Under New Ownership: Bank Of America

CEO Of The Nation's Largest Bank Talks About The Treasury Department's Plans For Buying Into Financial Firms

(CBS)  Banks are supposed to lend money, and when they stop - as they have in recent months - the workings of our entire economy are threatened. Credit became so frozen, the government had to step in this past week and take an ownership stake in the country’s biggest banks.

On Monday Treasury Secretary Henry Paulson summoned the CEOs of the nine largest banks to Washington - and gave them a massive amount of money so they would start lending again.

The largest of the banks is Bank of America (B of A) - now partly owned by the United States of America.

The head of Bank of America, Ken Lewis, says that when he and the others met at the Treasury Department, it became clear that Secretary Paulson's "offer" was an ultimatum - no negotiations.

"In other words, take it or leave it?" correspondent Lesley Stahl asked.

"Right. Right, right."

"It’s said that he told the bankers and you, "This is your patriotic duty," Stahl said.

"I don’t remember if he used the word, but there was an element to that," Lewis said, "that this was the right thing for the American financial system, and therefore it was the right thing for America."

"Did you feel that? Was that a persuasive line of argument?"

"Absolutely," Lewis said. "I deeply believe that. I think he was right on."

"Now explain, why was it so important to the government that everybody agreed, that the nine largest banks are ALL in this?" Stahl asked.

"If you have a bank in that group that really, really needed the capital, you don’t want to expose that bank," Lewis said.

"In other words, stigmatize it."

"Right, exactly."

"So everybody knows that they’re not as good as somebody else."

"Exactly."

"Most of you were just stunned by the amount of money that the government put on the table," Stahl said.

"Yeah," Lewis replied. "At least I was. And I think most everybody else was."

The total was $125 billion of taxpayers' money. Bank of America, Lewis says, didn’t need the money … but got $25 billion anyway.

"Do you have any choice in this?" Stahl asked. "In other words, can you take the money and not lend?"

"We wouldn’t want to do it that way, because you can make more money lending," Lewis said, "and so the intent will be to use it to grow loans and to make more net income."

But under the Treasury's plan, there’s no requirement that a bank use the money to lend. It could use it to acquire weaker competitors - or put it in Treasury bills.

One of the few strings Secretary Paulson attached relates to salaries. A bank would have to pay more taxes if it paid an executive over $500,000 a year.

One of the bankers in the meeting objected, and started arguing with Paulson - and that’s when Ken Lewis, a critic of excessive executive compensation, spoke up:

"I did make the point that we needed to stop talking about executive comp and get on with this because that should not stop the deal."

"Actually, you’re quoted as saying, 'If this is what’s going to stop this, you’re out of your mind,'" Stahl said.

"I did use the phrase 'out of your mind.'"

"Because why? Because you thought if it got out publicly … ?"

"No, that the importance of this deal getting done versus these elements of executive comp were just out of sync," Lewis said. "I mean, this was so much more important. And all of us can take a little less money."

With his salary and lucrative stock and options, Lewis took home $25 million last year. But he’s one of the few in the business who can be fired without a golden parachute, and he thinks executives on Wall Street have made too much money.

"I think they were overpaid,' he said. "It's more egregious in financial services than any other industry that I know of. We need to cut back compensation in this industry."

"So this is a question everybody wants answered: Is this Socialism?" Stahl asked. "Have we now taken a huge step away from the free-wheeling Capitalism that we’ve known for the last 30 or so years?"

"I don’t know what we’ll call it, but it will be different," he said. "And there will be more regulation. The Golden Era of financial services is over, in my opinion."

[dstadlin]

I worked for a predecessor bank to Bank Of America 1978-80 and was an acconting officer that workedon special projects. Something I will never forget is being in a meeting with senior management and hearing their vision for Virginia National Bank. Cliff Cutchins and Wright Harrison deserve the credit for the amazing growth of VNB into BOA. They had a vision that by the year 2000 VNB would be the largest national bank. Through a series of mergers their vision was accomplished. The most amamzing thing was that in those days, working for the bank was like being part of a family. I left to attend law school and in all my years in the business world, I have not encountered more visionary leadership with heart than that of VNB in the 80''s.

[pjtsytms97]

I was defrauded of $6175.00 by a Mexican timeshare resort in Mazatlan Mexico.I was required to apply for a Bank of America credit card for the $6175.00 downpayment. The merchant breached the timeshare contract, I disputed the charges with Bank of America, who refused to credit the earnest money downpayment. Bank of America threatened to report me to the credit bureau, so I was forced to pay Bank of America $6175.00 for absolutely nothing! I wrote a letter to Ken Lewis in August regarding the timeshare fraud, and nothing was done. Bank of America is as corrupt as the merchant who defrauded me.
Pamela J. Turner

[jill7771]

60 Minutes may not have insulted Bank of America CEO Ken Lewis, but you insulted me, and many other people who live in the Charlotte area. Stahl''s interview tactics were not only tacky and rude, but they were also ignorant. Charlotte North Carolina? Is it North or South Carolina? Are you kidding me?
Where do you live, ... Mars? Have you ever even been to Charlotte? I''ve got news for you, Ms. Stahl. Not only is Charlotte a banking hot spot, it is also the home of some of the largest and most innovative health care companies in the US, and home to a vast number of "transplants," or people who have migrated to the South from above the Mason-Dixon.
So wise up, and watch your tone, ma''am.

[jebroph]

Not Leslie Stahl''s best piece of work. I cannot believe she failed to mention Wachovia even once during the entire segment. She was so caught up in the Wall Street vs Charlotte thing a better approach would have discussed the rise of BOA versus the fall of WB.

[paramountpro]

Lesley, Lesley, Lesley I think you need to go to the CLUE store, because obviously you don''t have one! WALL Street is not just the financial institutions in New York, it is a reference to all banking in the US. The collapse of the banks in the past month was mostly from the larger banks across this country, not just Wall Street! WAMU, Soverign, Wachovia etc. They all let the bean counters control lending policy, which as we know now, was a huge mistake. It''s like a kid in a candy store. There is a good chance that BOA will fail too after the Merril Lynch purchase! Bigger isn''t better in this market. I%u2019m going to put my money in a credit union or smaller local bank. They didn%u2019t treat mortgages like a pyramid scheme.

[slyt2]

Once again i am amazed!! The very people who
are responsible for the plight we are in are
called upon to " bail " us out. How in the
world do you justify buying a company on the
brink of bankruptcy for such a huge amount of
money to avoid negative publicity ? Is it reasonable to assume that the largest mortage holder
in the country had some clue as to what the
consequences of their actions would be. 60 minutes
should call these shysters what they are - crooks!
Now they have access to even more money to use
during their fleecing of honest American citizens.

[tannerbird]

When will the American people start getting there proffit sharing checks.

[paramountpro]

Who would have thought Wachovia would be on the brink of collapse? No One! Who would have thought that Merrill Lynch would go down in flames? No One! Who would have thought that BOA, with the help of the US government, would be the next bank to go fail? Stay tuned for this and things he found in his pocket with Andy Rooney.

[hdridermlb-2009]

I was disappointed that the real history of Bank of America was not correctly depicted in this piece.

[rileymmm]

Ms. Stahl, I found your condescending tone and attitude completely offensive during your interview with Mr. Lewis. As a recent transplant to Charlotte from Chicago, I believe both the native Charloteans and other transplants are a far cry from the "country bumpkins" as you have labeled our population. Why is it that everyone from New York believes that the rest of the world are nothing more than mentally inferior beings? Jill7771 has definitely hit the nail on the head. Sixty Minutes should apologize for the extremely poor way in which this interview was handled. For years, I have had great respect for your show, but after witnessing such an ignorantly handled piece, I''ll be rethinking the weight that I place on your words.

[mcv57]

I guess the U.S. Government has abandon Nazis/Bush Economics ... Karl Marxt enter.

i saw what i think was most of the interview, and what i came away with was this: ceo ken lewis/b of a comes across as well as anyone/any financial institution possible could in light of the economic and financial environment that exists today. lewis actually came across in this piece as a plain spoken, unpretentious, likable person. now, i know he''s filthy rich, but he came across not as some snooty, detached, incompetent, filth rich ceo. some execs, when they do the job lewis obviously has done at b of a, actually earn their rich compensation in this highly pressurized, competitive world of theirs. that interview left me with the desire, literally, to take all the money out of my wachovia acct and deposit it in b of a - tomorrow - seriously!

[paramountpro]

Regarding Lesley Stahl''s comment on Charlotte, and those who are offended by it. I think you missed her point. She was referrring to the stereotypes that many refer to when talking about the south. Charlotte is a great city and most people do know it..but still many do not and think it is Mayberry.

[hanh4]

Instead of congragulating Mr. Lewis of BofA, Ms. Stahl may have wanted to address customer satisfaction with him instead. Just because half of all American households (according to Mr. Lewis) have
some type of an account with BofA, does not mean that half is pleased with the way that BofA does business. Bank of America has been compared to loan sharks and has been accused of usury. Most customers that I know, myself included, would have rather borrowed money from the Mafia! While they may have chose not to deal in subprime mortgages, BofA has been very successful in raping their credit card customers with high interest rates, every fee imaginable and deceptive loan practices. Ms. Stahl''s warm and fuzzy interview with Mr. Lewis has left me wondering: does Bank of America own CBS?

[missingamerica]

Only the Republicans could get us into a position where whe must pay the leeches to keep sucking our blood.

[hanh4]

Instead of congratulating Mr.Lewis of BofA. Ms. Stahl may have wanted to ask him about customer satisfaction instead. Just because half of all American households have some type of an account with BofA, does not mean that they are happy with how they do business. Bank of America ahs been compared to loan sharks and accused of usury. Many Americans, myself included, would have rather borrowed money from the Mafia after doing business with BofA. While they may have chose not to get involved with subprime mortgages, they have raped their credit card customers with high imterest rates, fees and other deceptive lending practices. Ms. Stahl''s warm and fuzzy interview has left me with one question: does Bank of America own CBS?

[jill7771]

You think I missed Ms. Stahl''s point? Oh, I don''t think so. I read it loud and clear.
During her narative, she said that BOA was a banking power house located in "Charlotte, North Carolina?" and her tone was rather aloof.
Reflecting a stereotype? What is this, 1930?
That, and she referred to Charlotte as a "town." She should at least call "The Queen City" what it is.

[togotogo1]

B of A has bought many credit cards and my rate last year went up 6 times the rate before. They refused and were nasty about negotiating. That''s were their profit came from and why they will lose their good credit customers for the future. I paid off my 15k balance at 25% (GMAB) and will never do business with them again with any of my 5 mortgages or credit cards. I hope they continue to lose their profitability. Bad customer service will be their downfall. You can''t ride on the backs of your your 800+ credit score customers to make your huge profits. See ya!!!

[togotogo1]

60 MINUTES-check out B of A''s credit card practices---UNBELIEVABLE and a good story for you....

[katlady60]

I don''t care how many people B of A has as customers I will never be one of them. I don''t like the big boys I use either a credit union or a local bank. I get excellent customer service from my bank and I don''t have much in my account. Last year I walked into the B of A just where I was doing a craft show and asked them to change three $20''s to fives and ones. I was asked if I had an account there and of course I don''t. I explained I was at the craft show and couldn''t get my car out to go to my bank but I just needed change and the teller said no if I''m not their customer no change. This is a small town about 90,000 people and to treat people like that in that situation was on called for. I wouldn''t with them if they were the only bank in town.

[rcgreene1]

Agree with all points made. It was as if Leslie Stahl was interviewing a visiting king. BofA has become a monopoly so large that, like WalMart, can now control markets. That Mr. Lewis might be a benign dictator is not the point; the structure that will outlast him grants inappropriate power to a single corporate entity.

And the Red Herring debate on Socialism vs Capitalism obscures the issue. Socialism is a political philosophy, not an economic system, and there have been socialist countries in Europe that have practiced capitalism successfully without injuring the citizenry. But the message I hear from Mr. Lewis is that corporate America, with the government''s help will come back strong -- but without any real increase in concern or structural support for small business and for the working class. And they smiled so much over it all...

[hanh4]

60 minutes - please have Mr. Lewis of BofA on again and be sure to invite some of us who have posted on this site, so that we can ask him to explain: BofA''s predatory and deceptive lending practices,changing interest rates for reason dujour, fees that lead to more fees, non-descript envelopes that contain info notifying customers of "change in terms," but look like junk mail, and my favorite; holding deposits, especially payroll checks drawn on BofA!

[barbaraf4]

"The largest of the banks is Bank of America (B of A) - now partly owned by the United States of America"
~~~~~~~~~
I would feel more comfortable about the bailout if the above quote said: "owned by the CITIZENS of the United States of America"

[rgk92649]

Regarding your "pride" in Charlotte. Wake up dummy, Banks and Insurance companies are settling into Charlotte North Carolina because your State''s legislature has permitted mortgage and credit card usuary and worthless insurance policies to become "legal." The United States Supreme Court is responsible for allowing your State''s soullessness to be exported in interstate commerce. Still, what would one expect from a state whose prior major industry was big tobacco? Yeah, be real proud of Charlotte.

[kevin23235]

I am a disabled Veteran and a long-time customer of Bank of America. After seeing this interview and how just how evil and greedy Mr. Lewis is, tommorrow morning I''m taking my business elsewhere!

[mikec4prez]

Hey, has anyone heard about the new president nominee! Michael Douglas Carlin has set his mind to be kind and create world peace. With his book "A Prescription For Peace", he has great ideas of saving the environment from another great depression. If you want more information about how Michael Douglas Carlin will save our world, go to www.mikecarlinforpresident.info.

[rgk92649]

I find it interesting that my prior comments have been removed because they are critical of Bank of America. It''s downright Orwellian.

[rgk92649]

This is the weakest segment I have ever seen on 60-minutes.

[rgk92649]

Lesley Stahl failed to discuss H.R. 5244, The Credit Card Users Bill of Rights with Ken Lewis.

[swiftcreek1]

to Barbaraf4: It wouldn''t matter. You can call a pitbull a poodle and guess what? When it''s chewing on your leg it''s still a pitbull. The truth is that the banks now belong to the government, AIG belongs to the government. (Which give them a very convenient avenue to force nationalized healthcare down our throats) You think you own that house and property? Nope, it belongs to the government you just rent it. You have the right to transfer the rental agreement to someone else and profit from improvements done to the property, but you own nothing. (Try not paying your property taxes and you will find this out very quickly) Read imminent domain law an you will find out many other ways that they can evict you from that "rental" property with or without just compensation.

We may elect the dimwits we send to Washington, but we have no real power as constituents anymore. We''ve given that up by allowing the courts and elected representatives to completely undermine the values of our Constitution. This nation has allowed it government to become "of, by and for the elected and their special interests" It stopped being a government "of, by, and for the PEOPLE" LONG AGO. The slope just started getting steeper with LBJ.

[paramountpro]

Get a life Jill. You''re reading way too much into something that is not there!

[federalist11]

Lesley Stahl failed to and CBS allowed her ti fool the viewers of America when she said that the Federal Reserve is bailing out the banks. Then went on to imply that the "Federal Reserve" is one and the same, a part of the US Government. This misleading reporting is wrong and the public has a right to know the truth. It''s a wonder Americans aren''t rioting in the streets.
Not including the $700 billion blank check issued to the banks and signed by the US taxpayer, the sum of liabilities assumed by the US government from the finance industry in the past 6 months alone exceeds 50% of the GDP.

Recognize this all-but-forgotten quote?
"The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
%u2014 Thomas Jefferson, Founding Father, Third President of the United States, and the principal author of the US Declaration of Independence

[blunderbuss]

Bank of America (and many other banks) gave many "liar''s loans" to illegal aliens... this "sellout of America" is the root cause of the housing crisis.

[aspirinpleaz]

Let me get this straight. As I understand it, according to the Stahl interview with CEO Ken Lewis of Bank of America, Treasury Secretary Paulson has just perpetrated the Greatest Shell Game of the Century on the USA. Apparently, nine of the largest banks in the country were just distributed a total of $125 billion, whether in financial trouble or not, to avoid "Stigmatizing" any one of them! To add insult to injury, Paulson allowed himself to be bullied when he tried, but failed, to establish limits on executive pay as a condition of the bailout financing. What a winner Paulson is! First he calls in nine bank executives, insists they each take money whether they need it or not, then fails to close the deal of setting salary conditions. He just let''s these hired thugs take the money and run. Have I got this right?

[rgk92649]

Bank of America granted low interest credit to millions. Then they raised interest rates to enslave them. Bank of America periodically "holds" deposits without any rhyme or reason. They do so to interfere with their customer''s liquidity. It''s very profitable for them because they can generate overdraft fees. Bank of America pays for all of their property plant and equipment, as well as all of their employee''s salaries with the revenues that they generate from fees alone. (Refer to their publically available income statements.)

Lesley Stahl almost made one good point when she mentioned that the credit card crisis is about to hit. Bank of America was one of the biggest offenders in that market. Essentially, everything H.R. 5244 is now trying to reverse, was invented by Bank of America, including the Universal Default clause and anytime any reason interest rate increases. Ken Lewis must have one terrific P.R. firm to get 60-minutes to do this interview and let Ken Lewis get away without answering for his company''s many sins. It''s no wonder that he wasn''t able to recognize the inherent evil in Countrywide''s business practices, Bank of America''s are just as short-sighted.

Fire Lesley Stahl''s producers, either CBS owes Bank of America money too or someone on this story was a sell outs.

[Michael Arnold]

Criminals leading criminals.

The only way to fight them is to not buy anything you don''t need. The dollar is the only vote we have.

[cheetah-man7]

I have zero respect for Bank of America. They are the worst kind of banking scum.

[tapsettle]

"Under New Ownership: Bank Of America"

yeah, but it''s only temporary .. like a custodian role until the real owners (China) take full control very soon.

[tapsettle]

LMMFAO!!! get ready America for your new burkas
-----
Posted by pelosilover

If they can put up with arse-holes like you they can put up with anything.

[eat-the-rich]

Do you expect us to believe that these bankers made a deal for an ownership stake, took billions each, and left the room thinking things like "gee what I think he must have meant was...." BULL. There was a closed door deal alright - this was not it. You''ve been snowed CBS.

And now that we have just given all this money to them, who owns a stake in who? America will get that money back - as bribes, payoffs, and campaign contributions. Lucky us.

[lewiston14]

I have zero respect for Bank of America. They are the worst kind of banking scum. posted by Cheetah-Man7 at 01:04 AM : Oct 20, 2008

I don%u2019t agree CHASE has the franchise on that Froze my mothers bank account that only had SSI money. It took a month but we got it back. I hope they are really ticked off when they check again and find out they spent hundreds to trap $0.00


The only way to fight them is to not buy anything you don''''t need. The dollar is the only vote we have.

No stop paying for everything except gas electric phone etc. Draw your money out because its not doing you any good there maybe 1 or 2 percent. If you want to stop the bleeding stop giving the patient infusions.

[grandesign]

raemyles,

Please GO AWAY!

[truthspeake2]

Not too worry - goat lover bahbahbahbahbama will fix everything with all his "new" campaign contributions - the citizens of America are broke, yet they afford to give oshama an average of $86!

LMMFAO!!! get ready America for your new burkas

Posted by pelosilover at 01:51 AM : Oct 20, 2008


LOL....what it speaks to is how much we hate the GOP and its supporters and where you hate and war mongering morons have taken this country but hey, when its all over, you guys can take up a collection for McSame and McPalin to take a lesson in Campaign Politics 101. How''s that Trickle Down working...

[slim1h2o]

The total was $125 billion of taxpayers'' money. Bank of America, Lewis says, didn%u2019t need the money %u2026 but got $25 billion anyway.


Gee, I need some of my SS money. Hey feds, ya think you can send me some of what you owe me now?

After all, you''re willing to give 25 billion to a bank that don''t need it......

[wizard-13]

How are the Banks planning on paying us back? Did we buy stocks in the company so when they become profitable again we get the revenue? Or was it a gift? The Goverment shuold freeze all the assets of all the management of these banks until they become profitable again. We suffer you suffer. Welcome to America. The best country money can buy.

[walt1944-2009]

It has been learned that the Bank of America already has plans for the $25 Billion which the Great Emperor Bush and his stupid Treasury Secretary, Henry Paulson, insisted the Bank take anyway, even though it didn''t need it.

First, the upper managers of the bank will each get a hefty bonus and raise compliments of the American taxpayer!

Next, the upper managerment of the bank will have a series of weekend "seminars" at exclusive resorts rivaling the "outings" that the upper management of AIG has had over the past several weeks, again at taxpayer expense!

Finally, the bank will raise fees and interest rates on ALL their customers, simply because all the other banks will be doing it, and it will make their financial statements look that much better!

AIN''T REPUBLICAN CAPITALISM WONDERFUL?????

SIG HEIL, MIDDLE CLASS? WHAT MIDDLE CLASS???, BUSH!!!
sig heil, I''M IN A RUT WITH JOE, THE PLUMBER!!!, McBush!!!
sig heil, I THINK I DID GOOD ON SNL!!!, Palin!!!

[soubie1]

The past past few weeks all I have heard was how credit is freezing up. This Saturday, I was going through my junk mail and came across a solicitation from Bank America offering an unsecured loan for $50,000.00. Imagine my shock when I realized it was addressed to my 17 year old daughter. I have to believe that had she completed this application she would not have been approved, but is this what Bank America is teaching our children/young adults? Has the banking industry learned nothing?

But after watching this segment, I guess Bank of America received so much unwanted money from the government, that they have to spend it somewhere. I would prefer the BOA executives go pheasant shooting with the AIG people.

[credibility2]

These newly fashioned behemoth banks aren''t good for the overall economy since they reduce competition, reasonable trade and consumer options and tend to encourage price fixing through market domination. Pretty soon, there will be only one entity that owns the entire world. Just kidding, but it''s looking like that more and more.

[txgrouch2007]

AIN''''T REPUBLICAN CAPITALISM WONDERFUL?????
Posted by walt1944 at 09:41 AM : Oct 20, 2008

Is Barney "Affordable Housing" Frank a Republican?

[h5mind]

The simple and inescapable reason for our current financial meltdown is the fact that the world market has come to realize what our banks have known for years-- that an economy based on the creation of debt--not wealth-- is doomed to fail. Banks, governments, and nations go bankrupt for the same reason as individuals-- they spend money they don''t have on things they don''t need. $150 billion in pork tied to an equally worthless ''bailout''. Billions to support pre-emptive wars around the globe. Billions more to curtail liberty, destroy sovereignty (state and personal)and undermine the constitution here at home in the pursuit of "a little security". How many bald-faced lies do these hyenas have to tell before we realize they are not to be trusted with our wallets, our economy, and certainly not our safety?