Why Bank of America’s Ken Lewis Is Quitting | Newsweek Voices - Daniel Gross

The real reason the Bank of America CEO suddenly quit.

Oct 1, 2009 | Updated: 3:00 p.m. ET Oct 1, 2009

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People around Bank of America should have known something was up when its beleaguered CEO, Kenneth Lewis, returned from his August vacation with a beard. For a Southern, buttoned-down banker like Lewis, growing a beard in Aspen is the equivalent of a full-on existential crisis. And so the announcement of his retirement on Wednesday wasn't such a big surprise. (Here's the farewell memo.)

Analysts may cite several reasons for the seemingly abrupt end to the career of a self-made, homespun banker: the mid-crisis acquisition of Countrywide Financial, big credit losses at the bank's core operations, and the hornet's nest of troubles the bank acquired when it purchased Merrill Lynch last fall. To these, I'd add another reason for Lewis's downfall. He wanted—no, needed—to make it big in New York.

In America, there's banking—taking deposits, making loans to homeowners, small businesses, and large regional companies, and serving on local boards. And then there's Banking—lending to hedge funds, investment banking, structured finance, and serving on the boards of famous cultural institutions. You can be a very successful and large banker in Charlotte, N.C., which is where Lewis's Bank of America prospered. But you can't be a Banker unless you're in New York. It's one thing to be the chef at the best French restaurant in Chicago. But the rewards—psychic, cultural, social, emotional—are much greater if you run the top French restaurants in Paris.

For Lewis, getting into investment banking was the equivalent of seeking to open up a bistro in Paris. But unlike some of his CEO colleagues, such as JPMorgan ChaseCEO Jamie Dimon, he wasn't born into the brokerage business. Born in Meridian, Miss., and a graduate of Georgia State University, Lewis lacked the social and cultural connections that frequently smooth the way for Wall Street careers. Lewis didn't summer in the Hamptons, or stroll over to Temple Emanu-El for Kol Nidre, or pop up to Allston for HBS reunions.

And so Lewis and Bank of America had to buy their way into Wall Street. Under Lewis's leadership, Bank of America spent a lot of time and money trying to build up a presence in New York, hiring bankers and erecting a tower near Bryant Park. But Bank of America couldn't push its way into the top tier. And a year before the world fell apart, Lewis began to think better of his attempt to make it here. "I never say never, but I've had all the fun I can stand in investment banking at the moment," he said in the fall of 2007.

A year later, he was back. As Merrill Lynch choked on losses tied to mortgage, Lewis saw a chance to buy the nation's largest brigade of stock brokers and gain control of an iconic investment banking franchise. At the press conference announcing the deal, I asked Lewis what made him think this foray into investment banking would be more fun than the last one. Lewis crowed about Merrill's quality and headed off quickly to be interviewed by Maria Bartiromo of CNBC.

I have long suspected that most of the shennanigans in the high-flying financial sector, purportedly in pursuit of "profits", are at some level nothing more than a demonstration of pathologically overblown EGO. Money, for the sake of money itself, is only of value for what it will buy... and once an individual has millions of dollars, much less HUNDREDS of millions, there is very little that he can't already buy. Anyone at that level of financial security who is STILL driven to amass more is responding to something other than the desire for material things.

Perhaps there SHOULD be an upper limit to how much wealth any one individual can call his own. I am astonished to find myself even thinking such a thing, but there it is. America was founded on notions of human equality that are at odds with the vast fortunes some have accumulated (often, perhaps always, in part by exploitation of the political system, and frequently by some measure of fraud and deceit). Nevertheless they will pass vast wealth on to heirs who did nothing to earn a penny of it, but who will be among the wealthy, elite "powers-that-be" in every subsequent generation, served by armies of "ordinary" people who are just as securely locked into relative poverty and lower social class by lack of opportunity, as the scions of the wealthy are assured of elevated social and financial standing by opportunities they personally did little or nothing to earn.

So much for the abolition of inherited nobility, and the classless civil society, that the Founders may have thought they had established.

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Posted By: techie22 @ 10/16/2009 5:43:14 PM

Bank of America has had some of the most rapacious policies of any bank I've dealt with.
After paying them loan shark rates for the past 5 years, they started making automatic
payments before the due date and really screwed up my bank account. They are evil and
I will never own another BoA product as long as I live !
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Posted By: Jeffrey7500 @ 10/02/2009 2:55:00 AM

I have never, ever dealt with a company as evil, vile, greedy, and arrogant as Bank of America. It will be a great day when I get my Bank of America Visa card paid off and I never have to deal with this rotten company again. People like Ken Lewis are the reason that there is going to be a judgement day and I hope he gets what he deserves. I wouldn't care if Congress literally legislated Bank of America off the face of the earth.
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Posted By: Iconoblaster @ 10/01/2009 4:43:50 PM

I have long suspected that most of the shennanigans in the high-flying financial sector, purportedly in pursuit of "profits", are at some level nothing more than a demonstration of pathologically overblown EGO. Money, for the sake of money itself, is only of value for what it will buy... and once an individual has millions of dollars, much less HUNDREDS of millions, there is very little that he can't already buy. Anyone at that level of financial security who is STILL driven to amass more is responding to something other than the desire for material things.

Perhaps there SHOULD be an upper limit to how much wealth any one individual can call his own. I am astonished to find myself even thinking such a thing, but there it is. America was founded on notions of human equality that are at odds with the vast fortunes some have accumulated (often, perhaps always, in part by exploitation of the political system, and frequently by some measure of fraud and deceit). Nevertheless they will pass vast wealth on to heirs who did nothing to earn a penny of it, but who will be among the wealthy, elite "powers-that-be" in every subsequent generation, served by armies of "ordinary" people who are just as securely locked into relative poverty and lower social class by lack of opportunity, as the scions of the wealthy are assured of elevated social and financial standing by opportunities they personally did little or nothing to earn.

So much for the abolition of inherited nobility, and the classless civil society, that the Founders may have thought they had established.