Ken Lewis has surprised — in a way. A couple weeks ago we told you that Lewis would have to choose between former Merrill Lynch CEO John Thain and the rest of ML. Little did we know that events would accelerate to the point where Lewis was forced to choose between his Goldman Sachs lifeline and the entire rest of BofA. But several things happened.
One, Lewis used the GS connection to wrangle another $20b. out of the feds, reducing Thain’s future utility. Two, the entire financial sector came under renewed assault on Wall St., demanding that Lewis make a move — any move — to change the momentum. He made two. His big BofA stock purchase, essentially a gimmick, but a valid gimmick during panic selling, was one. The second was axing Thain, who had to know his days were numbered, but who probably thought he’d get to leave of his own volition after a few more weeks. With these bold strokes Lewis has temporarily reduced pressure on his own job and slightly redirected matters to Thain’s control of ML in the closing days before the merger.
The risk, however, is that the flux accelerates outflows from ML as investors flee from the bloodshed. But Lewis still has moves to make. A powerful one would be to assume the mantle of crusading knight against the excesses of Wall St. and the feds by demanding that steps be taken to reform the credit default swap scam, which continues to negate the effects of X billions the feds pour into the banking system. This would do little to fix his Countrywide mortgage portfolio problem, but it has the virtue of needing to be done and continues to keep the focus elsewhere.
In other words, the Uptown crowd should climb off the ledges, Lewis is out there swinging.
