The Public’s Bank of America?
The situation surrounding Bank of America (BofA) and its merger with Merrill Lynch is a mess. While the media fixates on whether CEO Ken Lewis should be fired, the real question is whether this merger creates any value beyond Merrill’s recent earnings. Despite billions in losses, is this partnership even worth keeping beyond its honeymoon phase?
Here’s why this merger might not last:
Clashing Cultures: The cultural divide between BofA and Merrill has only grown wider. When two companies continually deceive themselves, it’s a sign they shouldn’t be together. The government needs to decide: either let Merrill fail or fix it, but this forced marriage isn’t working.
Lack of Leadership: Lewis claims he took one for the country with the Merrill deal. Whether or not that’s true, his role as CEO demands he prioritize the interests of BofA’s owners and customers—not the national financial system. His responsibility to shareholders and customers is clear, but his recent decisions, including the Countrywide acquisition, suggest otherwise.
A Dysfunctional Board: Investors are targeting Temple Sloan, but the bigger issue is the dysfunctional board structure. When the CEO and Chairman hold all the power, no lead director or external talent can fix the leadership imbalance.
In the end, the merger between Wells Fargo and Wachovia seems to have worked out better than BofA and Merrill Lynch. Strange days ahead indeed. Stay tuned.