Money Matters, Simplified.
BOA’s new CEO, Brian Moynihan, has his task cut out
by Jamie Anderson - December 18, 2009 - comments
Increasing credit problems wherein credit card delinquencies are at an all-time high and mortgage and consumer loans problems that are mounting by the day are industry-wide problems, the ones that Moynihan has to grapple with as well now
Charlotte, NC, December 18 -- In his fourth assignment of the year, Brian Moynihan joined at the helm of affairs at the besieged Bank of America Corp. on Wednesday.
Addressing about 750 employees at the bank’s headquarters, in Charlotte, outgoing Chief Executive Officer, Kenneth D. Lewis, said of the new incumbent, “Many of you know him because he’s been in so many different jobs. Hopefully he will be in this job much longer than the last three or four.”
Moynihan, despite being an outsider, ascended to the top position at the largest U.S. bank even though some directors strongly advocated that the position be given to an internal member.
The tasks ahead
50-year-old Moynihan, an Ohio-born lawyer, will now take on what is likely to be the toughest job of his career. However, years of rich experience should enable Moynihan reinstate the splintered spirits at the bank.
Moynihan will have to deal with regulatory investigations into the bank's 2008 acquisition of Merrill Lynch as well.
At the same time, the onerous task of repairing relationships with regulators and members of Congress who piercingly disparaged the bank for acquiring Merrill lies with Moynihan.
Further integration of Merrill and mortgage lender Countrywide, both acquired in the last couple of years, needs to be undertaken.
The new CEO signaled that focusing on current businesses rather than buying new ones was on the top of his agenda.
"When we use the word execution, we mean key things that face our customers. That includes rebuilding relationships with consumers who have had economic hardships,” Moynihan claimed.
Suggesting a departure from the approach of retiring CEO Kenneth Lewis, who was best-known for his deal making, Moynihan clarified, “We don't have to think about buying something."
Right candidate
That’s a tall order for a lawyer turned investment banker. Nonetheless, experts in the industry as well as people personally known to him opine that he is the right candidate for the job.
Nancy Bush, an independent bank analyst at NAB Research LLC said, “I’m glad they went with someone who knows the company and who isn’t going to restructure and shake things up right away, because Bank of America just needs some quiet time.”
“He may swap some players around, but he’s not going to lop off any businesses,” added Bush.
Ed Paxton, Moynihan’s high school basketball coach describes him, “He was a total team player, a very unselfish individual. His playing time was limited, but that was because at that point in time we had very successful teams. But he was always someone you could count on when you put him in.”
This is not to say that Moynihan does not have his share of detractors. His relative lack of long-standing banking knowledge may not clear the bank's operational obstacles, claim critics.