Today, all shareholders of Bank of America should be more than totally indignant – they should be absolutely and unequivocally furious. The stock dropped more than 18% on the announcement that BofA needed more bail-out funds to support the Merrill acquisition. This after earlier assurances that no such step would be necessary.
The evidence seems to suggest that BofA executives have known all along that these added bail-out funds would be needed and, in particular, knew about it before the shareholders voted on the merger. But, BofA executives apparently decided to keep it a secret from the shareholders. Never mind that Treasury Secretary Paulson also knew the situation and didn’t disclose it to Congress or the public. It is the Bof A executive suite and Board of Directors who are fully accountable to the shareholders.
Now, in view of current circumstances, there are stories circulating that BofA may have to cut its already greatly reduced dividend further because they are precluded from using TARP funds to pay dividends.
If the shareholders had known all of this before the merger vote, it is very doubtful that they would have approved the merger. But, this merger was apparently necessary to serve the monstrous ego of Ken Lewis and his merry band of corporate executives.
The people that the shareholders hired to steer the ship (the CEO, the Executive Suite, the Board of Directors, the Corporate attorneys, and the accountants) permittred this gross failure to disclose and should be held accountable.
The Merrill acquisition has turned out to be a disaster for the shareholders. But, it is not like some shareholders didn’t see it coming. BofA summarily dismissed their concerns and apparently just went full speed ahead just “because the train was on the tracks” and that decision has led to a full scale train wreck.
If you asked most shareholders what was more important – the security of their dividends or rescuing Merrill, the answer should have been plain to management Instead, management chose to jepordize the dividend.
There aren’t any immediate actions available to small individual shareholders relative to this deplorable situation except hope that some well heeled shareholder steps forward and files a class action suit against the officers and directors, attorneys and accountants for allowing this chain of events to take place. In the meantime, shareholders can immediately commence an e-mail and letter writing campaign calling for the resignations of CEO Ken Lewis and his senior executives as well as calling for the immediate resignations of the Board of Directors and their replacement by more responsible people who would put the shareholders first.
January 24, 2009: Follow-up: See the site :”dandodiary.com: for a post on the class action law-suit filed against B of A and its officers and directors.
The stockholders of B of A have lost $100 billion in value and that information did not get one-tenth of the press coverage that the Madoff ponzi scheme costing investors $50 biillion got. What is wrong with that picture?