The Partial Coup d’Etat at Bank of America

April 30th, 2009 by Phil Mattera

bofaBank of America seems to be in a state of denial about the partial coup d’etat that was just carried out by the company’s shareholders, who took the remarkable step of ousting Ken Lewis from the chairman’s job.  BofA put out a press release with the vague title “Bank of America Announces Results from Annual Meeting” that never mentions the demotion of Lewis, who was kept on as chief executive. It simply announces that non-executive director Dr Walter E. Massey, president emeritus of Morehouse College, had been selected for the chairman’s post.

Moreover, as of this writing, the About page on the BofA website contains a box headlined Leadership with a quote from Lewis, who is still identified as chairman. The quote reads: “Bank of America helps build strong communities by creating opportunities for people — including customers, shareholders and associates — to fulfill their dreams.”

As I described in my previous post, Lewis spent four decades at BofA and its predecessor companies fulfilling his dream — or more strictly, that of his mentor Hugh McColl — of conquering a long list of competitors and creating a financial leviathan that today has the dubious distinction of being  deemed to be too big to fail. Now his personal part of that dream is crumbling before him.

As hard as BofA’s p.r. people may try to downplay it, the company’s investors have just presented Lewis with a resounding vote of no confidence. Although the attempt to kick Lewis off the board entirely did not succeed, his loss of the chairmanship is a humiliating defeat and may make it untenable for him to remain in the CEO post.

What was a sad day for Ken Lewis was a remarkable victory for shareholder activism and a serious setback for those top financial executives who seem to think they can avoid any personal consequences from mismanagaging their banks to the point that they need to be propped up with vast sums of taxpayer money. The uprising of the BofA shareholders should also send a strong message to the largest owner of large banks — the federal government — that the time has come to get tough with the banking barons.

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