Ken Lewis

Charlie Gasparino over at the Daily Beast points out a new development in the neverending Ken Lewis saga, which if true, may mark the beginning of the end of the pristine image of Ben Bernanke and Hank Paulson: "In defending former Bank of America CEO Ken Lewis against charges that he misled investors, his lawyers will call as witnesses former Treasury Secretary Hank Paulson and the current Federal Reserve Chairman Ben Bernanke, according to people close to the matter." We hope the AG will take advantage of this opportunity to pursue justice, and expose the former Treasury Secretary and the just reconfirmed Fed Chairman who will under oath, be revealed as the true masterminds in this illegal operation.

In short, in the process of acquiring Merrill, the Bank’s management misled its shareholders, the public, its board and its lawyers by concealing Merrill’s disastrous fourth quarter financial results in order to secure the shareholders’ uninformed approval of the deal. The Bank’s management then salvaged this potentially crippling situation by extracting billions in taxpayer bailouts by misleading the federal government. They did this, in part, by threatening federal officials that they would terminate the Merger Agreement based on a material adverse change—virtually the same material change they failed to disclosed to their shareholders prior to the vote. This action seeks redress under New York’s Martin Act for this conduct. - Andrew Cuomo

NY AG Andrew Cuomo just announced he would file civil securities fraud charges against BofA ex-CEO Ken Lewis and CFO Joe Price under New York's Martin Act. This blow to Ken Lewis follows hot on the heels of yet another attempt by the ever pathetic and worthless SEC to cover up the whole Merrill mess, this time by proposing yet another settlement with BofA, however instead $30 million this time taxpayers will pay BofA investors $150 million. The fact that there is no change in the SEC's M.O. from before, but merely an increase in the "booty", is sure to anger Judge Rakoff even more. The need for a referendum over the fitness of Mary Schapiro to serve her job as head of the SEC in light of these two diametrically opposing actions is now greater than ever.

Insult was just added to Ken Lewis' terminal injury (and it might get much worse).

It was immensely refreshing to find an actual probing piece of investigative journalism coming out of Reuters, instead of the traditional regurgitated, opinion-based, fluff-filled, secondary source monologues (we prefer the British spelling) we have become accustomed to seeing out of the Thomson Reuters behemoth. In a rare example of how even the MSM gets it right sometimes, Matt Goldstein has done an admirable job of connecting the dots based on a FOIA request he had submitted to the FDIC, in which the insolvent (as of today) Deposit Insurer has provided Goldstein with a unique glimpse into the daily travails and activities of its boss, Sheila Bair, and how they may have a direct bearing on the future of none other, than a very troubled Chief Executive Officer.

"Some will suggest that I am leaving under pressure or because of questions regarding the Merrill deal. I will simply say that this was my decision, and mine alone." - Ken Lewis

Not a bad move by the man about to be raided by the Fed, the AG, the SEC, the Tooth Fairy and who knows who else. In other news, the Chairman wins again.

There is blood in the water... that of Ken Lewis, and the sharks are all over it. The latest to join the dismemberment party of one Bank Of America Chief Executive Officer, is New York Representative, and Chairman of the Committee on Oversight and Government Reform, Edolphus Towns. And while the traditional defense provided by Lewis, BofA, and respective lawyers, has been one which delegates any wrongdoing to the attorney-client privilege gray area, Towns has told the bank it "cannot use attorney-client privilege when dealing with Congress." The last piece of armor that Lewis had has just been torn off. From a strategic point of view, the question now becomes whether Ken Lewis, soon to be faced with the traditional prisoner's dilemma, will out his "dealer" Hank Paulson, in exchange for a slap on the wrist, as the alternative could be a much more gruesome fate easily involving an 8x10 cell.

The stuff just got serious folks. "The FBI involvement opens up the possibility of criminal charges, although the scope and possible outcome of the probe remain unclear."

A closer read of the SEC response to Judge Rakoff reveals some nuances that indicate the SEC could be positioning to throw lawyers from Wachtell, Lipton, Rosen and Katz and specifically partner Ed Herlihy at the wolves, presumably to spare the "chosen one" Ken Lewis from a fate that could potentially include jail time.

SEC charges Bank of America with lying to investors to the tune of billions of dollars, but quickly realizes its mistake and settles for $33 million. Actual payment to be delayed until BofA teller in charge of petty cash drawer returns from vacation.

Courtesy of the House Committee on Oversight And Government Reform

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When you end up angering CalPERS, this should not come as much of a surprise. At least he retains the CEO title: Walter Massey will replace Lewis as Chairman. Now maybe Bernanke can be stripped of the title Uberload of the Formerly Free Financial Markets and Emperor of the Amazingly Ubiquitous SPY Bid.

S&P is out with a report which basically says car scrappage will be the new black... At least for autos. From a report just released, S&P sees a 13.6 million SAAR... in 2011!

Global Downturn In Auto And Truck Industries To Continue Through 2009, Reports Say

In an interview with Fox Business Network, Lewis plants his feet squarely in his mouth while wearing the pinkest of pink too-big-to-fail glasses, claiming again that he will not need any additional capital, putting his job on the line, and squarely contradicting Chris Kotowski and anyone else who can read financial statements and realize that another round of massive equity dilution at BofA is merely a matter of time, probably very short time at that.