Are Ken Lewis and Vikram Pandit Toast?
One of the more interesting aspects of the bank stress tests is that only two institutions seem to be blabbing their results around town: Bank of America and Citigroup. Yet these are the two largest banks that will likely require the biggest infusion of capital in order to survive.
It doesn't seem likely that the government leaked information for the Wall Street Journal's front-page coverage that highlighted BofA and Citi's need to raise more capital, so I assume that the banks themselves thought they'd better prepare the market for more bad news. Considering that the GM chief Rick Wagoner lost his job when the automaker reported more damage, the emerging news out of B of A and Citi beg the question: are CEOs Ken Lewis and Vikram Pandit about to get pink slips from their new boss, Uncle Sam?
If I were Uncle, I would think twice about letting these guys go. Oh sure, it would be nice to have Ken Lewis stop talking trash about the government's involvement in Lewis' acquisition of Merrill Lynch, but it's probably easier to control the flow of information if he's still the CEO. Note that former Merrill chief John Thain is on a rampage to restore his reputation. Imagine what that big crybaby Lewis would be like if he were unleashed? (Of course putting a muzzle on NY AG Andrew Cuomo may prove more difficult, even for the ultimate dog whisperer, Rahm Emanuel.)
But even if the government axed Ken and Vikram, who is going to take over? It appears that the number of qualified applicants for the job description "Captain of Sinking Ship" is dwindling, so in this case, maybe sticking with the guys who brought you to the dance makes most sense.
