Posted by
alfredlester on Friday, October 02, 2009 3:06:51 AM
Who will lead Bank of America out of this mess?
That question is reverberating through Wall Street and Washington after the abrupt resignation of Kenneth D. Lewis, the bank&S217;s beleaguered chief executive. On Thursday, a day into this remarkable boardroom drama, bank insiders and a rapt audience in the financial community were grasping for a clear answer.
No sooner did news of Mr. Lewis&S217;s resignation break Wednesday evening than the handicapping began. Wall Street odds-makers tossed out the names of half a dozen possible successors. But Bank of America directors, many of them stunned by the turn of events, have only just begun to consider their options. The search is expected to take weeks.
For all the names being floated, few banking executives have the skill and experience to run Bank of America, a coast-to-coast giant with nearly $1 trillion in deposits &<51; and a bunch of giant-size problems.
Some executives with the right r&>33;sum&>33; have, like Mr. Lewis, fallen from grace during the financial crisis. Few would come without baggage. While federal regulators will not handpick the successor, they will effectively have veto power of the board&S217;s choice, according to a person briefed on the matter.
Whoever gets the job will face the daunting task of guiding Bank of America into its post-bailout future. The bank has yet to repay the many billions of taxpayer dollars that propped it up during the worst of the crisis.
Its controversial takeover of Merrill Lynch, which nearly undid both companies, remains problematic. And the bank&S217;s legal troubles &<51; and Mr. Lewis&S217;s &<51; are formidable.
So while Mr. Lewis transformed Bank of America into national behemoth, his successor must grapple with this troubled legacy. The new leader must repair the bank&S217;s strained relationship with its regulators, and perhaps, set it on a new course.
&S220;It is not only the choice of who is going to be the captain, but also what direction the ship needs to sail,&S221; said Rakesh Khurana, a leadership and corporate governance professor at Harvard Business School.
Mr. Lewis, who intends to leave on Dec. 31, did not groom an heir. Indeed, his resignation came just two months after Bank of America&S217;s board drew up a list of deputies who might fill the top job &<51; but then refused to select one, believing that Mr. Lewis would stay, according to two people with knowledge of the board&S217;s actions.
Now the board, in a state of upheaval, is moving quickly to interview several internal candidates. It plans to designate a group of directors on Friday to lead the search for Mr. Lewis&S217;s replacement. It also plans to hire an executive search firm to review outside prospects.
One controversial option under consideration would be to name an interim chief executive, someone who might stay in the position for two or three years. An interim leader might be viewed as a lame duck &<51; a significant risk, considering the bank&S217;s challenges &<51; but it would give Bank of America time to cultivate another executive to take over.
One possible interim chief is Gregory L. Curl, the bank&S217;s chief risk officer and the architect of Mr. Lewis&S217;s biggest deals. Mr. Curl, who is about 60 years old, has avoided the spotlight for years totally free credit score. He served as Mr. Lewis&S217;s chief negotiator in the ill-fated Merrill deal, which prompted Bank of America to seek a second financial lifeline from Washington.
The list of internal candidates is long. Brian T. Moynihan, 49, the head of the bank&S217;s big consumer unit, is perhaps the top contender. Mr. Moynihan, an adviser to Mr. Lewis who has rotated through four top jobs in the last year, has a background in law and appears to have the confidence of some members of the board. After he refused to move to Delaware to take over Bank of America&S217;s credit card unit, Mr. Lewis, who is said to believe that bank executives should do whatever it takes to serve the company, first told him there no option other than to leave. Under pressure from several directors, Mr. Lewis reversed course and named him the bank&S217;s legal chief.
Like Mr. Curl, Mr. Moynihan was closely involved with the Merrill deal, and both would probably be carefully vetted by regulators.
The odds, analysts say, are longer for Thomas K. Montag, 52, who runs the investment banking business; Barbara J. Desoer, 56, the head of mortgage operations; and Joe L. Price, 48, the chief financial officer.
The board will almost certainly consider outside candidates as well, but few of them would come without problems. Among the names that have surfaced are Robert K. Steel, 58, who has held discussions about the possibility with some of the bank&S217;s investors. Mr. Steel, a former Goldman Sachs executive and Treasury under secretary in the Bush administration, is a North Carolina native. But there are lingering concerns related to his time leading another North Carolina-based bank, the Wachovia Corporation. Among them are a television appearance where he promoted the company just before it was sold to Wells Fargo in duress and at least one open regulatory inquiry. A spokesman for Mr. Steel said he declined to comment on the search.
Other possible candidates have close ties to Bank of America, including Alvaro G. de Molina, 52, a former finance chief who now runs the finance company GMAC, which has also received extraordinary government support. Another is Gregory J. Fleming, 46, the former Merrill Lynch president, who negotiated a great deal for Merrill Lynch shareholders in selling the brokerage company to Bank of America.
Bank of America&S217;s board must make its choice amid looming questions about the bank&S217;s future. The board has been reviewing the bank&S217;s businesses, weighing the risks and opportunities for every area of the company, including those businesses that might suffer severe losses if the economy worsens. Management is also conducting a stress test similar to the one the bank provided for regulators last spring to help determine the shape of its businesses.
The conclusion of those reviews is bound to influence the choice of a new leader. But many see the Lewis era fading.
&S220;Ken Lewis had a very clear leadership style &<51; it was his way or the highway,&S221; said Meredith A. Whitney, a prominent banking analyst. &S220;Now you have a weak, undefined and to-be-determined leadership operation.&S221;
Who Can Take Charge at Bank of America?