By Martin H. Bosworth
ConsumerAffairs.com
April 29, 2009
Under heavy fire from critics for the bank's losses in the economic meltdown, former Bank of America chairman Kenneth Lewis will step down as chairman, to be succeeded by Dr. Walter E. Massey. Lewis will remain as President and CEO.
All 18 board members were said to "comfortably" resist votes to remove them from the board, but the vote to split the duties of chairman into different posts was successful. Massey, an accomplished scientist and a member of many corporate governing boards, most recently served as president of his alma mater, Morehouse College in Atlanta, Georgia.
The announcement came after a raucous shareholder meeting in Charlotte, North Carolina today, where investors and activists grilled him for pushing the acquisition of debt-riddled Countrywide Financial and Merrill Lynch, as well as for accepting billions in taxpayer money during the first round of bailouts of the financial market last year.
Countrywide, formerly the world's largest mortgage lender, was acquired last year by Bank of America for $4 billion amid rumors that it would seek bankruptcy protection due to mounting losses from the collapsing housing market. The additional acquisition of Merrill Lynch saddled the banking giant with an estimated $70 billion in capital losses, while shareholders saw their investments drop by an average of 76 percent.
At the shareholder meeting, Lewis said the size of Bank of America made its health essential to the health of the country, and that the decision to pursue the Merrill deal was out of the best interests of investors and the bank. Lewis has also publicly claimed he was pressured to pursue the deal by former Treasury Secretary Henry Paulson and current Federal Reserve chairman Ben Bernanke, in order to prevent the true extent of Merrill Lynch's losses from becoming public.
As part of the "shock absorption" of the losses from Countrywide and Merrill Lynch, Bank of America has sharply hiked interest rates on its credit card accounts and cut back credit lines on even those customers who pay regularly and have healthy credit profiles. ConsumerAffairs.com continues to receive complaints from disgruntled customers who have seen their interest rates spike suddenly for no reason.
The Service Employees' International Union (SEIU) launched a campaign to remove Lewis as chairman, after it was revealed that Bank of America used $25 billion in taxpayer money it received for executive compensation and buyouts of competitors, while squeezing the credit lines of its customers.
Countrywide, meanwhile, has been absorbed completely into Bank of America and renamed "Bank of America Home Loans," but continues to be dogged by state investigations for deceptive marketing and false advertising of its loan products to home buyers.
