An admiral (and a general) jump ship at Bank of America
The exodus of directors from Bank of America (BAC) continues, raising the question once again about whether the bank is run by its board or the government.
The firm announced that retired General Tommy Franks and retired Admiral Joseph Prueher left the board. It is fair to ask what to military men where doing on the board in the first place and whether their lack of experience impeded the board's ability to oversee management's activities.
According to Reuters, "In the last two months, seven directors have left what had been a 19-person board, including lead director O. Temple Sloan, a longtime supporter of Chief Executive Kenneth Lewis."
While Lewis may be losing some of his backing on the board, the changes in the body have clearly come due to government pressure to build a group which has much more experience in the banking and financial services industries.
A public company board should be able to decide its composition without pressure from anyone other than shareholders. The government appears to have decided to disregard those "rules" It is a dangerous precedent and one that any firm that does significant business with the federal author ties should be worried about. Trying to influence board composition at banks and car companies may not be the end of it, especially as bailouts and money from the stimulus package to certain industries grows.
Douglas A. McIntyre is an editor at 24/7 Wall St.