Bank of America CEO Lewis Steps Down

(AP)  Updated at 7:14 p.m. EASTERN
Ken Lewis, the embattled CEO of Bank of America Corp., is leaving the company, succumbing to nearly a year of strife that followed his company's acquisition of Merrill Lynch & Co.

The bank said in a statement late Wednesday that Lewis, 62, would retire as CEO and also leave the company's board by the end of the year. The company said his successor will be selected by the time he steps down Dec. 31.

The news, coming after shareholders had stripped Lewis of his chairman's title earlier this year, wasn't surprising because of the heavy pressure he came under after the Merrill deal. Lewis had said he would stay on as CEO until after the company's financial problems were resolved, a process expected to take several years.

However, with the bank also under heavy criticism from government officials, Lewis was increasingly seen as vulnerable.

"He's had a big target on his chest for the whole Merrill Lynch deal, and I can only imagine the emotional stress he's endured" said Alan Villalon, senior research analyst at Minneapolis-based First American Funds, which owns Bank of America stock.

The deal was first questioned after it was learned that Merrill Lynch's losses were far more than expected, and Bank of America asked for and an additional $20 billion from the government, in part to offset those losses. The brokerage lost $15 billion in the fourth quarter and more than $27 billion for the year.

But Lewis came under even greater attack when it was learned the investment bank with the knowledge of Bank of America executives gave billions of dollars in bonuses to employees even as it asked for more bailout money from the government. The deal was forged a year ago at the height of the financial crisis and closed Jan. 1; the bonuses, which would normally have been paid in January, were moved up and paid out in December.

New York Attorney General Andrew Cuomo this month subpoenaed five members of Bank of America's board as part of an investigation into the Merrill deal.

Bank of America had settled a separate investigation last month into disclosures about the Merrill bonuses with the Securities and Exchange Commission, but a federal judge threw out that $33 million settlement, saying it was unfair and needlessly penalized the bank's shareholders. The judge ordered the case to go to trial Feb. 1.

The announcement raised the question of whether the government, which has been leaning on the company to revamp its board and its operations, sought Lewis' departure. Treasury spokesman Andrew Williams said the Treasury would have no comment.

A Bank of America spokesman didn't immediately respond to a request for comment.

Shares of Bank of America rose 23 cents to $17.15 in after-hours trading, after falling 24 cents to end the regular session at $16.92.

Investors may have some concerns over the lack of an immediate successor, but those will likely be temporary, Villalon said.

"They probably won't operate long without a CEO," he said. "If somebody comes from the outside, or even internally, it gives a set of fresh eyes."

Others said the bank would likely be pressed to quickly name Lewis' replacement.

"You can't leave a $3 trillion company in jeopardy without knowing who the CEO is until December," said Tony Plath, a finance professor at the University of North Carolina at Charlotte.

Lewis, who was appointed CEO in 2001, was already dealing with a barrage of criticism before the company's annual meeting on April 29, but he and other bank executives were nonetheless stunned when shareholders voted to separate the jobs of chairman and CEO. The questions of how long Lewis would be able to hold on to his job began in earnest that day.

Lewis had said he wanted to remain CEO until the government loan was repaid and Bank of America turns around its operations after the end of the recession. But that could have been years, as the company and other banks have warned that they would continue to suffer loan losses because so many consumers are strapped for cash or unemployed.

"Ken has been pummeled by the institutional investors, he's been pummeled by the government, he's been criticized by his new board. It's coming at him from all directions," Plath said. "There's no way he can continue in his role as CEO."

[bubbadubba]

I think his bonus and golden parachute will be around 300 million dollars.
Yea, that sounds about right.

[cbsblogger]

Are you saying this poor man will be jobless?

Every CEO should have their bonus compensation withheld for at least 5 years. The lag time would determine if their decisions were profitable in the long term to shareholders.

[tmittelstaed]

I sure hope that the shareholders do NOT permit the new CEO to be both CEO and Chairman of the Board. Having one person be both those roles is a huge problem with corporate governance. The Chairman needs to be looking out for the interests of the stockholders and divorced from daily operations. The CEO needs to be involved in daily operations, and needs someone looking over his shoulder to keep him honest. That's the Chair.

When the same person does both things, it effectively locks the shareholders out of control of the company. These fools in BofA pretend surprise that the stockholders voted to split the roles, but they know da mn well the roles should never have been combined in the first place.

[hungry1968-16]

He shouldn't be "stepping down".

He should have been tarred, feathered, and put in a public stockade for several months.

[hungry1968-16]

by rhs648 September 30, 2009 9:16 PM EDT
Just another example of rewarding incompetence, sub-par performance, and failure. This is like giving "A's" to "C" students. It could have been avoided if the government had established rules before handing out the money. It is partly President Bush's fault and partly President Obama's fault and congress also is at fault. Now let us give the government control over our health care and watch the mess they make of it.






It's partly President Obama's fault?

And you say that because this whole mess went down MONTHS before he was sworn in?

I don't know why you oppose Obama, but you look foolish 75% of the time that you post, because your claims are just absurd and without merit.

[rhs648]

hungry1968-16 - Are you describing my comments or your comments? That is how I feel about some of your comments. Since when is everyone wrong if they don't agree with you? It is obvious we don't share the same views. My comments are generally presented in a way that doesn't insult other posters. You tend to attack posters whose views are different from yours. Lets keep things civil without personal attacks.

[stuart-johns1]

I think judging by the lack of comments here and by the amount of time this thread has ran, America is getting toired of this whole financial deal. It is disgusting greed at the average man's toil and expense.

[timdgrim]

by stuart-johns1 September 30, 2009 6:05 PM EDT
China is not going to be selling any cars in the USA for some time, if ever. I don't know where you get that from, maybe deep in your head somewhere, but anyway, you're wrong.
___________________________________________________

Hey Dillweed stuart-johns1 A$$...you better check you little brain, I have facts...you're a Dillweed!!! that's also a fact! Read Dillweed!
Jan. 14 (Bloomberg) -- China's BYD Co., the world's biggest maker of mobile-phone batteries, plans to sell hybrid cars in the U.S. as soon as 2010, using its technology to expand into the market for energy-efficient vehicles.

``We are the best in battery technologies, and I am sure we will be the best in the automobile industry as well,'' founder and Chairman Wang Chuanfu said in an interview at the North American International Auto Show in Detroit today. ``Electricity will replace gasoline,'' he added.

[timdgrim]

This proves you're a Dillweed!

[rhs648]

Just another example of rewarding incompetence, sub-par performance, and failure. This is like giving "A's" to "C" students. It could have been avoided if the government had established rules before handing out the money. It is partly President Bush's fault and partly President Obama's fault and congress also is at fault. Now let us give the government control over our health care and watch the mess they make of it.

[tmittelstaed]

Explain how it was partly Obama's fault, spin doctor. Obama had nothing whatsoever to do with TARP.

[rhs648]

tmittelstaed - You are correct. This happened before President Obama took office. My mistake. Thank you for correcting me. Next time, please leave out the spin doctor reference.

[stn_sage]

Here's another business insider that needs to be investigated, tried, and imprisoned. In my opinion, that is!

[brianbwb-2009]

"He's had a big target on his chest for the whole Merrill Lynch deal, and I can only imagine the emotional stress he's endured" said Alan Villalon,..."

You can only imagine it, because any stress is imaginary.

This crook never missed a steak dinner, and likely never will, there is no stress in his life.

Maybe he should contract an illness that eats his entire fortune, and then spend the rest of his life homeless, as well as unemployed, then we can talk about stress.

[pw08-2009]

Oh, no! Now the stockholders have to worry about what kind of settlement package will he get and you know it will be excessive. What a fraud.

[tmittelstaed]

The real problem was the "too big to fail" Republican reasoning. If the Republicans had put their money where their professed beliefs are, there would have been no TARP, and BoFA would have gone into bankruptcy - and once in bankruptcy the trustee has legal authority to void out those bonuses.

But of course, that would have screwed all the friends of the Republican party over, thus they allowed those people to plunder the public till.

BofA may pay back the TARP but since the government had to come up with the TARP money by deficit spending, it essentially is borrowing the money to pay TARP - and there's an interest cost to borrowing that money. If you think the banks are going to pay for that your nuts.