"Roach Motels: When CEOs Don't Read Their Own Reports

A few days ago, I posted a book review about a recent work by Anne-Marie Fink, an analyst at J.P. Morgan Asset and Wealth Management. Her book "The Money Makers, How Extraordinary Managers Win in a World Turned Upside Down," (310 pages, Crown Business books), makes a number of useful points, but one of them seems to be standing out.It has to do with what Fink calls "roach motels" or the "cockroach" theory that if you see one bad bit of information about your company or someone else's it's likely there's lots more. That is, of course, if you actually ackowledge that you see it.

One of her examples is that of Enron where CEO Ken Lay had been warned aplenty about the funny deals his CFO was getting into that led to the implosion of the firm, Sarbanes-Oxley and nearly a decade of teeth gnashing in C-Suites everywhere.

This, indeed, is a huge problem and it still happens. One more recent example is Bank of America, which is eating crow after swallowing the rotting carrion of Merrill Lynch.
If only top execs such as BofA chief Kenneth Lewis had heeded their own people, says The Wall Street Journal. Last year, BofA's top North America chief economist David Rosenberg was accurately identifying the housing bubble and the danger of excessive mortgage loans.

Nonetheless, Merrill Lynch kept on piling on toxic mortgage debt that led to its downfall. Lewis should have had a good understanding of the problem when he went through a marathon negotiation over a September weekend during which he agreed to takeover Merrill Lynch.

In December, when the deal was closing, he was bitten in the you-know-where when Merrill was reporting losses of $15 plus billion for the last quarter because of such bad debt.

If only Lewis had written his own economist's report.