Support for Bank of America CEO Ken Lewis wanes
— -- On Tuesday, the California Public Employees' Retirement System (Calpers), the largest U.S. pension fund, said it is voting against the re-election of Lewis and the bank's other 17 directors for not disclosing mounting losses at Merrill Lynch or BofA's secret meetings with the government in the fall for aid to complete the acquisition of Merrill.
Influential proxy groups such as RiskMetrics and Change to Win also have lobbied shareholders to vote against Lewis. William Patterson, executive director at CTW Investment Group, a BofA shareholder who has called for Lewis and other board members to be voted out, says this is one of the "biggest shareholder challenges to a sitting CEO" he has seen.
The calls for Lewis to quit come as BofA faces pressure from the government to raise more capital to better prepare for a worsening recession. Both BofA and Citigroup will have to raise more capital based on preliminary results of government stress tests unless they successfully appeal the findings, the Associated Press reported, citing two people familiar with the matter who spoke on condition of anonymity because they were ordered not to discuss it. USA TODAY was not able to confirm the report.
BofA and Citi each have already taken in $45 billion in government bailout money. Both declined comment on the report, citing rules barring them from discussing their results.
Federal regulators conducted tests on the 19 largest U.S. banks to see if they had enough capital to be able to withstand losses from a further drop in the economy. All the banks were informed of the results on Friday. The results are expected to be released next week.
Analyst Paul Miller of Friedman Billings says that along with BofA and Citi, other banks including Wells Fargo, PNC Financial, SunTrust and Regions Financial will require more capital if unemployment, now 8.5%, soars as high as 12%, which is above the 10.3% unemployment rate the government used in its stress test.
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