BoA: Takin' it to the Streets
Ken Lewis, Chairman and CEO of Bank of America laid out his case on the Opinion page of the Wall Street Journal yesterday. It was a necessary communications maneuver for American Banker’s 2008 “Banker of the Year,” who has seen his star fall – along with his share price – as the troubles continue to mount at Merrill. In addition he has led a constant offensive internally to distance BoA's situation from Citi.
In his piece, Mr. Lewis acknowledges the faulty practices of the large banks, amongst the myriad institutions involved in the credit and housing bubble, where the “need to make changes in the way they run their business, from risk management to expense control to compensation packages” is recognized.
It is a welcome overture and, as Mr. Lewis goes on to debunk popular “claims that have been repeated so often they are now take to be fact,” it becomes apparent he is writing for four audiences:
- The American Taxpayer
- The Investment Community
- BoA Counterparties
And rightfully so. His words are chosen well and his evidence, though debatable, demonstrate an understanding of the hands that feed. In the era that heads of finance now operate in, such public relations posturing is necessary for survival in an increasingly unforgiving climate.
One of his stronger points is reiterating that banks are in fact lending, a point Ed Yingling, President and CEO of the American Bankers Association spelled out in a letter to the WSJ in February. They do an excellent job highlighting a critical point – that banks have a necessity to abandon the irresponsible and unsustainable lending practices of the past few decades. It is a message of reform that should be welcomed, however painful the process of delevering for all parties involved.