When I was home I just couldn't bring myself to ask him, "Buying Merrill? Fuck the heck!?" But now I really wish that I had so perhaps I could have a little insight into the current mess at Bank of America,
His audacious acquisition of Merrill Lynch, the giant brokerage, looks so disastrous that many on Wall Street wonder if he can keep his job.
Four months ago, as turmoil swept Wall Street, Mr. Lewis’s bank bought the foundering brokerage for $50 billion in stock. Today, the two companies are worth $40 billion combined.
For Mr. Lewis, who built Bank of America into the nation’s largest bank through a series of bold acquisitions, Merrill has created one headache after another. The brokerage ran up steep losses after Bank of America agreed to buy the brokerage. A number of key Merrill executives left, including John A. Thain, whom Mr. Lewis pushed out on Thursday. The problems at Merrill were so acute that Bank of America was forced last week to seek a second federal financial rescue.
Some of Mr. Lewis’s shareholders are angry, and the lawsuits are flying.
As Atrios notes this morning, nobody could have predicted! Except, well everyone. I guess this is that issue of moral hazard we've been hearing so much about. Armed with the knowledge that the government will just hand you piles of money no matter what happens there's nothing preventing you from making really terrible decisions.
There's no way in hell that Bank of America should get another dime of taxpayer money. This was such a blindingly stupid acquisition that there should be no rescue of Bank of America, let em collapse.