At Least New BofA CEO Brian Moynihan Knows the Bank Well
Bank of America (BAC) has finally picked a successor to Ken Lewis. After months of trying to recruit an external candidate for the now worse-than-thankless job, BofA has picked Brian Moynihan as its new CEO. He's held several key positions inside the bank, including a role as the in-house lawyer who helped negotiate its deal to acquire Merrill Lynch. Since Ken Lewis announced he would leave -- in the wake of allegations that he misled Congress when discussing what he knew about Merrill Lynch's financial condition before buying it -- BofA's board had struggled to find a suitable replacement.
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Interestingly, that process spurred BofA to repay its $45 billion in TARP money so it wouldn't be limited in its ability to pay an incoming CEO. This will be a big boost for Moynihan because it'll mean less government intrusion, in addition to more pay.
BofA's board evaluated both internal and external candidates. Bloomberg News reports that Chairman Walter Massey chose Moynihan after considering six internal candidates including Gregory Curl, BofA's chief risk officer, who Lewis wanted. Robert Kelly, CEO at Bank of New York Mellon (BK) and the leading outside candidate, dropped out of the running on Dec. 14, according to Bloomberg.
An Insider with Many Jobs
Who is Brian Moynihan? He's a lawyer from Ohio who lives in tony Wellesley, Mass., according to the Boston Globe, and joined BofA when it acquired FleetBoston Financial in 2004. Moyhnihan ran FleetBoston's brokerage and wealth management unit and directed strategic development for six years, according to Bloomberg. The Globe claims Moynihan has a "reputation as a whip-smart and indefatigable executive who mastered many disparate tasks assigned to him."
Moynihan had many jobs at BofA. He was president of the global wealth- and investment-management unit, spent a month in 2008 as general counsel, then replaced former Merrill Lynch CEO John Thain in January 2009 -- running BofA's investment bank and wealth-management units. In August 2009, BofA appointed him to run its retail bank, including oversight of credit card operations.
Moynihan faces big challenges as the troubled giant's new CEO. He needs to limit consumer loan losses, which are hurting BofA's results, integrate Merrill Lynch, smooth relations with regulators after their battle with Lewis and boost brokerage and investment-banking fee income to offset all the loan losses.
Why the Long Search?
In short, Moynihan has run most of BofA's different business and appears capable of handling the challenges ahead. So it makes one wonder why the board was so eager to get someone else besides Moynihan for so many months.
- The board is concerned that Moynihan's involvement with the Merrill Lynch deal could cause legal problems.
- Some BofA insiders may have reasons for not rallying behind him. If that's so, the board may have feared unwanted turnover.
As I've wrote in October , I dislike the one-stop-shopping concept for financial services that BofA pursued under Lewis because consumers don't want to put all their eggs in one basket. Plus, BofA has had trouble getting its disparate units to work together.
Moynihan says all BofA needs to do now is "execute" -- whatever that means. We'll see how well, or who, he executes starting in January when he takes over.