Published by WallStreetWeather.net
During a 5:00 PM Board meeting yesterday, Bank of America (BAC) CEO Ken Lewis told the Board in a telephone call that he will retire from the bank and from the Board of Directors at the end of the year to allow BofA time to select his successor.
Mercury represents our thought process and how we communicate. Mercury conjoined Saturn in Virgo in mid August, opposing Ken Lewis’ natal Mercury in Pisces. Virgo can be critical as this energy demands accountability. Mercury and Saturn in Virgo, together with Mars in Mercury-ruled Gemini then, indicated that Lewis was feeling the criticism and pressure (Mercury) from governmental authorities (Saturn) to take action (Mars) by leaving gracefully. The Wall Street Journal confirms this, citing a person “close to” Ken Lewis who said Lewis was “fed up with the criticism that haunted him following the takeover of Merrill Lynch.”
Unless contradicted by other factors in the natal chart, people with Mercury in Pisces can tend to do their best thinking when they are engaged in and/or spending time in environments they consider to be an “escape” from the everyday world. For Ken Lewis, ending the summer in the mountains provided “time to reflect.”
The three week period three to four times a year when Mercury is retrograde* provides an opportunity to reflect and review matters that have yet to be completed or fully resolved. Mercury turned retrograde on September 7; the Journal indicates that Lewis “made the decision to quit after Labor Day after returning from vacation.”
Ken Lewis’ resignation comes one day after Mercury turned direct in Virgo exactly opposite his natal Mercury. One year ago when the September 15, 2008 Pisces Full Moon conjoined his natal Mercury, Lewis thought his seven year dream had come true in acquiring Merrill Lynch.
Soon the dream began unraveling into a nightmare for Ken Lewis. As Merrill’s losses accelerated more than anticipated, BofA wanted to find a way out of the mess even though shareholders had just approved the merger. In order to avoid injecting even more systemic risk into already fragile financial markets, BofA received an additional $20 billion and a loss sharing provision to cover $118 billion in assets in a deal engineered by Fed Chairman Bernanke and then Treasury Secretary Paulson, but kept quiet until BofA reported Q408 earnings on January 16, 2009.
Ken Lewis as well as sources quoted in the Journal state that “there was no government pressure” on him to resign. But investigations by the House Oversight Committee, New York Attorney General Cuomo, a lawsuit by Ohio Attorney General Richard Cordray on behalf of five pension funds, and a looming February 1 court date with Judge Jed S. Rakoff who refused to approve BofA’s agreement to pay the SEC $33 million for failing to disclose the payment of Merrill bonuses in the merger proxy filing sent to shareholders, have drawn undue attention to BofA and particularly Ken Lewis.
Jupiter (courts) and Neptune (fraud) challenge Lewis’ natal Jupiter in Scorpio, and reflects Lewis hiring his own defense attorney, as it has been reported that Cuomo might be preparing civil fraud charges against him.
In a January post on the BofA/Merrill merger, I predicted that Ken Lewis might announce his retirement at the time of his 62nd birthday April 9. Lewis vowed to stay on, and was stripped of his Chairmanship at BofA’s April 29 annual meeting. By staying on, Lewis can say he was at the helm when the bank’s fortunes turned around during the six month financial bull run.
Ken Lewis is not a hero for buying Countrywide Financial and Merrill Lynch. And he is not a villain for doing what he believed and the bank’s regulators believed would cause the least amount of systemic risk to the financial system. The Merrill bonus payments should have been disclosed as part of the SEC filing, but the majority held shares owned by institutional shareholders would have approved the merger anyway.
The sad saga behind the BofA/Merrill Lynch merger is that Merrill Lynch could no longer stand on its own, due in large part from the problems brought on by its previous boss, Stanley O’Neal. As Saturn enters Libra October 29 and challenges Pluto in Capricorn over the next year, rather than making one person the sole scapegoat, it is time to learn the lessons of this experience to build a new regulatory framework that would not have allowed Merrill to accumulate vast quantities of high risk assets purported to be safe.
Libra is the sign of balance, and the interesting balance that BofA had to weigh with Merrill Lynch is that if it waited for Merrill to be more stressed to achieve a lower price, retail clients in Merrill’s crown jewel wealth management division would have started bolting. If this was the focus of BofA’s desire than we might not be able to blame Ken Lewis for overpaying to keep Merrill whole. This situation differs greatly from Barclays (BCS) acquiring Lehman Brothers at a bargain because the businesses Barclays acquired were not directly subject to a run on the bank. Perhaps BofA could have gotten Merrill substantially cheaper but at what price to Merrill’s retail client base?
If Ken Lewis was strictly trying to buy an investment bank, there’s no question that BofA overpaid for Merrill. But if he was looking to purchase a retail brokerage with its clientele intact, then it’s more likely he paid a fair price for Merrill.
*Planets do not really move backwards, but appear to from Earth’s vantage point.