Did Ken Lewis Learn from Ken Thompson’s Mistakes?
On Thursday, I interviewed UNCC finance prof Tony Plath for a story that I'm working on. I asked him if Countrywide could turn out to be Ken Lewis's Golden West. Here's what he said:
"There’s a chance, but the chance is smaller. You never say never in this in this industry, but there are a couple of differences.
Number one, $4 billion vs. $24 billion [the former being the price for Countrywide, the latter the price for Golden West]. Number two, Countrywide has the exposure in the mortgage market, but it’s not as heavily concentrated in those option-adjusted ARM mortgages.
Probably most important, Ken Lewis has learned by looking down Tryon Street by what is going on, on South Tryon. The guy who was supposed to head that business is Dave Sambol, and he just walked away with a $24 million payday from BofA and never worked a day for the company, because they replaced him with Barbara Desoer. Ken Lewis is learning from Ken Thompson’s mistakes, and he’s not going to turn Bank of America into Countrywide. He’s going to turn Countrywide into Bank of America. And if Ken Thompson had turned Golden West into Wachovia instead of letting Golden West dominate the mortgage culture at Wachovia, we wouldn’t be having this conversation today. Ken Lewis just took a $24 million loss on the person that was going to run that mortgage business. He didn’t take that loss lightly, he did that on purpose….
What that told me is that they were willing to do what it took to make sure they didn’t turn into Wachovia. So the answer to your question is, it could happen, but it’s highly unlikely based upon Ken Lewis’s ability to learn from what went on on South Tryon."
It's an interesting perspective, isn't it?