Brian Moynihan choked on his breath as he spoke at the Barclays Capital Global Financial Services Conference this morning.
He was discussing the firm’s plans to initiate Phase 1 of Project New BAC, a broad re-structuring that will re-focus the bank’s business on corporate, international banking, and away from consumer lending.
Project New BAC has at least 2 stages of cost-cutting. Phase 1 cuts mostly the consumer business. Moynihan is likely the best man to trim costs efficiently in this area because he ran the consumer bank, the biggest in the world at the time, at Bank of America before he was named CEO.
But before that, he was a lawyer, and what we’ve seen out of him recently is that he still is, more so than he is a leader. He is implementing positive changes, but not articulating them with authority.
On a conference call with investors in August, he closed by saying words to the effect of, those people who think we’re in trouble, we’ll see you in court.
And during that call, and again today at the Barclays conference, the primary purpose of his speech seemed to be to offer proof that the nay-sayers are wrong, that Bank of America is a strong company. Moynihan has now made that argument a few times. He’s assured investors multiple times that Bank of America has enough capital to cover its mortgage litigation exposure. He has pointed out that the challenges it faces are some that all banks face: extended low economic growth and low interest rate environment, mortgage issues, and the new capital structure.
He’s proven that Bank of America should survive because it has the tools and plans to address its shortcomings — assuming the firm is setting aside enough for mortgage litigation damages (which some would still argue it isn’t).
And he makes an effort to rally his troops with leaderly remarks. To address the huge number of layoffs coming at BofA, for example, Moynihan said at Barclays that Bank of America has to be the best company out there, not the biggest company. He mentioned Bank of America’s strengths, like in investment banking.
However speaking today and on conference calls earlier this year, he’s dedicated more face-time to proving critics wrong more than he has to confronted the problems facing BofA in the future: low-growth and new regulatory capital requirements that constrain the amount of business BofA can do.
Jamie Dimon, the CEO of JPMorgan, by contrast, has publicly lobbied against capital regulations a few times now. In return he’s gotten some flack, but many members of the financial industry are inspired. He fights to keep their jobs and the industry vibrant. It seems as though he wants to be a part of the future of finance and will take a stand to influence what form it takes.
Moynihan might not agree with Dimon that the new Basel and U.S. financial regulations are anti-American, but the government is 1) implementing rules that hit his firm’s profitability, and 2) it’s suing the pants off his firm for fraudulent mistakes made at an acquisition it might have been pushed to make (Countryside), and instead of doing something about it, Moynihan shows everyone how well his firm can roll over and take it.
Brian Moynihan was not a favourite with some of the Bank’s board members in 2009, when he was named CEO after Ken Lewis announced plans to step down and the firm began what turned out to be a difficult hiring process that resulted in many people turning down the job.
But Lewis gave one good reason in particular why Moynihan should be named CEO. He actually wanted the job.
Now there’s little doubt that Moynihan would be able to defend Bank of America’s capital position to the death in court. Or that his re-structuring plans for BofA are good for the company.
Tom Montag, on the other hand, appears to be gunning for the CEO job hard.
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