Despite President Obama’s and The Charlotte Observer’s best efforts, Ken Lewis lives on as the CEO of a non-nationalized bank that alchemized force-fed Merrill Lynch granite into gold.
Admittedly though, his testimony before a Congressional committee on Thursday was not Lewis’ finest hour. In fact, Rep. Jeff Flake, a Republican from Arizona, compared Lewis’ testimony to a case of Stockholm syndrome:
“You’re still regulated, and it seems like you still identify with your captors, with your regulators,” Flake said, as others laughed. “We’d like to have a candid answer here. I don’t know if you can wiggle your pinkie finger or something.”
But given the smoking gun Fed Chief Ben Bernanke had held to Ken’s head in December, that was revealed by the House of Representatives on Wednesday, the incredible success of Bank of America Corporation (BAC) since the Merrill Lynch deal despite assaults from the Obama Administration and the continuing regulatory circumstances, the behavior of the Chief Operating Officer of the nation’s second largest bank is understandable and excused.
The smoking gun is proof in the form of internal documents and memos that Ben Bernanke’s Federal reserve threatened Ken Lewis and BAC with retaliatory action if they backed out of last Fall’s deal to buy Merrill Lynch and revealed Merrill’s newly discovered losses.
Ben Bernanke had previously denied the threats in sworn testimony before Congress earlier this year, albeit in a Clintonian, what are meaning of “I” and “we” kind of way, as it appears the most explicit threat came from his Richmond, Va. bank surrogate. Thankfully, Elijah Cummings (D-MD) understands that when the Fed Chief says “I” and “we” when speaking in his official capacity, he speaks for the mob he leads, eh ah, I mean the whole Federal Reserve Board.
Speaking of mobs though, remember that the object of Bernanke’s threat has also been the target of Chicago South-Sider, President Barack Hussein Obama, who threatened to remove himself from between Ken Lewis and the pitchforks when Lewis had the temerity to stand up to the regulators trying to force nationalization of his bank earlier this Spring. This is also the same Lewis that has survived a Drive-by media, led by his hometown dead tree Disturber’s vendetta, attempt to have him removed as BAC’s leader.
Ken Lewis has survived all of the assaults, including the recent “stress tests”, in such good shape that it has raised private funds in the billions to remove the threat of nationalization.
Bank of America, along with other banks and financial institutions, have been unfairly demonized since last year’s credit crisis as greedy, overpaid speculators that caused the housing crash. This demonization has rested on two myths:
1) Greedy Bankers Foisted Sub-Prime Loans on the Poor. Oh no they didn’t. It was government. You see, liberal politicians and activists were convinced that banks were unjustly denying loans to minorities and low-income borrowers. They even had studies to show that minorities were discriminated against. The solution? Force. Liberals would force the banks to loan money to less-qualified borrowers.
Various community activists across the country have been able to pressure banks into making concessions in money or in kind, in order to get those activists to withdraw their objections to pending mergers or to banks opening new branches in another state, for example.
2) Lack of Regulation Caused the Crisis. Actually the regulators were part of the problem. With the politicians cheering them on, the regulators were all over the banks forcing them to lower their lending standards. And when the regulators finally did try to restrain the banks, the politicians reined them in.
A timeline reveals Ken Lewis’ masterful job in saving BAC:
- The credit crisis/housing crash of last fall precipitates deepening recession and stock market crash
- Bank of America (and other large banks), at the behest of then Treasury Secretary Henry Paulson and Bernanke, is forced to accept TARP funds, and the attendant influence and control attendant thereto, which causes BAC stock to decline
- BAC agrees to buy troubled Wall Street firm Merrill Lynch (and Countrywide Mortgage Co.) but then learns of greater losses than previously revealed before the deal is consummated. BAC threatned to reveal the loses to stockholders and seek another vote on the deal but agrees to go forward under threat from the Fed due to the “need for stability in the nation’s financial system”
- Merrill losses are revealed after the deal with BAC is consummated, causing Bac’s stock to plummet to near $3.00
- Lewis buys large number of shares of BAC with personal funds
- Obama Administration claims BAC and other banks are “insolvent” (despite the fact that BAC’s revenues exceeed liabilities and it always pays its bills); appears to desire nationalization; thus prompting BAC and other banks to offer to pay back TARP funds early
- President Obama rebuffs offers for early TARP paybacks with “pitchfork” threat
- BAC, against all odds, posts large profit for first quarter, with the acquisitions of Merrill and Countrywide leading the way via their customer bases
- Lewis wins re-election as CEO, loses re-election as Board Chairman, and remains in control of BAC operations and policy
- Bernanke urges Treasury Secretary Timothy Geithner to subject banks to “stress tests”
- BAC survives stress test and easily raises private investment funds to cover new capitalization requirements
Given that Lewis has excelled despite the threats and pressure of government regulators that still plague him, it is quite understandable he would be equivocal in retrospect about the the previous threats.
The bottom line that emerges is that there may not be a circumstance under which Ken Lewis can’t make money and his business not prosper.
BAC stockclosed yesterday at $13.62, up over 300% since its ObamaDemPaulsonBernanke low.
“One man with courage makes a majority.” – Andrew Jackson
Originally published @ Examiner.com, where all verification links may be accessed.