Posted on 01/16/2009 7:32:51 AM PST by rabscuttle385
BY DAN FITZPATRICK
Bank of America Corp. Chief Executive Kenneth Lewis on Friday rejected the suggestion that he and his team did not conduct enough due diligence before agreeing to buy securities firm Merrill Lynch & Co., saying forecasts did not suggest Merrill's assets would drop so suddenly in value.
"We did not expect the significant deterioration in mid to late December that we saw," he said on a conference call with analysts.
The fourth-quarter decline at Merrill led to an agreement announced Friday giving Bank of America $20 billion in additional U.S. aid and a government guarantee to backstop future losses on a $118 billion portfolio of toxic investments, 75% of which were inherited from Merrill and the rest already owned by Bank of America.
The Charlotte, N.C. lender also announced a $1.79 billion fourth quarter loss, compared with year-earlier net income of $268 million.
Mr. Lewis said Bank of America decided not to walk away from its agreement to purchase Merrill, which closed Jan. 1, because of assurances from the U.S. Treasury and Federal Reserve about government assistance and "we just thought it was in the best interest of our company and our shareholders and the country to move forward."
(Excerpt) Read more at online.wsj.com ...
Also, we could claim that we are too big to fail, which of course we are, and that way we could screw the taxpayers and pay ourselves some great salaries and bonuses. Is this a great country or what?
That would be the "did not conduct enough due dilligence" part. Everybody who's been calling this right for the past three years knew Merrill was holding a big portolio of crap.
That would be the "did not conduct enough due dilligence" part. Everybody who's been calling this right for the past three years knew Merrill was holding a big portolio of crap.
>> Ken Lewis is an idiot.
I’ll add the adjective “egotistical”.
Nevertheless, BofA will be one of the last two or three standing.
How much do you think they’ll cut the dividend this quarter?
Answered my own question...
>> Bank of America, meanwhile, slashed its dividend to a nominal 1 cent a share
Sucks to be a shareholder. Glad I sold all of mine at a profit back in Oct.
He paid some firm $20 million dollars to do a review of the transaction with only ONE WEEKEND to do the research! Another banking CEO who will golden parachute to safety after dragging the economy down with his stupidity.
To be fair, he was being pressured by the Feds to take on ML quickly, before it could collapse.
Sometimes you gotta just do the right thing, not what some bureaucrat (who would be out of a job by January 20th, anyway) wants. And if you were just going to do it anyway, why piddle away $20 million on a bogus piece of paper to cover your hiney?
Aggressive, yes. An idiot--probably not.
He basically asked the government if they wanted to support Merrill all by themselves or through Bank America, which would partially take the hit in the interest of a shot at long term profits. Uncle Sam went for Option B, because they thought a vaporized Merrill would have the more costly repercussions supporting it as an intact division of Bank America. We'll see.
You are still a shareholder. Taxpayers are the single largest owner.
>> You are still a shareholder. Taxpayers are the single largest owner.
Thanks for reminding me.
All the costs and drawbacks of ownership, plus none of the benefits.
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