Five weeks later, Mr Lewis's strategy is in tatters. Not only have top Merrill executives been leaving Mother Merrill in droves, including Greg Fleming, president and chief operating officer, and Bob McCann, head of its brokerage business, and the promised 35,000 firings from the combined bank are still to be done. Now Mr Lewis has also backed up his behemoth to the US Treasury and loaded it with an additional $20bn of equity – on top of $25bn that Bank of America and Merrill had already received – and won insurance on a $118bn portfolio of toxic securities. Mr Lewis has pulled a Vikram Pandit, duplicating in short order the similar quasi-nationalisation the government put together for Citigroup in November when it invested $45bn in the crestfallen bank and insured $306bn of toxic waste. With Citigroup in the process of being slowly dismantled ever since, nobody has given much thought to naming Mr Pandit, Citigroup's chief executive, the banker of the year.
The US is now the largest shareholder – at about 6 per cent – in Bank of America. Mr Lewis admitted he did not enjoy his new status of being a “ward of the state” and pledged to get out from under the government yoke “as soon as possible”.
The question hangs in the air like a thick blanket of smog, though, as to how possibly Mr Lewis could not have known what everyone else on the planet already knew. To wit, that both Countrywide and Merrill were virtually bankrupt institutions and to pay even $1 for their equity might well have been too much. For Bank of America to continue doing what it was doing well, neither deal was necessary. But Mr Lewis did them anyway. He now claims to have been blindsided by the rapid deterioration of Merrill's assets and almost invoked the “material adverse change” clause in the contract to get out of it at the end of last year. “We did not expect the significant deterioration in mid to late December that we saw” in Merrill's assets, Mr Lewis said on a conference call on January 16, by way of explaining the sudden need for the government rescue.