Brian Moynihan should send a thank you note to New York Attorney General Andrew Cuomo, who is at least partially responsible for Moynihan’s surprising rise to the top job at Bank of America.
A year ago Moynihan was more or less fired from Bank of America after he refused to take a post in Delaware running the bank’s credit card operations. Ken Lewis informed the board of directors that Moynihan had resigned. But the very next day Moynihan was instead made general counsel at the bank after the abrupt firing of Timothy Mayopoulos.
After Lewis announced on September 30, Moynihan quickly emerged as a leading candidate for the top job. But many at the bank and on Wall Street considered him an unlikely choice. Lewis himself favoured Greg Curl, who had been head of strategy at the bank and was recently elevated to chief risk officer. In fact, when Lewis resigned, he asked the board to immediately name Curl as his successor.
As late as two weeks ago, Curl was considered the lead inside candidate. He had managed the bank’s TARP exit capital raising, which many thought would win him the CEO slot.
But Curl had a problem—and that problem was named Andrew Cuomo. The attorney general has been probing whether Bank of America’s top management properly disclosed mounting losses at Merrill to shareholders before they voted to approve the acquisition last year. And word has been leaking out of Cuomo’s office that he is “concerned” about some of the testimony Curl gave to the investigation. Charlie Gasparino reported that those concerns cast a cloud over Curl’s chances.
A source familiar with the matter says that Cuomo effectively vetoed the selection of Curl. The board was concerned that selecting Curl would invite even more scrutiny from Cuomo. They wanted to avoid spending another year with top management distracted by investigations into the Merrill acquisition. Our source says Cuomo let the board know that he would be very much opposed to the selection of Curl.
The board then returned to its pursuit of Robert Kelly, the chief executive of Bank of New York Mellon. But those talks stalled, in part because Kelly was asking for a larger pay package than the BofA board was willing to guarantee.
So with Kelly too pricey and Curl unacceptable because of Cuomo’s investigation, the board turned to Moynihan. He was unanimously elected by the board but he was definitely not their first choice.