Blast! Our own advisor satisfaction survey was scooped by Dick Bove, banking analyst at Rochdale Securities. In a research note published this morning, Bove—in calling for outgoing-CEO Ken Lewis to be reinstated as CEO on Jan. 1—says that large shareholders and Bank of America management would prefer Lewis to stay.
While he acknowledges that he is speculating, he says anecdotal evidence (conversations with BoA management, shareholders and others) leads him to believe that Lewis is wanted on the grounds that no one is more qualified to run the behemoth. “Last week, I would have put the odds at near zero, but after talking to so many people . . .” Bove told me today that he has sent out a questionnaire to institutional shareholders asking for their opinion.
He points to our annual Broker Report Card survey—a measure of rank-and-file FAs’ satisfaction of their employers—as proving his point. In his research note, he writes: “I was shocked to discover that even the sales force of Merrill Lynch is happy with Bank of America. A soon to be published poll [that would be our survey, to be published online December 4] indicates that 86 percent of the sales rep like their company. This is the highest positive response of any brokerage company other than Edward Jones.” (We had already told him about the results in prior conversations.)
Bove writes, “In sum, Mr. Lewis was a key architect in the creation and management of Bank of America. He knows this company better than anyone else and he knows how to operate it. At this point in the company’s history, this is the type of leader needed.”
Bove also said that Lewis was forced out for political reasons, that “Lewis has become Barack Obama’s Andrew Mellon.” (That is a reference to FDR’s scapegoating of Treasury Secretary Andrew Mellon during the Great Depression, who was unpopular for speaking out against federal stimulus measures and for letting weak banks fail. First they brought articles of impeachment against him. He left the Treasury to become ambassador to the U.K. The Roosevelt administration wasn’t finished, bringing income tax evasion charges against him, but lost when a grand jury declined to indict him. So it brought civil charges against him—and, after a few years, Mellon was exonerated, albeit months after he had died. )
Of course, Bove acknowledges that Lewis would be encumbered by various regulatory bodies’ investigations and lawsuits by shareholders regarding BoA’s purchase of Merrill.
Bove also says that basically the federal government wants to further break up BoA. “The list of companies that BoA has sold would take many pages,” he told me. “Citi once had $2.3 trillion in assets and now has just $900 billion—no longer too big to fail.” He is against Washington’s policies, saying new regulations being discussed by politicians will badly hamper banks’ ability to make money and might force them to “fire small customers,” as he put it, because they won’t be able to charge the fees they need to service such clients.
Bove also told me that no one who is qualified wants the job, and he predicts a government “flack,” such as a Jon Corzine, former Goldman chief and now lame-duck governor of New Jersey, would be put in place to “bust up” the company further.
Registered Rep.’s 19th Annual Broker Report Card survey will come out in the December issue, to be shipped on December 4. We intend to publish the survey online on that date. For last year’s survey, “Dear Management, Thanks for Nothing,” click here.
