Let's hope Lewis' audacity pays in time

Ken Lewis just cemented his place in business history as either the genius who made Bank of America the most dominant financial services company of the 21st century or the gambler who made one big bet too many.

His $50 billion offer for Merrill Lynch, a company that lost $4.5 billion just last quarter, is an astronomical risk. But that very nerve prompted the series of deals that made BofA the force it is today. CEO Lewis, and Charlotte, had better hope bank executives have one more good one in them. We bet they do, but it will take years to pay off.

The Merrill deal is twice as big as Wachovia's 2006 purchase of Golden West. That debacle cost Wachovia CEO Ken Thompson his job. If Lewis can't navigate Merrill's bad investments – which include nearly $9 billion in exposure to collateralized debt obligations – he could be next.

The 70 percent premium he paid over Friday's close means it will take that much longer to recoup the bank's money. With Merrill searching for a buyer to stave off a downward spiral, BofA surely could have paid less. Lewis reportedly started talking with Merrill chief John Thain on Saturday night and sealed the deal the next day. How much due diligence can be done in that time?

BofA only recently swallowed Countrywide Financial, so Lewis has a lot to digest. But the deal gives BofA control of the nation's largest army of financial advisers and one of the most respected investment banks, an arena in which BofA has faltered. Combined with Countrywide and the 2005 purchase of credit-card firm MBNA, BofA will have shored up virtually all areas of the business. Even the Titanic wasn't too big to fail, but in today's banking industry, size can offer some protection.

Charlotte's a banking center, but Wachovia, and to a lesser extent BofA, have been battered by the financial crisis, largely by making the same kind of dopey decisions that have brought down Bear Stearns and Lehman Brothers.

But BofA is still strong enough to take on Merrill, a sign of executives' confidence in their ability not just to weather this crisis but to thrive. Charlotte, and its 65,000 financial industry employees, certainly need them to be right.

BofA started toward national prominence through the audacity of previous CEO Hugh McColl Jr., and this purchase is in line with some of his gutsier grabs. But make no mistake, the end of the financial crisis is nowhere in sight, and we all ought to be hoping that Ken Lewis was driven by more than ego to make this deal.