At 7:00 a.m., reporting from the NYSE, I tried to cobble together the outline of the facts. It was clear to me at that point that the Merrill sale to Bank of America was as big a story as the fall of Lehman Brothers, because it provided a window into the questions on everyone’s mind: What happens next? Was it a precursor of more trouble to come?
After the Today show, I headed over to Bank of America headquarters, where Ken Lewis and John Thain were scheduled to give a 10:00 a.m. press conference. The first thing I noticed when the two men walked into the room and shook hands for the camera was the awkward body language. They were not comfortable with each other, or, I suspected, entirely confident about the giant leap they had made over the course of a single weekend. Thain’s face looked gray with fatigue, and his standard close-mouthed smile seemed more strained than usual. I could see in his eyes that he felt defeated. Sitting side by side in their dark suits and red ties, sipping water from glasses embossed with the Bank of America logo, they were an odd couple. Lewis’s opening statement—“We thought this was the strategic opportunity of a lifetime”—might have seemed more plausible if the financial world wasn’t in upheaval. Thain added that his own people inside Merrill were delighted with the deal, glossing over what must have been incredible turmoil and uncertainty at Merrill.
I thought it interesting that early on in the press conference reporters phrased their questions as if assuming that Bank of America and Merrill had been talking about a deal for weeks, although the agreement was nailed down only over the weekend. Lewis and Thain both looked a bit abashed when they admitted that prior to Saturday morning there had been no discussion between them about a purchase. It was unbelievably fast. Why not just wait? Why buy Merrill at such a premium? I wasn’t the only one wondering what was going on. Surely, after the Lehman news, Merrill’s stock would have been under pressure, and Lewis could have picked it up cheaper.
Toward the end of the press conference there was an odd note when a reporter asked Thain what his role would be in the new merger. His face went blank for a second before he murmured, “To be honest, I haven’t had a chance to flesh out that discussion.” Lewis smiled approvingly, calling Thain selfless. “It was never about him,” he said. “It was always about the deal.” In the months ahead I would have reason to think about this many times.
As the room cleared after the press conference, I sat down to tape a lengthier one-on-one with Lewis, which would air on Closing Bell. I wanted to pursue the question of due diligence—how such a major deal could be struck in a forty-eight-hour period. Did he really have the time to study Merrill’s books? He replied in a very relaxed manner—essentially saying, “Not to worry. We know what we’re doing.”
I was also curious about the man himself. Lewis had told me on many occasions that investment banking was too volatile, and he definitely didn’t want to be in that business. “You are in that business now in a big way,” I observed. “What changed?”
He tried to sell me on a new vision of a company that married the two strongest factions of the financial industry to form an unbeatable entity. “It will be the envy of the financial services industry in terms of market share,” he said. “And the power with which we can operate in the best country in the world. If you want to create that formidable company, you have to be opportunistic.”
There was no doubt in my mind that Lewis was optimistic. He saw the purchase as an amazing opportunity, a real coup. He leaned toward me, forcefully making his point. “This company’s going to be a thing of beauty as we get to the other side of this economic downturn,” he insisted. “It will be the envy of the financial services industry.”
I left my interview with Lewis and headed back downtown to prepare for my show at the New York Stock Exchange. I needed time to think and study, but events were happening too fast to allow an opportunity for reflection. Complicating matters was the fact that we were in the final weeks of an intensely fought presidential campaign. Ticking across the wire was a statement by Republican nominee John McCain, obviously trying to quell panic, saying, “The fundamentals of our economy are strong.” It was one of those devastating remarks that continued to echo long into the campaign. The debate McCain’s remark generated had to do with what the fundamentals actually were. But there was no escaping it. Everywhere you looked there was a meltdown. Wall Street was getting the stuffing kicked out of it, and the stakes were no less than the future of the entire U.S. economy.
I worked my BlackBerry lining up guests and gathering information. “Let’s get Win Smith to talk about his reaction to the Merrill deal,” I suggested to my producer. “And find out if Meredith Whitney is available.”
Closing Bell was a packed show that day. Win Smith was my first guest. Smith was not one to grab the spotlight, but more than almost anyone I could think of, he represented the Merrill founders. He had a dog in this fight, if only because of his father’s service. “What are your thoughts?” I asked him. His words were measured but his
