Emergency CEO to the Rescue?

In case of subpoena, break glass for "emergency CEO." It won't be quite that easy for the Bank of America (BAC) board, but this is precisely what directors at the embattled bank are preparing for this week, should outgoing chief executive Ken Lewis get ensnarled in fresh legal woes that force him to step down before year's end, the Wall Street Journal writes this morning, scooping the field. What kind of legal problems could Lewis be facing? The Securities and Exchange Commission and New York Attorney General Andrew Cuomo are still investigating why Lewis and the bank allegedly withheld details of crippling losses at Merrill Lynch.

Citing a source, the WSJ says BoA's board formed a special committee, led by Bank of America Chairman Walter Massey, to come up with a short list. The eventual candidate would require signoff from federal regulators, the newspaper adds. Of course, on Friday the board began its formal search for a successor to be named by the end of the month to take over for Lewis in early 2010. That short list too will be presented to Washington for review, the penalty for accepting $45 billion in taxpayer funds during the height of the crisis, the newspaper reports.

There's still plenty of blame to go around for the handling of the financial meltdown we went through a year ago. A new report by the the inspector general who oversees the government’s bailout of the banking system will come out later today with strong criticism for the Hank Paulson-led Treasury Department for misleading the public, the New York Times reports. Last autumn, "a Treasury official made incorrect statements about the health of the nation’s biggest banks even as the government was doling out billions of dollars in aid, according to a report on the Troubled Asset Relief Program to be released on Monday by the special inspector general, Neil M. Barofksy," the newspaper writes. The problem was that Treasury officials were entirely too pessimistic, the report reads, according to MarketWatch. The report recommends that government officials be more clear in explaining exactly how and why they plan to spend our $700 billion, "even in time of crisis."

There will be some good news, too, coming out of the Treasury today. The WSJ reports the Treasury's Public Private Investment Program, enacted to unload billions' worth of toxic bank assets from its balance sheets, found three more willing buyers in BlackRock Inc. (BLK), Wellington Management, and AllianceBernstein LP (AB), plus its subadvisers, Greenfield Partners and Rialto Capital Management. The trio will commit $1.94 billion to buy dodgy bank assets, the newspaper writes.

Most bankers might come across as bullish about the current economic recovery, but not HBSC's chief executive, Michael Geoghegan. He's "so convinced there will be a second downturn in the coming months that he plans to delay any rush to expand the bank," writes the Financial Times. His words come even as banking observers have suggested HSBC (HBC) might be poised for a series of Asian acquisitions, after Geoghegan relocated his office from London to Hong Kong. However as he tells the FT, “Is this a V recovery or a W? ... [I think] it’s the latter. [If I’m right], we have to be very careful we don’t grow the balance sheet so far before the recovery has come only to write it back into the impairment line later on." His words comes just as HSBC completed the sale of its New York headquarters for $330 million in cash to Israeli businessman Nochi Danker. The bank will lease back its building at 452 Fifth Ave., writes Bloomberg.

It's a big week for retailers who anxiously await the September sales reports from key chain stores. The figures, due to be released Thursday, are seen as a keen barometer for Christmas sales projections and gives them a chance to adjust their inventories, the WSJ writes. The results for stores open at least a year are predicted to fall 1 percent to 2 percent compared with September 2008, and that would be a "harbinger of a season filled with bargain hunting and last-minute gift shopping." With analysts already predicting a gloomy holiday buying season, stores have been "slashing inventories in hopes they can avoid profit-sapping price cuts," writes the WSJ.

And finally, the winners and losers in the likely Chapter 11 filing of troubled corporate lender CIT (CIT) are already being counted. According to the FT, Goldman Sachs stands to receive a payment of $1 billion should CIT go bust. And the big losers? The American taxpayers, which would lose $2.3 billion in the case of a CIT bankruptcy. "The potential loss for taxpayers would be the biggest to crystallize so far from the government’s capital injection plan for banks," the newspaper writes.