Off The Record w/ Charlie Gasparino - BofA

Will BofA earnings restore the reputation of beleaguered CEO Ken Lewis?

Few CEOs have endured as much criticism as Lewis over his purchase of Merrill Lynch - a deal many believe cost him his job.

In what may be an effort to preserve his legacy, Ken Lewis decided to forgo his 2009 salary – about $1.5 million. When word came down on Thursday evening, the Fast Money traders agreed that it was a small price to pay.

As you remember, Bank of America agreed to acquire Merrill Lynch in a hastily arranged deal in September 2008, at the height of the financial crisis, just as Lehman Brothers was preparing to file for bankruptcy.

When it asked shareholders to approve the takeover, Bank of America said Merrill would not pay year-end bonuses without its consent. But in August, the SEC said in court papers that BofA had already authorized Merrill to pay up to $5.8 billion in bonuses and didn't share that information with shareholders.

But as Goldman showed this morning - the investment banking business is alive and well on Wall Street. And with BofA earnings out Friday, could the Merrill deal vindicate Ken Lewis?

Quite possibly.

If you look at JPMorgan earnings -- the bank side is clearly losing money, says CNBC’s Charlie Gasparino on Fast Money. It’s the securities end of banks that are outperforming. So it stands to reason that if it wasn’t for Merrill Lynch this would be a bloody quarter.

Gasparino goes on to say the value of Merrill should pay off this quarter and for many quarters to come, Gasparino.


And in terms of the CEO search, Charlie Gasparino says the board of BofA is getting closer to finding its next CEO.

Despite chatter about finding someone outside the company such as Bill Boardman, the former #2 at Bank One or Chad Gifford the former CEO of Fleet Financial -- sources tell CNBC that the BofA board of directors prefers an insider to run the company.

Following is Gasparino's original list of potential new CEOs:

Name Position
Thomas Montag Head of Global Markets
Barbara DeSoer Bank of America Home Loans
Sallie Krawcheck President of Global Wealth
Brian Moynihan Head of Consumer and Small Business Banking
Joe Price CFO
Greg Curl Chief Risk Officer

And here's how Gasparino is gaming the outcome.

Odds Of Succession
Greg Curl 1:2
Brian Moynihan 1:3
Sallie Krawcheck 1:10

I think Greg Curl is the guy they want, Gasparino says. It's worth noting that despite earlier reports, BofA does not want to appoint an interim CEO. Instead they want to make a decision and then move forward.

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Trader disclosure: On October 15, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT): Terranova Owns (SUN), (OIH), (HOC), (HES), (GOOG), (IUYG), (OHI), (FTO): Terranova Is Short (GRMN), (CCL): Najarian Owns (BX) Calls; Najarian Owns (DELL) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (GOOG) Nov. Calls, Is Short (GOOG) Oct. Calls; Najarian Owns (HMY) Calls; Najarian Owns (IBM) Nov. Calls, Is Short (IBM) Oct. Calls; Najarian Owns (LAZ), Is Long (LAZ) Puts, Is Short (LAZ) Calls; Najarian Owns (MYL) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (STX) Call Spread; Najarian Owns (TEVA); Najarian Owns (YHOO) Call Spread

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