Indiana Grain Company, LLC

Posted: 04/30/09

By: tomgrisafi

There's an old journalism maxim about storytelling: People like to read about people, which is why Ken Lewis, Bank of America Corp.'s chief executive and ousted chairman, is grabbing attention and headlines this morning, while Morgan Stanley's talks to spin off its capital-intensive, risk-taking trading arm go largely ignored.

The impact of Mr. Lewis's transgressions are largely behind us -- the bank has absorbed the acquisitions of Countrywide Financial Corp. and Merrill Lynch & Co., and it is moving on. Whether shareholders wish to pull Mr. Lewis's chairman title holds little more than symbolic meaning.

Meanwhile, Morgan Stanley's speculative move could create another highly leveraged, cowboy trading operation that (in the eyes of many) will directly undermines efforts to repair and reform Wall Street.

Mr. Lewis' counterpart at Morgan Stanley, John Mack, has proposed jettisoning his bank's freewheeling, gambling trading division, which bears more resemblance to a hedge fund than a commercial bank.

Spinning off the company's Process Driven Trading unit could put it beyond regulators' jurisdiction and create yet more outsize risk for the company and the financial system.

Unlike Mr. Lewis, who added only to the misery of his shareholders, Mr. Mack could be compounding the problem by proposing a structure that other banks could easily adopt.

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