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Kai Ryssdal: We’re not going to have Ken Lewis to kick around anymore. The CEO of Bank of America announced yesterday he will step down at the end of the year — 2009 has not been the smoothest of rides for Mr. Lewis or the bank he runs. He has been criticized, heavily too, for B of A’s role in the credit crisis and in particular, how he handled the acquisition of Merrill Lynch last fall.
But Lewis also built Bank of America into one of the biggest banks in the country. And that size means that whoever gets his job may not have an easy time of it. Marketplace’s Jeremy Hobson reports.
JEREMY HOBSON: Ken Lewis’s successor won’t just be the head of a bank that’s too big to fail. He or she will lead a bank three times the size it was when Ken Lewis took over in 2001.
Here’s Celent banking analyst Bart Narter.
BART NARTER: Fifteen years ago, the top five banks had about 11 percent of all deposits. Now there are three mega-banks in the U.S. that have 10 percent or more of all deposits. Bank of America is one of them.
And it’s portfolio is quite a bit more complex than it was, especially with that controversial acquisition of the investment bank, Merrill Lynch.
NARTER: It’s a dramatically different business, and to be an excellent retail banker doesn’t make you an excellent investment banker.
The new CEO will have to be both. And even being both won’t make the job easy.
Christopher Whalen of Institutional Risk Analytics says next year will test the nerves of everyone in the banking sector, even those who have already accepted toxic-asset losses on paper.
CHRISTOPHER WHALEN: We’re going into a period now of realized losses. This is mostly on loans, but it’s also on securities, where the bank is saying, ‘Well, I’m not going to get my money back.’ That’s a very tough thing for banks to do.
HOBSON: Well do you think they’ve been too optimistic when it comes to how much money they’re putting aside for losses?
WHALEN: Oh definitely.
And remember, Bank of America still hasn’t paid back the $45 billion it borrowed from taxpayers last fall. Whalen says all that adds up to a tricky changing of the guard at B of A.
WHALEN: And it’s a little troubling, frankly, that Lewis would resign before they had a successor in place.
Investors didn’t seem thrilled with any of the potential candidates floated today. Bank of America’s stock fell more than 4 percent.
In New York, I’m Jeremy Hobson for Marketplace.
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