There was a lot of chatter when Ken Lewis stepped down as CEO of Bank of America (BAC) as to whether a potential enforcement was forcing the board's hand. It turns out that thought was right on the money.

Andrew Cuomo, New York Attorney General, has decided to bring a civil action against Lewis, charging him with a lawsuit that contends that the bank's management team misled shareholders by understating the losses at Merrill Lynch, in order to get approval of a merger. It also charges that he later overstated the firm's willingness to terminate the merger in order to get $20 billion from the federal government.

There was no way the board could allow a standing CEO to be charged. So from the board's perspective, he had to go. It's bad enough that Joe Price was charged; he stepped down as CFO but is still with the bank as head of consumer a small business banking. He just got a raise, bringing his pay to $800,000 a year, from his previous salary of $500,000. The bank has a tough decision on its hands regarding his status. He may step down so the bank won't be distracted. 

"The Bank of America and its officials defrauded the government and taxpayers at a very precarious time," Cuomo told reporters. The interesting part here is that Bank of America has also settled with the SEC on the related case that was scheduled to go to trial soon, agreeing to pay $150 million--that's more than the $33 million it had agreed to the first time, only to have the deal nixed by Judge Jed Rakoff.

Rakoff basically thought the bank was getting off too light. The bank also agreed to retain an independent auditor to review disclosure practices, better refine compensation and audit committees' roles and give shareholders the right to vote whether to approve pay proposals. It's still unclear to anyone if he will approve this one, but you would think the bank and the SEC sought some sort of indication. 

For more:
- here's an AP article
- here's a release on the settlement

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