Friday, January 23, 2009
Sometimes, no matter what a CEO does, an action he has undertaken goes bad. This appears to be the case with the Bank of America-Merrill Lynch acquisition. It seemed like a good idea at the time. Bank of America got the leading brokerage in the nation: Merrill Lynch got a bailout it needed just in time. Since then, it has been downhill. The resignation of John Thain yesterday was a sign of just how bad things have gotten. What does Bank of America tell its shareholders now? What does it tell the thousands of Merrill Lynch employees who would like to leave if they could only find some place to go? How does the bank rebuild morale, especially if Thain was relieved for paying bonuses to Merrill employees early in order to circumvent the bank's permission? Bank of America's CEO, Kenneth Lewis, has a tricky leadership and communications task during the next few months. I hope he is up to it because the merger has become toxic and is teetering on the edge of failure. If it does fail, it will become a tar baby that drags the bank down and could affect all of its operations.