Yesterday Ken Lewis announced he was stepping down as Bank of America's CEO.

Let me be the first to say, "good riddance."

As a San Francisco native the Bank of America has been in my life and my family's life for a century. My Italian immigrant grandparent's grub stake in the American Dream came in the form of a loan from the bank, then named The Bank of Italy. It's founder, who Ken Lewis is not worthy to even mention, was Amadeo Giannini. Giannini started the bank in 1904 when he noted that existing banks were something less than thrilled with the idea of lending money to what they considered little more than a bunch of southern European peasants.

My grand father used those small loans to build two brick and stucco duplexes on what was then the outskirts of San Francisco, and to start his bricklaying business.

I only mention this because Giannini and Ken Lewis did have one thing in common - they were each at the helm when financial disaster struck. For Giannini it was the crash of 1929 and the depression years that resulted. For Ken Lewis it was ... whatever the hell you call this thing we're in now... another Great Depression or, as the guys who caused it prefer, "the Great Recession."

But that's where the similarities end. Because the way the two men, and the institution they headed, handled the crisis could not have been more different. My father, eleven-years old in 1929, recalled the hard times that followed well.

"When my father and others in our mostly Italian neighborhood started to have trouble keeping up with their mortgages and business loans, Giannini sent them a letter," my father told. "In it he said he understood that it wasn't the borrower's fault and that the bank wanted to keep them as customers and help them get through the hard times, but that both sides had to pitch in."

Giannini's proposal was simple, fair and balanced;

"Forget making principal payments on your loan," he told my father and others in the same boat. "If you can manage a few dollars every month towards principal, great, he told borrowers. But if you can't, then just make the interest payments until you're back on your feet."

My father said Giannini's wise strategy not only saved his family's home and his father's business, but those of scores of other families in their neighborhood. It also saved Giannini and his young bank the burden of repossessing properties that, due to the depressed conditions, could have only been an enormous loss to the bank.

Compare that with how the renamed Bank of Italy, now Bank of America - but really owned by Nation's Bank of Charlotte - handled the mortgage meltdown. Just to say that Ken Lewis et al, handled the current mess exactly opposite of how Giannini handled his crisis, would be a gross understatement. Lewis & Co. not only went the opposite direction, but did so with the kind of gusto and enthusiasm normally reserved for the manically insane.

Here's just a personal snapshot of what I speak.

Over the past six months I've been trying to help a young couple with their BofA problem. They took BofA up on an offer about four years ago, a first time homebuyer's loan. They both had perfect credit ratings and both were employed. They got 100% financing from BofA. Then the market crashed and a few months ago their house was appraised. They now owed $100,000 more than what they paid and what they owed the bank.

Since they had zero equity I suggested they contact the bank and see if they could cut a deal to adjust the loan. They contacted the bank the same week BofA pocketed about $50 billion in taxpayer bailout dough. The bank treated these kids like deadbeats and told them to get lost.

I suggested they contact the bank and put it this way to them:

"I think you misunderstood our earlier letter. You thought we had a problem. No. YOU have a problem and we're trying to help you out while getting some relief ourselves. Because if we walk away from this property YOU are going to have to take the whole $100,000 loss. So, let's talk."

Long story short - they weren't interested in talking. "Keep paying on the underwater loan or we will foreclose on the property," was their only response. (It reminded me of my favorite scene in a movie - Blazing Saddles, where the new black sheriff is surrounded by angry white townies, draws his gun and points it at his head a warns the advancing crowd, "One more move and the n.......r gets it!" )

So those young (former) homeowners are walking away from that house this weekend. Over the last two weeks they tried again to save the BofA time and money, offering to simply sign a deed in lieu of foreclosure. The bank refused.

Then they tried to find someone at the bank willing to take the keys and secure the property so it does not join the hundreds of other vandalized abandoned homes already on the local market.

Nope. The bank wasn't interested in securing the home either.

So the kids will simply leave, and the bank will.... well, who the hell knows what the bank will do. And at this point, who the hell cares?

The bank lost on so many fronts in just that one case; they lost the hope reducing their loan loss, they lost the chance to keep a modified but performing loan on it's books, it lost the chance to avoid the expense and time of a lengthy foreclosure process and they lost the chance to secure what will soon become an asset on it's already troubled books.

Oh, and they lost two future customers who are just beginning their earning lives. The kids closed all their BofA accounts and went with a local credit union.

Amadeo Giannini is doing cartwheels in his marble sarcophagus. And you and I, being the taxpayers we are, can only sigh and wonder why Ken Lewis - and his kind - are being bailed rather than jailed.

_______

newsforreal.com



About author Stephen Pizzo is the author of numerous books, including "Inside Job: The Looting of America's Savings and Loans," which was nominated for a Pulitzer. His web site is Stephen Pizzo is the author of numerous books, including "Inside Job: The Looting of America's Savings and Loans," which was nominated for a Pulitzer. His web site is News For Real