Ken Lewis Out as BAC Chairman

The Dow rose 168.78 points today to close at 8185.73. That’s the highest close since February 9.

There were solid gains across many sectors. Pantry Inc. (PTRY), a favorite in my Quantum Growth service, soared over 15%. Smith & Wesson (SWHC), which is in my Emerging Growth service, jumped nearly 10%.

One of the big news items today was that Ken Lewis lost his job as chairman of Bank of America (BAC). It’s about time, I’ve never trusted him. This is what I wrote earlier this year:

“The reason for my distrust is that the bank has always tried to massage its earnings numbers each quarter. I can’t stand when companies try to do that.

Last year, other banks were compensating their institutional clients for losses in their controversial high-yielding institutional money market funds, what did BofA do? They simply returned the illiquid securities to their clients. Technically, mutual funds are allowed to do this, but BofA did it so they wouldn’t have to disclose their losses. For BofA, it was more important to try and mask their losses rather than to take care of their clients.”

BAC shareholders were plenty angry at today’s meeting and demanded that the jobs of chairman and CEO be separate. Lewis held them both. Given this move, I doubt he’ll hang around as CEO much longer. I now rate Bank of America as a hold. It’s a better stock without Ken Lewis.

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