While there is much to dislike about Ken Lewis, his decision to continue last December with the Merrill Lynch merger isn't one of them.
A recent editorial in the Wall Street Journal expresses the now standard view that Bush Treasury Secretary Hank Paulson and Ken Lewis, CEO of Bank of America, inappropriately allowed for the interests of the global financial system to trump those of BofA's shareholders by forcing the merger with Merrill Lynch after it was abundantly apparent that the company was in serious trouble and the Bank was overpaying for ML.
It is absolute hypocricy to pillory Lewis, given that if he had chosen to withdraw from the deal, the media, Congress and probably the WSJ itself would have assaulted him for his lack of patriotism and self interest. Indeed, it's hard to imagine that back in December (when we were all still terrified of Great Depression II), a collapse of the deal wouldn't have caused even greater instability than we experienced. But, now, all these months later, we've forgotten that the rulebook - whether it was the laws regulating finance or more fundamental Laws of Finance - was being thrown out as we "all became Keynesians" (I didn't) and it was very hard for anyone (especially the CEO of a money center bank) to know what was the "right" thing to do.
What this recent debacle suggests is that media and Washington elites now feel sufficiently confident that the financial system can absorb the kind of self-serving witch hunt that now is apparently unfolding. Perhaps we should find that encouraging. I hope they're right!
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