We all make mistakes, if only occasionally. It’s just that if you are Ken Lewis, your mistakes can cost you hundreds of billions of dollars, along with your reputation and your job. To paraphrase Warren Buffett, it looks like Lewis might have worked at Bank of America for 39 years to build his reputation, only to blow it all over a weekend back in September when he decided to buy Merrill Lynch.
In the space of just a few months, Bank of America has gone from being one of the rare success stories of this crisis to one of its biggest casualties. Last week, its shares fell more than 46% as it unveiled a $15bn capital injection from the US Treasury. Its shares have now halved this year, and are off by nearly 80% since it bought Merrill Lynch in a shotgun marriage after a weekend of frantic talks. In the past few weeks, Lewis must have replayed that decision in his head many, many times.