I’ve long been critical of Ken Lewis. For being known as a merger wizard he sure has made some big mistakes. The Countrywide buyout has to be one of the most fantastic fumbles in M&A history. Buying up billions of level 3 assets, at the beginning of the credit crisis, from the nation’s largest mortgage underwriter was astronomically stupid. But even after the deal went through B of A’s balance sheet was relatively strong in comparison to its competitors. They had 20% less level 2 assets than Citi and JP Morgan, half the level 3 assets that JP Morgan had and 20% of the exposure that Citi had. Angelo, the slick New York salesman, hadn’t necessarily gotten the best of the old country boy.
But then John Thain came flying in from NY with his big city smarts and his Goldman Sachs background and took the old country boy for a spin on the weekend of September 14th. Without even performing a proper audit Ken Lewis agreed to purchase Merrill Lynch – widely known as perhaps the most toxic asset on Wall Street. And he agreed to buy them out at an unbelievable premium of $29.
He didn’t just buy one insolvent firm at a huge premium. No, this wizard of the merger came back for more with the Merrill deal.
In my opinion, these were terribly flawed deals that were approved by a CEO who hastily jumped into them. He could have easily taken a page out of the Jamie Dimon playbook and actually waited for the firms to go under before jumping in with both feet. But he was convinced by life long salesman that both firms were great buys.
Ken Lewis has ruined the Bank of AMERICA. And for that he should be tarred, feathered and sent far far away from anymore of these sly New Yorkers….