Bank of America heiress says 'idiots' are running the bank
Say "banking heiress" to me and I envision a spoiled brat. But that doesn't mean that she's wrong when she complains about the executives who are destroying her fortune. This comes to mind while reading the comments of Virginia Hammerness, a big stockholder in Bank of America (BAC) and heiress to founder A.P. Giannini's family fortune. She recently complained, "What idiots, what kind of idiots are running that bank?" and described the current state of the bank as "totally repulsive."
I feel sympathy for Hammerness because her criticisms are spot on. She pointed out that CEO Ken Lewis should pay for his decision to acquire the near-bankrupt Merill Lynch, even after learning that huge bonuses were paid out to Merill employees right after the deal was announced. Her grandfather would not have accepted such huge bonuses, she said, but would have instead put the money into helping customers.
A.P. Giannini was famous for helping his customers after San Francisco's 1906 earthquake. His bank had burned down so he set up a wooden plank on two barrels along the street and made loans on a handshake. Giannini later said that each of those loans was repaid. The best thing about Hammerness is that her memories of how her grandfather ran Bank of America reflect exactly the kind of banking principles to which we need to return.Too bad there is no way she is going to see her fortune return to where it was before Ken Lewis got his hands on it.
Peter Cohan is president ofPeter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in Bank of America securities.