There’s always something to howl about.

The Subprime Bank of America

Remember those impetuous, ne’er do well subprime borrowers and those greedy subprime lenders?  Writing about them is sooo… 2007 but I’m happy to report that both greed and reckless abandon are alive and well today….

…at Bank of America.

Remember Ken Lewis?  He’s that sober-faced, bespectacled CEO of the Charlotte-based behemoth that started out as North Carolina National Bank and the Bank of Italy in San Francisco.  Ken has presided over Bank of America since 2001.  Since then, he’s been binging on banks like a subprime borrower stripped equity out of the old ranch:  He bought Fleet Bank in 2004, MBNA in 2005, and ABN-AMRO, LaSalle Bank, and US Trust Company in 2007.

That wasn’t enough.  Like a subprime borrower addicted to Vegas, strippers, and shiny new Hummers,  he was having too much fun to see the market turn.  What did Ken do while the house of cards was a-tumblin’?

He bought Countrywide Financial, America’s largest mortgage originator.

Still, that wasn’t enough.  Like a crack-addict jonesin’ for a last hit on the pipe, Ken absorbed America’s largest securities brokerage, Merrill Lynch.  Just like the crack addict who spent his welfare check on that last hit, Ken took money from the government to cure his fix for power.

Wall Street doesn’t like what Ken’s done.  Since the bailout binge, BAC has dropped from $37 to about three bucks as it became America’s largest subprime lender/servicer (Countrywide originated a boatload of subprime, option ARMs, and Alt-A paper while Merrill’s First Franklin was in the top three of subprime lenders).  A guy that eschewed the whole “subprime” lending market jumped into the deep end, drunk with power.

Now, it’s not just Wall Street that’s calling for Ken’s head.  It seems that the unions’ pension fund managers are pissed off, too:

CtW Investment Group, which said its affiliated funds own 116 million Bank of America shares, faulted Lewis for not backing out of the merger or revealing Merrill’s losses in a timely manner, and letting Merrill pay $3.6 billion in executive bonuses just before the merger closed.

It said Lewis’ actions have contributed to a 90 percent drop in Bank of America’s share price since the merger was announced last September 15. The merger closed on January 1.

Lewis took “outsized, reckless risks” in acquiring Merrill, and his removal “is necessary to restore investor confidence,” CtW Executive Director William Patterson said in a March 5 letter to O. Temple Sloan Jr, the bank’s lead outside director. The Washington, D.C. group has undertaken shareholder campaigns against other companies in the past.

Ken’s response?  The same adolescent approach failed subprime borrowers took;  he was PRESSURED to do it:

Lewis has said he tried to back out of the merger in the middle of December, but that federal regulators urged him to close. Bank of America received $20 billion of new capital from the government in January to help absorb losses at Merrill.

Oh brother!  Will someone please sentence this bozo to a year in a shuttered shack in suburban Stockton, like Joe Pesci in The Super?  He could bring his buddies Thain and Mozilo. The three of them can get hustled on the courts and get a taste of what life is like when you act recklessly.

For what it’s worth, I never did jump on the pass line with BofA.  Michael Cook answered my question so well that it scared the bejeezus out of me.  I still think BofA will get a strong enough lifeline big enough government bailout that the stock could go to $20 in 5-6 years, but Krazy Ken won’t be in the executive office.

Seriously, how much CAN a three dollar stock drop?