The Corporate Observer : Washington D.C. Class Action Lawyer & Attorney : Steven Berk Law Firm : Consumer Protection, Corporate Abuse : The Corporate Observer Blog

Bank of America’s chief executive, Kenneth D. Lewis, announced his sudden resignation last week. Lewis has been under a cloud of suspicion following allegations that Bank of America misinformed shareholders of details related to its merger with Merrill Lynch.

Lewis’ personal career at Bank of America is a classic American rags-to-riches tale. He began working as a low-level loan officer, eventually moving up to become the bank’s President as the bank grew to be one of the world’s largest.

As President, Lewis’ agenda: growth and profits. From Fleet to Countrywide to the venerable Merrill Lynch, he surely was successful on expanding upon the nationwide platform created when upstart Nation’s Bank purchased Bank of America. But what about compliance? What about nurturing a culture of measured risk and thorough analysis? Looking back on Lewis’ reign, after a $40 billion government bail out, and the debacle surrounding Bank of America’s failure to disclose (or perhaps worse) billions of bonuses to Merrill executives, he leaves despite expansion with a mixed record to be sure. 

Main Street hopes that Ken Lewis enjoys retirement and the $100 million he is expected to receive in stock and compensation – money that cannot be touched by payment czar Kenneth Feinberg. 

Perhaps he can use that money and business acumen to start a foundation –that trains bankers in compliance and business ethics … might be a nice start.

Assisted by Jess Begen and Zach Kady

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Frustrated by Bank of America’s failure to come clean, Rakoff issued a bitter ruling condemning the bank for its dishonesty and immorality. “It is not fair, first and foremost because it does not comport with the most elementary notions of justice and morality…”

Today we applaud the Honorable Jed Rakoff – our former “Person of the Week” – once again, for standing up against both Wall Street greed and immorality and one of the nation’s most important regulators. Not a bad day’s work.

On Monday, Rakoff stridently refused to approve a $33 million settlement deal between the Securities and Exchange Commission (SEC) and the Bank of America.

Rakoff’s decision protects the rights of Main Street and fulfills the judiciary’s historic role as the conscience of America. As Alexander Hamilton writes in Federalist Paper No. 78,

“The judiciary…has no influence over either the sword or the purse; no direction either of the strength or of the wealth of the society; and can take no active resolution whatever. It may truly be said to have neither FORCE nor WILL, but merely judgment.” Jed Rakoff’s actions demonstrate great judgment in the face of force and will.

The $33 million penalty—which would ultimately be borne by shareholders on Main Street—would have settled an SEC lawsuit filed against Bank of America, following its merger with Merrill Lynch & Co. The lawsuit accused Bank of America of lying to its Main Street shareholders, publicly promising that Merrill executives would not be rewarded year-end bonuses, while privately allotting upwards of $5.8 billion for bonus compensation.

Frustrated by Bank of America’s failure to come clean, Rakoff issued a bitter ruling condemning the bank for its dishonesty and immorality. He argued that the settlement was not only inadequate—$33 million from shareholders for a $5.8 billion lie?—but also unjust and absurd in that it doubly punishes Main Street victims, who would ultimately pay the costs of the $33 million penalty. “It is not fair, first and foremost,” wrote Rakoff, “because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the Bank’s alleged misconduct now pay the penalty for that misconduct.”

Rakoff’s harsh language surely expresses the frustration shared by many Americans and perhaps suggests that business as usual on Wall Street will no longer be tolerated, at least by Jed Rakoff. And for that, we salute him as Main Street’s Player of the Month.

Stay tuned: Rakoff has scheduled the case for trial on February 1, 2010.

Assisted by Jessica Begen.

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