says.”

This morning, I lay awake trying to think of analogies to saying “Lewis is doing a great job, except for this one Merrill mistake:”

Saddam Hussein did a great job as president of Iraq except for massacring his own people with chemical weapons.

Alan Greenspan did a great job as head of the Federal Reserve except for creating the biggest financial bubble in history with his low interest rate policy.

Tim Geihtner did a great job as head of the NY Fed, except for completely failing to oversee the firms under his watch.

Chris Cox did a great job as head of the SEC except that none of the broker dealers he was supposed to regulate exist anymore because he did such a bad job regulating them.

Hank Paulson did a great job as head of the US Treasury except for not ever comprehending that home prices might be able to go down as well as up, and not having any foresight into the current financial crisis until it was already way too late for him to do anything about it.

Ben Bernanke did a great job succeeding Alan Greenspan as head of the Federal Reserve except for not ever comprehending that home prices might be able to go down as well as up, and not having any foresight into the current financial crisis until it was already way too late for him to do anything about it.

I’m sure my readers will have other examples here.

The bottom line was that BAC’s MER acquisition was not a minor mistake – it cost the firm tens of billions of dollars – and more importantly – it wasn’t the only mistake! Did we already forget about BAC’s acquisition of Countrywide?!?!?!

-KD

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