A lot of names have hit the news with an announcement, “I do not want to be the CEO of BofA.” The list of who has been offered the job is much shorter.
Everyone who was actually a candidate got a call, “would you like to be considered?” If the answer was yes, they were asked to come in for an interview with the six men given the job of finding a replacement for former BofA CEO Ken Lewis, who is soon stepping down.
People familiar with the matter say there is a bit of a Civil War in the boardroom as the committee narrows down their choices, because the six men designated to pick Ken Lewis’s replacement are comprised of four “Yankees” and two “southerners.” They can agree on one thing: unless there is a problem, they all want to hire someone from within BofA. Jon Corzine is probably the only outsider being considered at this point. From there start the problems.
In the interview are the six committee-men. On the Yankees’s side it is Chad Gifford, Thomas May, Charles Holliday, and Thomas Ryan. On the Southern side: Walter Massey and Don Powell.
The Yankees like Brian Moynihan, the Bostonian lawyer-by-training who has run BofA’s consumer back, the largest consumer bank in the U.S.
The southerners like Greg Curl, BofA’s chief risk officer from St. Louis. Curl has worked on a number of their biggest deals, including the bank’s purchase of Merrill Lynch. Ken Lewis also trusts him.
The interview is not a grill session. BofA has a lot of problems related to the Merrill Acquisition; the CEO will continue to get sued forever over it, and that is not good for business. Also, he or she would face problems left-over from the Civil War.
Contrary to what has been speculated on the news, it is very clear that the CEO would have to live in Charlotte, NC, where there are lingering north-south issues, according to people familiar with the matter. The location might not be an issue for Moynihan, who flies north to Boston on the weekends, but his habit probably only widens the north-south divide.
Also an issue is the $45 billion the bank owes the government. Regulators insist that TARP companies raise $1 of private equity for every $2 they want to pay back. The new CEO will have to oblige, further diluting BofA’s shareholders. In addition to dealing with unhappy shareholders, of course they also will not get paid for the forseeable future, and it will never be a competitive rate.
BofA is a big bank with a lot of potential, but candidates have to be convinced, and the burdens on the decision process do not end there.
Three of the six committee-men were not at BofA when the crisis unfolded: Ryan, Powell, and Holliday. And together they all have a “Memorandum of Understanding” with BofA’s federal regulators looming over their heads, along with a nearing deadline.
The memorandum is an agreement that the committee must have their choice approved by the regulators, who are not going to be pleased with either Curl or Moynihan, people familiar with the matter say.
It is not an attractive cocktail, but someone will have to take it soon. The deadline is fast-approaching.