DealZone

Lloyd Blankfein has very much been a man in the news lately, sometimes to good effect and sometimes not so much. In the past few weeks the Goldman Sachs CEO has made headlines by declaring that his firm was “doing God’s work” and, just this week, by suggesting that Goldman probably would have survived without the government largess that was channeled its way at the height of last year’s financial sector meltdown.  Those comments, made in interviews with the Times of London and Vanity Fair, were part of a broad media offensive which has sought to burnish the image of the bank Rolling Stone’s Matt Taibbi famously described as a blood sucking vampire squid.

It seems surprising, then, that the nearly ubiquitous Blankfein will be absent when Goldman convenes its annual U.S. financial services conference next week, featuring such industry heavyweights as JPMorgan’s Jamie Dimon and Blackstone’s Steve Schwarzman, there will be no appearance by Blankfein or any other Goldman senior executive. That’s in sharp contrast to what happens at many top banks when they sponsor conferences; Bank of America’s outgoing CEO Ken Lewis, for example, was keynote speaker at his bank’s financial services conference early last month.

Does this mean Blankfein has said his piece for now and is going to adopt a lower profile going forward? Not necessarily, Goldman says. Blankfein, or whoever the Goldman CEO is at a given time, is never a featured guest at the conference, said Ed Canaday, a spokesman for the bank. “Historically we have not had our CEO or another member of senior management speak at the conference,” he said. “I know it’s different from some other companies but that’s how it’s been done historically.”

Meanwhile Bank of America, which on the initial conference agenda had the initials “TBD” next to its name in the space where other banks listed their CEOs, has dropped out entirely as speculation swirls about who will take the top job at the troubled lender. Given Blankfein is as secure in his job as any CEO of a major bank, perhaps the next Bank of America chief will take a page out of his book and be conspicuously absent from the stage next year.

John Thain says he put shareholders first and his interests second in deciding to sell Merrill Lynch to Bank of America.

Thain, speaking at the Reuters Global Finance Summit in New York, said a deal to sell a partial stake in Merrill Lynch to Goldman Sachs would have been better for him, but the sale of the entire Wall Street firm to Bank of America was the best outcome for shareholders.

Over a fateful weekend in September 2008, as Lehman hurtled toward bankruptcy, AIG floundered and the financial system looked into the abyss, Merrill held discussions with Bank of America, Goldman Sachs and Morgan Stanley for various transactions, Thain said.

One public-relations lesson for Bank of America <BAC.N> after a year of crisis and a pummelling in the court of public opinion: Don’t always listen to the lawyers.
That’s the word from James Mahoney, director of communication and public policy at the country’s largest bank.
B of A has taken a beating over everything from its pay scale and lending practices to the fees it charges consumers.
It’s humbling for the institution that a year ago was the country’s “leading bank,” Mahoney told a trade conference sponsored by by Financial Research Corp of Boston.
“Two words emerged: bonus and bailout. It’s been all downhill ever since.”
He said the bank’s lawyers barred it from offering a single narrative on the decisions leading up to its takeover of the investment bank Merrill Lynch at the height of the financial crisis just over a year ago.
The lawyers fretted that executives might stray from the script during any future depositions to investigators, Mahoney said. But that left B of A exposed to a lot of attacks and with no easy way to protect its flank.
The lesson? “Don’t listen to lawyers if you’re trying too manage the public reaction.”
Mahoney had a receptive audience for a rare peek under the hood at the bank’s rough year.
While B of A sorts out its leadership with the pending departure of longtime chief executive Ken Lewis, Mahoney’s said the bank has taken more than its share of PR black eyes because of its size.
“I think we really became the target of a lot of the anger that’s out there because (the bank) is a highly visible, convenient place to vent,” he said.
(Reporting by Ross Kerber)

For months, as he endured hearings on Capitol Hill and fought off a series of lawsuits, Bank of America CEO Ken Lewis trudged through a post-apocalyptic financial landscape against a steady drumbeat of questions about his future. The deal he had called “the strategic opportunity of a lifetime” — his purchase/salvage of Merrill Lynch — had swung from an act of patriotism, keeping the American way of banking from utter ruin, to a scandal over Merrill losses and bonuses.

Perhaps he should have seen the writing on the walls of the vacant houses financed by Countrywide, the mortgage lender Lewis purchased/salvaged just six months before the Merrill deal. The two transactions may have been strategic gems, but they were laced with political poison as the economy floundered toward its dramatic deleveraging and taxpayers pumped $20 billion into Bank of America to fund the Merrill deal.

“It was only a matter of time,” Campbell Harvey, a professor at Duke University’s business school, told Jon Stempel. “There is too much collateral damage.” As Stempel reports, Lewis spent north of $130 billion on acquisitions, including FleetBoston Financial Corp, the credit card issuer MBNA Corp, LaSalle Bank Corp, Countrywide, Charles Schwab Corp’s U.S. Trust private banking unit, and Merrill. In buying Merrill, he added a giant investment bank to what was already the largest U.S. retail bank, credit card issuer and mortgage provider. (Wells Fargo & Co has since become No. 1 in mortgages.)

His past subjects have included Lehman Brothers’ Dick Fuld, AIG’s Hank Greenberg and Bear Stearns Jimmy Cayne.  So when Brooklyn-based artist Geoffrey Raymond, 55, decided to do a portrait of Ken Lewis it wasn’t exactly something to celebrate for the embattled Bank of America CEO.

Like a grim reaper of high finance, Raymond was proudly exhibiting his latest work on a balmy Wednesday afternoon outside Bank of America’s new Manhattan tower. His latest is a rendition of the now-famous photo from Lewis’ Feb. 11, 2009 testimony before Congress.

Lewis is downcast, his scowl on full display.

Raymond’s art is an interactive experience — he encourages people to write on the portraits, venting their frustration, and Lewis’ was no exception.

Dennis Kucinich pointed out at a Congressional hearing Thursday that Merrill’s weekly losses in mid-November were greater than the losses in mid-December, and that Bank of America boss Ken Lewis got weekly updates on the investment bank’s losses. Lawmakers repeatedly said Lewis must have known much earlier than he claims about the heavy losses at Merrill, which lost $15.84 billion in the fourth quarter of last year.

That’s something that class action lawyers may latch on to, as they push their case over the Bank of America-Merrill Lynch deal, which hinges on what the bank disclosed and when.

Shareholders OK’d the deal on Dec. 5. Bank of America disclosed Merrill’s losses in January, after the deal closed. If shareholders knew of the losses before, the outcome could have been different.

Singapore investment vehicle Temasek cut its losses in Bank of America and ran in the first quarter, dumping a 3 percent stake, for which it took a $3 billion hair cut. Having watched its relatively high-risk investment in Merrill Lynch turn to dust, the Singapore state agency turned to firmer ground: China.

Temasek was among the investors to gobble up a stake in China Construction Bank that Bank of America sold earlier this week as it further drew in its horns from the global recovery story. Sources say the move fits with Temasek’s focus on global companies that aim to grow in Asia, noting that Bank of America is losing whatever global allure it may have bought along with Merrill’s bad assets. Getting a “gentleman’s C” in the stress test doesn’t inspire much confidence either.

However bad things get for Bank of America, it’s hard to dispel the ghosts of China’s policy banking bedrock. Though they will tell you they have been shedding dud assets from their balance sheets for years, nobody is under any illusions about either transparency or solvency of the People’s banking system. That’s not to say such investments won’t pay off. After all, as the axiom goes, no risk, no gain.

Ordered by the federal government to find $33.9 billion of capital, Bank of America‘s Ken Lewis seemed to be acting the part of the visionary global business hawk yesterday when he detailed plans to retain a large stake in China Construction Bank. “It’s a strategic partner, and we always want to have a very large ownership position,” Lewis said on a conference call hosted by Calyon Securities.

A few hours later, the bank sold a block of 13.5 billion CCB shares for $7.3 billion, according to a source directly involved in the deal. A lock-up period on the block expired last Thursday. The rest of the bank’s CCB stake — about 10.6 percent — is still locked up, and will be until Aug. 29, 2011.

The China investment may be a great long-term opportunity, but Bank of America is facing severe short-term pressure to raise funds, so a lesser Lewis might have admitted he would have sold more if he could have, but his hands were tied. While no doubt making money on the initial investments it made in 2005, Bank of America has been unloading its CCB stake at a discount to market prices since January.

(Corrected – Bank of America did not purchase Countrywide early this decade)

Now that the nation’s top public servant is wielding The Donald-like powers over chief executives of bailed-out companies, expectations are high that more heads will roll, and Bank of America CEO Kenneth Lewis is looking like the next contestant on a new economic prime-time drama: The Executive.

Rick Wagoner, ousted as General Motors CEO, had spent more than three decades in the company and had been in the driver’s seat for most of the last one. He also presided over the era of the energy-unfriendly Sport Utility Vehicle and is criticized for sticking with trucks far longer than he should have.

John Thain’s out of the door as well. And one wonders if Ken Lewis could have saved himself a lot of heartache if only he had watched the action movie “Speed”.  

Sandra Bullock called it more than a decade ago. As her character says in the movie: You know, relationships that start under intense circumstances — they never last.

Thain’s departure leaves Lewis without several top executives at Merrill, which it acquired on Jan. 1 for $19.4 billion. Other top Merrill executives to recently leave include Robert McCann, who was to lead the combined brokerage, and investment banking chief Greg Fleming.