Tuesday, October 7: A bad day for CEOs. Psychological barriers are breached
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Tuesday, October 7: A bad day for CEOs. Psychological barriers are breached

"These are the most difficult times for financial institutions that I have experienced in my 39 years of banking." - Bank of America CEO Ken Lewis

The week Wall Street capitulated


"If they didn’t let a bank fail, how were they going to prove there was a serious problem? You kill a chicken to scare the monkey..."

Tuesday, October 7: A bad day for CEOs. Dick Fuld faces Congressional grilling. Ken Lewis announces BofA’s capital raising exercise

Tuesday, October 7: A bad day for CEOs. Dick Fuld faces Congressional grilling. Ken Lewis announces BofA’s capital raising exercise

The two longest standing US banking CEOs are both having a bad day: Dick Fuld is hauled over the coals during a congressional oversight committee and abused by bystanders as he leaves the building. He blames a financial tsunami for the collapse of Lehman Brothers. While Bank of America cuts the dividend and raises $10 billion of capital, CEO Ken Lewis says: "These are the most difficult times for financial institutions that I have experienced in my 39 years of banking." Tuesday began with another meeting with a banker that failed to inspire confidence in the Tarp. "At the first auction only the desperate will come forward," said the banker. "Tarp exists to create a reasonable market price and avoid the negative consequences of forced firesales."

At least this investment banker was hopeful that the systemic issues would be resolved by the end of the year, as he listed the innovations in the Fed’s window, support for the CP market, the Tarp and the Federal Deposit Insurance Corp, and the fact that the brokers were now bank holding companies.


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