Dear Lord, poor Ken Lewis Bank of America Pressured to Buy Merrill Lynch. Around December of last year it looks like he got the financial equivalent of being thrown into a L.A. Crip prison cell wearing red! First he had to deal with John Thain, who obviously had been completely bullsh*tting Lewis since September. A few months ago I wrote this little ditty, "The Frog and the Scorpion"
The John Thain-Ken Lewis war of words and accusations is getting uglier by the day.
- First, Thain gets canned by Lewis as Lewis implies that Thain was less than truthful about remaining troubled asset time bombs when the deal closed in December. BofA also implied that Thain accelerated the payment of $4 billion of bonuses in December, before the BAC MER deal was completed, without their knowledge. Additionally, "someone" put out the story that Thain spent $1.2 million to renovate his office.
- Now, Thain is trying to prove that BofA was fully aware of the bonus situation. With regard to the $15 billion of losses posted from Merrill in the fourth quarter....well in the words of Don Rumsfeld, "Stuff happens."
Anyway, it's getting uglier by the minute and you have to imagine there's a good chance Kenny Lewis may not be around as BofA chief much longer. As you may know, I like to imagine conversations that might of or should have happened. Here's one imagined conversation between Lewis and Thain, sometime in early January.
Thain: "Kenny, I didn't know you were up in New York today, come on in and sit down! Oh wait, don't sit on that chair...it's an antique. Got a great deal on it. Only $35,000!"
Lewis: "Thanks John. Listen....ah...I ah..."
Thain: "Kenny, are you ok? You look terrible, was it a rough flight? If your going to throw up try not to get it on the rug, it cost $87,000....Oh Kenny, not in that waste paper basket...it costs $1,400!"
Lewis: "Sorry John. Listen...about these $15 billion additional charge offs...I've checked my notes and you pretty much assured me all your troubled assets were marked down the nuclear winter levels."
Thain: "And they were Kenny. Problem here is, we had about $40 billion of assets that we didn't think were "troubled". Who knew commercial real estate was going to get so bad. European high yield loans...like I said..who knew?"
Lewis: "Come on John, that's just bull-sh*t! How could you have lost so much money?
Thain: "Well Kenny, think about it this way. You see that toilet in my bathroom? The seat on that toilet costs thousands. I'm a thrifty guy. Therefore, to get maximum utility out of that toilet I make sure I use it at least six time a day. Now think about my head of trading, Tom Montag. I paid $89 million for him. I'll be damned if I was going to let him just sit there in the fourth quarter and do nothing but caretake the book. I made sure he was trading the CMBX around like it was nobody's business...and well....sh*t happens." Kenny...if your gonna puke again...you get it on this rug...you bought it! Oh wait, actually you already did....hah hah hah....."
Lewis: "John! How could you do this to me?"
Thain: "Well Kenny, have you ever heard to story about the frog and the scorpion? One day a scorpion came to the edge of a pond and wanted to get to the other side. Next to the scorpion was a frog. The scorpion asked the frog if the frog would ferry him across the pond. The frog said to the scorpion, "If I let you get on my back you will sting me." The scorpion said, "Look, you are doing me a great service. There is no way I will kill you after you provided me such a great service." The frog said, "Ok, hop on and lets get across the pond." The frog ferried the scorpion across the pond. As soon as they got to the other side the scorpion stung the frog. As the frog lay dying he said, "Why did you sting me? I did you a great favor and you said you wouldn't sting me. Why did you do it?" The scorpion replied, "I don't know, I guess it's in my nature."
Lewis: "Jesus John, what the hell are you talking about?"
Thain: "Kenny, you came all the way up to New York to ask me why I screwed you right? I guess it's just because it's in my nature! I'll have my $250,000 a year driver take you back to the airport."
Now it's April and it's coming out that Hank Paulson threatened Lewis in December to take Merrill as is or he would get tossed out on his can. Personally, I really don't know why Lewis caved....do you? I imagine a conversation could have gone something like this;
Ken: "Hank, I tried to do you boys a favor in September when the world was about to end by taking Merrill off your hands. Turns out this guy Thain is not only full of poop but he and his little buddies are trying to eat the entire place out from the inside. I'm breaking the transaction."
Hank: "You can't do that Ken. You try it and I'll toss you and your boys out."
Ken: "Oh yeah, you and what legal army chrome-dome? You're a lame duck with an approval rating of minus ten! These boys misrepresented themselves at that emergency sale back in September AND this $80 million head trader Montag is losing new money faster than a jack-rabbit humps. You ever see a jack rabbit.....
Hank: "Listen here Ken, when I was at Goldman we used to...
Ken: "First of all you ain't at Goldman anymore. Secondly, don't interrupt me again. Now Hank, I am the CEO of perhaps the most important bank in this country. I can invoke all sorts of market condition clauses that get me out of that Merrill trade. I know it and you might know it if you weren't so damn stupid. So we can play nice and you use that great big Goldman Sachs brain of yours and figure out a way to make these $15 billion of losses end up in that Omnibus Bill those boys in Washington pass every year. $15 billy clubs is a rounding error for those boys. OR I'll see your behind in court as the whole damn system goes down in flames. You choose Hank.
That's what I would have said if I were Kenny!
Thank's Bonddaddy!
Posted by: eric | April 23, 2009 at 06:34 PM
This might be your opus , Eric ...... I have to e-mail this to my 100 best friends ..... but it might take a few minutes to get off the floor and stop laughing !
faster than a jack rabbit humps .......... ROTFLMAO!!!!!!!!!!!!!!!!!
Posted by: bonddadddy | April 23, 2009 at 04:36 PM