April 30, 2009

BANK OF AMERICA’S SHAREHOLDERS vote for change! “After months of anger at Bank of America (BAC) chairman and CEO Ken Lewis, shareholders voted to fire him as board chairman yesterday at the company’s annual meeting in Charlotte. Lewis had a terrible year in 2008, as did everyone in the banking industry, but he had the added baggage of having withheld material adverse information from his shareholders about the forced merger of BAC with Merrill Lynch late last year. . . . Ken Lewis’s shareholders have now taken their revenge for what Paulson forced him to do. (They’re within their rights, of course, and I’m not arguing any differently.) The SEC now has to decide whether to bring enforcement action against Lewis and the BAC board. That would be a distinct injustice, unless they also choose to go after Paulson (not bloody likely). . . . One hundred days ago, we entered a new era, in which heavy government intervention in American industry is considered normal, rather than for emergencies only. And so far, the signs are that both Congress and the Administration are entirely willing to intervene heavily and unilaterally, not only in governance decisions but even in management decisions.”

Plus, from Megan McArdle: “Right now, Ken Lewis remains CEO–the board expressed unanimous support. But at this point, it seems likely that it’s only a matter of time. (If it isn’t, it will become a famous business school case on the Principal-Agent problem.)”

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