Bank of America CEO admits to huge 'error'

When I read that Bank of America (BAC) Chief Executive Kenneth Lewis told the Financial Times that he made a "tactical error" in accepting money from the government's bank bailout fund to complete its takeover of Merrill Lynch, I immediately thought of my two-year-old son, Jacob. He often says "sorry" for stuff that really does not merit an apology because he does not know the meaning of the word. Neither does the head of one of the few remaining major financial institutions.

Lewis' admission to the paper is simply astonishing. "He expressed regret that an 'abundance of caution' had led him to take more aid than he said was necessary to absorb Merrill's $15bn fourth-quarter loss," the paper said."An abundance of caution?" What planet is Lewis living on? It would seem that the caution was justified considering that Merrill Lynch lost about $533 million more in the fourth quarter than Bank of America estimated. Many on Wall Street thought Lewis could work his magic on the floundering Merrrill. It turns out he couldn't.

Maybe Lewis was skittish after New York Attorney General Andrew Cuomo began probing the bonuses that Merrill CEO John Thain and other top executives allegedly received before the merger was completed. Maybe he got tired of being a laughingstock on Wall Street.

But money is the greatest cure for anxiety, particularly when it is $45 billion from U.S. taxpayers. That includes $20 billion to prop up Bank of America in December, a move which he now said made his beloved bank appear as weak as Citigroup (C). He never explained how he could have closed the Merrill deal without government help.

Shares of the Charlotte-based bank plunged 8 percent today, falling along with the rest of the market. They have dropped more than 74 percent this year.

Lewis told the paper that he will leave the company as soon as the TARP money is paid back. That leaves the question of whether taxpayers or shareholders should be sorrier that he is not leaving now.
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