Comments on: Why give Ken Lewis a break? http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Richard http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7575 Mon, 05 Oct 2009 16:52:49 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7575 Those running index funds can’t add much value, but they can destroy value by poor and expensive execution.

CEO’s can’t add much value, but they sure can destroy value.

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By: Tim http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7541 Sun, 04 Oct 2009 23:27:37 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7541 -Response

“Total of 5.9 billion dollars in revenue for the first half of 2009 that can be attributed to countrywide not including interest income or fees.”

The vast increase is in REVENUE, a natural outcome when you just acquired another business. It says nothing of PROFIT due to these acquisitions.”

Countrywide 10-Q 2Q-2008
http://www.sec.gov/Archives/edgar/data/2 5191/000104746908009150/a2187147z10-q.ht m

Total expenses Q2 2008 – 2.192 billion
Total expenses H1 2008 – 4.364 billion

5.9 billion revenue – 4.364 expenses = 1.53 billion
(note: this understates the profit. Revenue did not include net-interest income or fee revenue.)

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By: Nemo http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7532 Sun, 04 Oct 2009 02:02:26 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7532 Perhaps shareholders are not rational – perhaps you have not seen how much money Merrill Lynch has made for BAC this year…

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By: The Real Deal http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7531 Sun, 04 Oct 2009 01:48:19 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7531 Tim:
“Total of 5.9 billion dollars in revenue for the first half of 2009 that can be attributed to countrywide not including interest income or fees.”

The vast increase is in REVENUE, a natural outcome when you just acquired another business. It says nothing of PROFIT due to these acquisitions.

Dave:
“You guys blame Ken Lewis and CEOs for the financial meltdown. CEOs work for the shareholders, not for the benefit of humanity.”

This statement pinpoints the raw trouble of American big biz. Jack Walsh of GE said ‘shareholder value is almost everything, because stakeholders of society can sink you too’. Well, many CEOs operate on the belief that shareholder value is NOT everything. Profit is. Indeed it is the only thing. When you have entire generations of executives educated to think this way, foremost of which are the bank executives, then the following are inevitable:

a) Investors demand ever increasing quarterly profits.
b) CEOs operates only for the short term gain. That’s what they are compensated for, and what the investors want.
c) Anything other profit maximization must be minimized, or eliminated. Most common of which include staff, systems, overhead, R&D, benefits. Any thing that contributes to profit must be maximized – ever more M&A.
d) Take this business culture to its logical conclusion what you get is winners at the executive suites over the short term. And losers everywhere else, including shareholders and stakeholders, over the longer term.

Note that this ideological management fundamentalism is uniquely American big biz culture. I don’t know of any other country practicing anything even close to it – perhaps UK being the exception.

When you have government regulators giving the profit-only CEOs a free hand; and violating moral hazard by giving every indications that big financial gamble failures will be bailed out (e.g. LTCM), then you invite a runaway nuclear reaction.

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By: Basho http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7530 Sun, 04 Oct 2009 01:47:18 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7530 Tim, if you look at the 10-Q’s carefully you will see that the AOCI balance has declined by $10 billion dollars over the year. That is $10 billion dollars of losses in the period that haven’t been run through the income statement. If you believe these losses are likely to reverse themselves in future periods, feel free to continue excluding them. If, like me, you are skeptical… you may want to take them into consideration when doing your analysis.

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By: CEB http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7529 Sun, 04 Oct 2009 01:40:09 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7529 By what possible criteria could it be determined that this guy deserves one penny of bonus? He is being rewarded by the “good old boys” for being one of them. If anything he should be sued and investigated criminally, along with the rest of BOA’s officers and directors.

Why are we rewarding such colossal failure and why are we ignoring the insider trading and reckless risk taking that has destroyed so many lives?

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By: RSG http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7528 Sun, 04 Oct 2009 01:04:47 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7528 The issue now is the $53 million retirement package that Lewis will receive. After driving the company into the ground and destroying the shareholders’ investments, Mr. Lewis should not be rewarded. It doesn’t matter if he is from the north or the south, or if he is from a “middle class” background. He has destroyed people’s lives and should not be rewarded.

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By: maynardGkeynes http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7527 Sun, 04 Oct 2009 00:36:32 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7527 Sorry, but only a fool (or the Fed) would have bailed at Merrill. Everybody knew Merril was a disaster, that it was a basket case, that it was worth nothing. Everyone, apparently, except Lewis. He is a fool.

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By: Jay http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7526 Sat, 03 Oct 2009 23:48:48 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7526 Dave,
It looks like you are the only smart one here as the others are stupid. Maybe you should be CEO???

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By: Dave http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/comment-page-1/#comment-7525 Sat, 03 Oct 2009 23:23:34 +0000 http://blogs.reuters.com/felix-salmon/2009/10/03/why-give-ken-lewis-a-break/#comment-7525 You guys blame Ken Lewis and CEOs for the financial meltdown. CEOs work for the shareholders, not for the benefit of humanity.

The reality is that our lawmakers were asleep at the controls, too pre-occupied on how to get kickbacks from lobbiest in the form of campaign contributions to care about the ramifiactaions of giving sub-prime mortages to people who could not afford them. And even if the lawmakers would read the bills they pass, they are too stupid to know the ramifications anyway.

The reason we have stupid lawmakers is that voters like you are stupid too, you vote choices based upon social issues while both the left and right rob you blind and waste your tax dollars. For example, why did we do “clash for clunkers”? So that you can pay for your neighbor to buy a new car while the guy is unemployed – you idiots. If Obama can take 500 billion out of the existing medicare due to fraud, why arent we throwing people into jail? Because you again are idiots.

Prove positive you are idiots (in case you still had doubts): not a single government official was jailed or even lost his job because of the financial meltdown. We have exactly the government we collectly deserve thanks to you.

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