Bank of America just can't catch a break. Early last month, at its first investor day in years, the largest U.S. bank by assets tried to wow shareholders and regulators with the firm's potential earnings power, as well as pledging to swear off any more dealmaking. But a couple of weeks later, the Federal Reserve rejected B of A's plan to increase its dividend. Now there's yammering from inside the bank that a couple of the bank's key executives were left out of the loop about informing shareholders of the decision.
B of A filed a statement with the Securities and Exchange Commission on March 23 admitting the Fed "objected" to the planned increase. According to the Wall Street Journal, neither Chuck Noski, the chief financial officer, nor Neil Cotty, the head of accounting, saw the document beforehand. The situation may be more nuanced. It's hard to believe the executives were not involved at all in the decision to notify regulators.
Either way, Chief Executive Brian Moynihan appears to be in a bit of a pickle. It would look bad if Noski was excluded. He's an essential point of contact for shareholders. He has also only been at the bank since last May, so any indication of him being frozen out so soon would be worrying.
But even if it was only a procedural cock-up, it appears there's still someone senior stirring the pot by implying otherwise to a national newspaper. Either way, this odd little breach raises fears that Moynihan's lieutenants aren't gelling. Many are still finding their feet, of course. Including Noski and Moynihan, five of the nine executives who presented at last month's gathering only started in their current roles in the past 15 months.
B of A has set up an internal inquiry to discover what, if anything, went wrong. It even wheeled out Chairman Charles Holliday to try to temper concerns. Granted, it's nothing compared to the problems caused by the capital-depleting, due diligence-lite acquisition spree led by former boss Ken Lewis. But Moynihan can ill afford another of these snafus.
For more information, visit
