Bank of America and Lehman Brothers?

I am leaning towards the idea of Bank of America acquiring Lehman Brothers. Although there are issues with any deal of this nature, I think this combination makes sense, particularly given the interest in real estate of both parties. A big benefit is that the operations of Lehman can be kept mostly intact. And, BofA would instantly have the best access to a lot of the "excess" talent that Lehman may need to shed in any deal.

My view was at least partially informed by an article in The New York Times by Ben White and Eric Dash entitled "Lehman and Its Staff Await Next Step."

One interesting aspect of the current financial turmoil is that the concept of an "investment" bank separate from a traditional "bank" bank is losing appeal very rapidly. Sure, investment banking is rather different from retail banking, but does that distinction really need separate companies for dealing with the different aspects of commercial financing? Why should "lending money" require different kinds of institutions? Besides, Wall Street investment banks have been edging into commercial lending anyway. OTOH, mashing "bank" banks and businesses in the "securities" industry into the same lump will present interesting turf issues for the Federal Reserve and SEC. Looking further out, the whole "stock" market and "bond" market is likely to evolve in a manner that we are as yet unable to even imagine.

The biggest looming problem is that Wall Street is kind of the "wild west", but consumers want "bank" banks to be rather boring and ultra stable and predictable. How does any executive team make those two work together?

-- Jack Krupansky