Memo From BofA's Lewis: Rough Week for Stock, Good Week for Business
Bank of America's shares hit an intraday low of $3.19 a share today, a level not seen since August 2, 1984, when the bank traded at $3.17 a share. Chief Executive Kenneth Lewis is having his own difficulties over his bank's acquisition of Merrill Lynch. It must be time for some morale building, and to that effect, here is a memo Lewis sent out to his staff today:
Rough week for stock, good week for business
To my teammates:
Public debate on the subject of potentially nationalizing some banks continues to put great pressure on our stock. And yet, our company continues to be profitable. I see no reason why a company that is profitable, with capital and liquidity levels that are very strong, and that continues to lend actively, should be considered for nationalization. Speculation about nationalization is based on a lack of understanding of our bank's financial position as well as a lack of appreciation for the adverse ramifications for our customers and the economy.
Bank of America does not need any further assistance today, and I am confident we will not need any further assistance in the future. I believe our company has more than enough capital, liquidity and earnings power to make it through this downturn on our own from here on out.
There is no question that the recession is continuing to worsen and that rising credit costs will continue to put great pressure on our ability to generate earnings. But here's the good news: Your hard work is producing results in businesses all across the company.
While I can't divulge any specific financial results mid-quarter, I can tell you that activity in our trading business continues to be vastly improved over last quarter. The corporate debt markets are showing some signs of thawing in both high yield and high grade, and we're already seeing some benefits in the market of our combination with Merrill Lynch, in terms of winning mandates to raise capital for new and existing clients. And Merrill Lynch Financial Advisors posted nearly a half billion dollars in CD sales in the first four weeks these products were available to their clients.
On the retail side, our customer satisfaction scores are up at a time when others are down. Our brand, which took a beating in January, strengthened in early February, as customers gave us high marks for trustworthiness and perception that money is safe with us. In the first week of February, our Go America, Save! promotion boosted CD sales 18% and IRA sales 10% over the prior week. We extended our industry record this week for number of active mobile banking customers, surpassing the 2 million mark. And this week, a consortium of banks, including Bank of America, launched the Help With My Credit campaign to raise awareness of the different ways credit card issuers can assist customers in managing their financial obligations.
I am really encouraged by what we're seeing in our home lending business. The mortgage boom is so intense we actually pulled down some advertising for a brief period to give our teams a chance to catch up to the volume, but they are running at full tilt now and processing record volumes. Our decision to acquire Countrywide has put us in a great position to capitalize on the surge in this business. This is a very positive story as we lead up to the launch of our new Bank of America Home Loans brand in April.
Yesterday, I met with a group of about a hundred of our top leaders to discuss what's going on in the businesses and listen to their thoughts and concerns. We talked about the great challenges we're all facing in the marketplace. But we also talked about how encouraging it is to work with such strong teammates, to have the trust and support of our customers and clients, and to have the position in our markets that we do.
As we concluded the meeting, I told them that we have a clear challenge in front of us: to prove the cynics and the critics wrong. I know we can do that - in fact, I think we're doing it now, in the work each of you is doing every day, and the business results you're putting up on the board.
Thank you for that. Let's keep the momentum going.
Ken
An expert translator never translates word for word. He hears the meaning of what is being said and relates this to the ears of his listening audience. As such, he needs to have quick and easy access to two separate and distinct reservoirs of language: one, in which he captures what he hears; and one, from where he draws the words to say what he has heard. His skill is enhanced if he can claim an understanding of cultural nuances as well.
Eskimos, for instance, have anywhere between 14 to 60 different words for ‘snow’ (depending on the language), whereas we have only one (with modifiers, of course). Therefore, it is often difficult to divine proper meaning through a translator whose skills may be lacking. (And who, in all honesty, would know the difference?)
A fundamental part of studying any one of the various academic disciplines is learning its vocabulary. It is entirely possible for a botany student (for instance) to listen to a lecture by a musicologist and not know what on earth he is talking about. How much more difficult it must be for people, from different parts of the world, speaking different languages, to understand each other, even with the services of a translator!
We hear the Iranian president say that the Jews must be ‘eliminated’. We never ask what exactly he means by that. Perhaps we are afraid to find out because in our own minds we link such statements to what we ourselves understand by ‘holocaust’ horrors. I would bet that were he confronted directly and asked to explain (in detail), his answers would differ from what we might expect them to be. Similarly, we tolerate accusations of racism, without realizing that those leveling charges themselves practice ‘racism’, at least to the extent of being aware of, and differentiating between the skin shades of their own. Many Indian women, for instance, refuse to go out in the sun for fear of darkening.
I wish I had a dollar for every time I have heard mention of the phrase “uncharted waters” as relates to our current financial crisis. Obviously, the vocabulary to explain it has not yet been developed among our ruling elite. It provides an opening for the unscrupulous to come in and exploit the situation. The ‘supply side’ conservatives have been deliberately excluded from the conversation - their words and concepts marked ‘poison’.
On the other hand, it must not be forgotten that this so-called ‘crisis’ has worked in favor of the current ruling class. Members might not want to be so quick to determine a ‘fix’ so long as the present situation serves their purposes. For that matter, I suspect that were all sides pinned down and asked to explain, their answers on the surface would sound the same, though their meanings would differ. And, as we have seen, it’s not easy to imagine a translator grounded equally well in the full spectrum of ideology. …just as it would be difficult to find a translator equally well versed in pretense and delusion who might agree to communicate what the intrepid Ken Lewis might actually be saying here.
I believe in you Mr. Lewis I also believe in Mr. Sloan and Mrs. Ward.