Bank turns to Massey

By Dan Chapman and Staff And Russell Grantham

The Atlanta Journal-ConstitutionThe Atlanta Journal-Constitution

Walter Massey might've been content to play tennis or fish, collect healthy fees from corporate boards and reflect on a rewarding life of science and scholarship.

A comfy retirement, though, must wait.

Massey, president emeritus of Morehouse College, was called upon last week to help rescue Bank of America. A long-serving board member of the nation's largest bank, Massey was tapped to become B of A's chairman.

He replaces Ken Lewis, another Atlanta habitue, who was forced by shareholders to relinquish the position. Lewis remains the bank's president and CEO.

One of Massey's tasks —- beyond guiding the bank through the recession, convincing federal regulators of the bank's financial worthiness and appeasing angry shareholders —- will be to help determine Lewis' fate.

The corporate coup that rocked the financial world involved two men with deep ties to Atlanta, where Massey and Lewis are remembered as smart, successful and driven men who left indelible marks.

Lewis, son of an Army sergeant, did two tours in Atlanta, first at Georgia State University and then at NationsBank, which acquired B of A and took its name. Massey, son of a manual laborer, graduated from Morehouse and returned to run the prestigious school. Both men were deeply involved in Atlanta civic life.

Nothing, though, quite prepared Lewis and Massey for the challenges that await. If the recession and federal regulators don't sink them, then still-furious shareholders —- including institutional investors who've seen their B of A stock slide 77 percent in value this past year —- could.

"If Dr. Massey takes public steps to accelerate the CEO succession process, and if he reconstitutes the board, then he could restore the bank's credibility," said Richard Clayton, research director for CtW Investment Group that manages B of A stock for union pension funds.

"The ball is in his court."

Different paths

Mississippians by birth, Massey and Lewis took different routes to Charlotte and B of A's board. Lewis grew up in Columbus and worked his way through Georgia State business school as a shoe seller, bookkeeper and airline reservation agent. An $8,000-a-year credit analyst job at NCNB followed after college.

In 1992, when NCNB bought Atlanta-based Citizens & Southern Bank, Hugh McColl sent Lewis back to Georgia.

"Ken was the strong insider that made things work," said Chris Marinac, an analyst with FIG Partners in Atlanta.

In Atlanta, C&S became part of NationsBank and Lewis was a 45-year-old Porsche-driving, $800,000-a-year executive in charge of its largest division. He also became the bank's public face in Atlanta.

NationsBank pledged $40 million for the city's Olympics campaign. Lewis also joined the Olympics committee, an anti-poverty campaign, and then-Gov. Zell Miller's welfare reform task force.

Lewis' doggedness, though, might've led to corporate stumbles once he replaced McColl in 2001, after it had become Bank of America.

B of A seemed to lose momentum in recent years, Marinac and others said.

"Being proactive on deal-making works until it doesn't," said Marinac. "Time will tell whether Merrill was the last straw or not."

B of A bought Merrill Lynch & Co. in January and later disclosed $15 billion in losses for the fourth quarter of 2008. The Merrill deal followed the questionable acquisition last summer of Countrywide Financial Corp., a mortgage broker with a huge portfolio of troubled loans.

The government has bailed out B of A to the tune of $45 billion this year. The Wall Street Journal reported last week that the bank, in danger of failing the government's "stress test," may need to borrow more money.

If B of A asks the government for additional cash —- UNC Charlotte associate professor Tony Plath estimates it will need $10-$20 billion —- the president could order the bank's management dissolved.

"They've got to get the controversy between the feds and Bank of America off the front page of newspapers," said Plath. "They've got to get back to business as usual."

Massey in hot seat

Walter Eugene Massey —- step right up!

"He will be the perfect person to communicate with regulators, Congress and the White House," said Sam Williams, president of the Metro Atlanta Chamber of Commerce where Massey served on the executive committee earlier this decade. "He will also try to make sure the bank survives and, indeed, thrives going through this financial storm."

Friends say Massey is well-suited for those tasks. As a precocious, yet homesick 15-year-old at Morehouse, Massey asked his mother if he could return to Hattiesburg. Essie Massey said no. He graduated with a degree in physics and mathematics, a commitment to social responsibility and a hunger to succeed.

"You left here believing you had to be a success," he said in a 1996 interview. He couldn't be reached for this article.

By 1966, Massey had received a masters and PhD in physics from Washington University in St. Louis. Massey filled top positions at the University of Chicago, Brown University and the University of California. He headed the National Science Foundation and the Argonne National Laboratory. At Brown, Massey placed student-teachers in inner-city schools to prepare teenagers for the rigors of science courses.

In Atlanta, Massey, working with the mayor and the Chamber of Commerce, became "intensely interested in improving Atlanta public schools," Williams recalled.

"He always tries to do the right thing every single time," said John Rice, vice chairman of General Electric. "And he's persuasive and relentless in pursuit of that right thing."

Massey returned to his alma mater as president in 1995. He led the school's most successful capital campaign, raising more than $120 million. He helped revitalize the West End and secure an important cache of the Rev. Martin Luther King Jr.'s papers.

In June 2007, Massey retired as Morehouse president.

Massey sits on the corporate boards of B of A —- a position he's held since 1993 —- and McDonald's. He has previously served as a director of Delta Air Lines, Motorola and Amoco. He has earned millions of dollars from his board work.

Critics, including Clayton, the research director at CtW, question whether Massey, a member of the board's audit committee, isn't tainted by the bank's questionable deals. They also wonder if he is independent enough to make tough decisions.

"This imposes a pretty heavy time burden on Massey, probably more than he bargained for," said Walt Moeling, an Atlanta attorney who represents the Georgia Bankers Association.

Lewis, as president and CEO, is still in charge of the bank's operations.

"My impression is Ken Lewis is still running the company," said analyst Marinac. "I'm not sure what they accomplished by removing him" from the chairman's role.