A well-known bank analyst has an unorthodox solution for Bank of America's CEO search: bring back Ken Lewis.
Dick Bove, an analyst with Rochdale Securities, wrote a note to clients this morning saying he thinks the embattled Lewis could return for a second act. Bove, who has supported Lewis throughout the past year, says he believes that the bank's managers and large investors also want Lewis to return.
Lewis "knows this company better than anyone else and he knows how to operate it," Bove wrote. "At this point in the company's history, this is the type of leader needed. Convincing him to return would be the biggest morale builder that management could get."
A bank spokesman declined to comment.
Bove, who is widely quoted in national media and frequently appears on CNBC, has compared anger at Lewis to a witch hunt, saying the government and shareholders are irrationally trying to pin the entire financial crisis on Lewis. Though Bove blames Lewis for the bank's "outrageously high" loan losses, he's also argued that losing Lewis will ultimately hurt shareholders, since Lewis is the person best qualified for running the large and complex Bank of America.
Lewis has never been known for his congeniality, which may have contributed to some of the ire he's now facing. But he's widely regarded as a smart and talented bank manager, building Bank of America into the country's largest bank during his eight years as CEO. He's also fiercely loyal to the bank, after spending his entire career there, and was committed to keeping its headquarters in Charlotte.
Lewis has been under fire for his Jan. 1 purchase of Merrill Lynch. He's facing lawsuits from angry shareholders who think they were misled into voting for the deal, a March trial with the Securities and Exchange Commission over disclosures related to the purchase, and investigations by the New York and North Carolina attorneys general. When he announced his resignation, a person close to him said he had become fatigued by the "mud being thrown on him day by day."
Bove wrote a similar note to clients last week, expressing his wish for Lewis' return. He noted the intense government scrutiny that Bank of America is facing, as it holds $45 billion in federal loans, and said that no outside candidate would be willing to take the salary cut or the government-related headaches.
In today's note, Bove said his previous posting was just wishful. Now, however, "I am beginning to believe that Mr. Lewis could in fact be brought back," Bove wrote.
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