HOW A SHARK BECOMES SHARKBAIT

A bit of information from the Wall Street Journal that probably won't make it into the Grand Rapids Press:  Institutional Shareholder Services, a preeminent advisory firm, urged shareholders of Fifth Third Bancorp to withhold support of embattled CEO George Schaeffer and other directors who are up for election this year.*

As reported here, Schaeffer led the big bank from Cincinnati through its go-go years until a declaration of bank fraud from your friendly neighborhood watchdog, the Local Area Watch, triggered a federal investigation of Fifth Third in the wake of its botched acquisition of Old Kent Bank in 2001.

That stopped Schaeffer's running-on-water strategy of buying up smaller banks quicker than the financial irregularities of these mergers (think of the financing of the Boardwalk project) could catch up with Fifth Third.  Dead in the water, the bank sank losing over 40% of shareholder value during the next three years.  With a bit of poetic justice, Schaeffer's crash and burn turned the tables on Fifth Third and now made the shark sharkbait.  Wells Fargo and US Bank have both looked into buying out Fifth  Third.

Click here for a list of past articles about Schaeffer and his bank.

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* However, most shareholders ignored the advice, as they too often do regarding mismanaged public corporations.  Think Enron.  So Schaeffer and his cronies were voted back in today, though with considerably less support than before.

Comments

[Chris]

The Press did report about the dissent on March 29 in its business section. The Press also was one of the earliest to report on Fifth Third's executive pay decisions for 2005 (and 2004).

[The Executive Director]

Thanks for the info, Chris. I didn't read Wednesday's Press, but I'm glad to hear that your editors followed my lead. ;) Now they need to get off the stick and follow up on the other important stories covered only by Local Area Watch.

Regards, Bill