Bad News for Bank of America
A lawyer may be next in line to succeed current CEO Ken Lewis.
Brian Moynihan, the lawyer put in charge of Merrill Lynch & Co. after the ouster of John Thain, is emerging as right-hand man and potential successor to Bank of America Corp. Chief Executive Kenneth D. Lewis.
This is not a shot at lawyers per se. Boards often appoint individuals as CEOs with a certain skill set to address specific problems. Usually, if a lawyer is being considered for the position of CEO, it is because his skills are needed to navigate legal issues the company faces, not because of his business acumen. As the article states
Despite limited experience on Wall Street and outsider status at Bank
of America, joining as part of its 2004 acquisition of FleetBoston
Financial Corp., the 49-year-old Mr. Moynihan has been at Mr. Lewis's
side at several important moments of the financial crisis, including
during a recent high-profile visit to the White House and a
mid-December trip to Washington to tell federal regulators the company
might back out of its agreement to buy Merrill.
If Bank of America appoints Moynihan, it is because they feel the need to address the regulatory environment in Washington, not to build shareholder value. Thus, BofA is likely to underperform the bank group over the next several years.
The last lawyer appointed to the position of CEO of a big bank was Charles Prince of Citigroup because of his adept handling of various legal issues Citi had gotten itself into. And we all know how well that turned out.
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