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 Ken Lewis popped into the living rooms of America on Sunday night to
say he's glad he'll personally receive less money so the bank he runs
can be part of the government rescue plan. In fact, the chairman and chief executive of Bank of America Corp. said
on CBS' "60 Minutes" his bank took the money even though it didn't need
it, and felt it was its patriotic duty to do so.
The heralded CBS current affairs program did a feature Sunday night on Bank of America and its role in the recent rescue package that Treasury Secretary Henry Paulson engineered to open up credit markets. Correspondent Leslie Stahl pointed out that as some banks collapsed in the recent downturn, Bank of America has only grown stronger, winning deposits from weaker competitors and buying up industry leaders like mortgage lender Countrywide Financial Corp. The report also noted that BofA avoided the subprime mortgage market as early as 2001. And Stahl focused primarily on the Oct. 13 meeting when Paulson summoned the heads of the nine largest U.S. banks to Washington and told them that the government would invest in them all, so no bank would be stigmatized as a weak bank. In fact, Stahl said, Paulson told his former peers (he once headed Goldman, Sachs & Co.) that it was their patriotic duty to participate. "I don't remember if he used the word, but there was an element to that," Lewis replied, "that this was the right thing for the American financial system, and therefore it was the right thing for America." Lewis added that he agrees with the secretary's sentiment that it was a patriotic move. The investment by the government will probably last three to five years, after which Lewis expects the government will sell out. And the move is conditional on no executives at the banks making more than $500,000 per year, unless the institution pays additional taxes. Lewis, a critic of outlandish executive compensation even though he earned $25 million last year, also said he supports the restrictions on salary. In fact, when one banker began to argue with Paulson about the compensation restrictions, Lewis cut his competitor short, telling him he was out of his mind. "The importance of this deal getting done versus these elements of executive comp were just out of sync," Lewis said. "I mean, this was so much more important. And all of us can take a little less money." The final segment of the report highlighted how BofA pounced on Merrill Lynch & Co., buying the Wall Street titan for $50 billion after one weekend of negotiation. Does Lewis regret not waiting for Merrill to go to the wall and buying the company for less money? "Some think that we should've waited till Monday and see if they would've gone bankrupt," he said. "Some think we would've gotten it for, you know, dirt cheap. But my point is, you would have a tarnished brand. You would've had chaos. You would've had a court ruling over all the sale of assets. And it was worth it to us to pay a more market price so that we could not have that happen." - Peter Moreira
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