It's about time: Bank of America (NYSE:BAC) CEO Ken Lewis is on his way out.
Even if you're not a B of A shareholder, there's something symbolic about this. Lewis is the last surviving Wall Street CEO who can be tied directly to explosive losses.
Remember how they fell?
- October 2007: Merrill Lynch CEO Stan O'Neal "retires" after bad debts cost the bank nearly $8 billion.
- November 2007: Citigroup (NYSE:C) CEO Chuck Prince steps down after the bank began stumbling on tens of billions in subprime losses.
- March 2008: Bear Stearns CEO Alan Schwartz sells Bear to JPMorgan Chase before it explodes.
- June 2008: Wachovia CEO Ken Thompson gets booted after the ill-timed 2006 acquisition of Golden West Financial tore Wachovia to shreds.
- June 2008: AIG (NYSE:AIG) CEO Martin Sullivan resigns after the insurer begins hemorrhaging money.
- September 2008: Washington Mutual CEO Kerry Killinger is fired just days before the bank filed for bankruptcy.
- September 2008: Lehman Brothers CEO Dick Fuld ushers his company straight into bankruptcy.
That left just a few legacy CEOs: Morgan Stanley's (NYSE:MS) John Mack, Goldman Sachs' (NYSE:GS) Lloyd Blankfein, JPMorgan Chase's (NYSE:JPM) Jamie Dimon, Wells Fargo's (NYSE:WFC) John Stumpf -- all of whom run banks that held up distinctly better than most -- and ... Lewis.
Oh, and this guy
Then there's Citigroup's current CEO, Vikram Pandit, who replaced Chuck Prince in 2007, so he can't be blamed for many of Citi's problems. He's trying to clean up other people's messes. But you can still argue that he should be replaced.
The most powerful argument for Pandit's ouster is simple: The guy has absolutely no commercial banking experience.
Pandit found his way to Citigroup after selling his hedge fund to the bank in 2007. Before that, he headed the institutional securities department at Morgan Stanley. Before that, he was a college professor. Commercial banking experience? Zilch. And that's scary since so many of Citigroup's problems stem from commercial-banking-based segments like credit cards.
Likewise, Lewis is a lifelong commercial banker who strayed dangerously too far into unfamiliar territory. As he famously quipped in 2007, "I've had about all the fun I can stand in investment banking." It just wasn't in his skill set. Yet he made a mad dash for one of Wall Street's largest investment banks, Merrill Lynch, which (not surprisingly) backfired and destroyed not only his career, but nearly the bank itself.
Lewis was a great commercial banker who tried to be a hero investment banker. Pandit is a hedge fund manager who's trying to be a turnaround commercial banker. Neither is a recipe for anything good.
Is Pandit a smart guy? Absolutely. Driven? No doubt. Committed? Heck, he works for $1 a year. But he had never even run a mom-and-pop commercial bank before taking the top post at Citigroup -- a bank with more than three-quarters of a trillion dollars in deposits. Being new to the game and CEO of one of the largest banks in the world is dangerous, if not horrifying. And just like Lewis, that lack of experience is bound to catch up sooner or later.
Some might say "Oh, come on. Give the guy a chance!" We have. Pandit's most notable decision so far has been splitting Citigroup into two segments: Citi Holdings, and Citicorp. That made for some exciting press releases, but did nothing for shareholders; both segments are still housed under one roof, called Citigroup.
Besides, Citigroup is more than 30% owned by taxpayers. This isn't the time for a CEO to be experimenting or trying to prove himself in the commercial banking world.
Bottom line
Lewis, like so many other Wall Street CEOs, is about to enjoy "early retirement." Should Pandit be the next to go? I believe he should. I'll give the guy an "A" on effort. But asking for a CEO with more than token experience isn't asking much.
What do you think? Let us know in the comments section below.
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