Bank of America Corp. is the banking industry's biggest tease — and that's not good for a company trying to put its problems behind it.

For the third time B of A has raised, and failed to meet, expectations that it was on the verge of naming a successor to Ken Lewis, who plans to retire as chief executive in three weeks. The board met this week, but late Wednesday afternoon there was no word on whether it had reached a decision.

The failure to recruit a strong outsider, or the indecision over insiders, underscores the company's managerial and corporate governance shortfalls — and how hard it is to fix these problems in the middle of a crisis. A good pick could erase some of the doubts about Bank of America that the process has added, but the delay has squandered some of the momentum the company generated last week with word it would soon exit the Troubled Asset Relief Program.

"It is a shame that they have to deal with a leadership crisis, but they didn't plan for a succession crisis properly," said Gary Townsend, the chairman of Hill-Townsend Capital.

Some of the blame rests with Lewis for not doing a better job of grooming and choosing a successor, Townsend said. Instead, Lewis last summer created a competition of sorts, identifying five managers who were to vie for his job.

Another factor was investors' decision in April to strip Lewis of the chairmanship, which likely diminished his influence over the board. Directors hurriedly appointed Walter Massey, a retired college president, to become chairman, and an overhaul of the company's board soon followed. The board shrunk by three directors, to 15, and more banking expertise was added.

B of A may have gone too far the other way, however. Townsend expressed concern that Massey has been ineffective at building consensus among directors who have proven themselves to be fiercely independent. "That has been an unintended consequence" of April's shareholder actions, he said.

The renewed waiting and questions quickly ended the breather that B of A seemed to have earned last week after it successfully negotiated a plan for repaying the $45 billion of Tarp capital it received. (It announced Wednesday it had sent the Treasury the money.) Analysts expected the Tarp-payback deal to hasten the CEO selection by removing compensation restrictions and by giving directors more control over the selection process.

There have been sporadic indications that the board is making progress. A proxy filed last week with the Securities and Exchange Commission in conjunction with the sale of nearly $20 billion in securities stated that discussions about the next CEO had reached "an advanced stage." On Wednesday a company spokesman would only say that a decision was expected "in the near future."

Marshall Front, the chairman of Front Barnett Associates LLC, which owns 350,000 shares of Bank of America stock, expressed surprise that the board had not acted yet. "It seems to me that they have had a lot of time to make a decision," he said. "There are undoubtedly people who have had their fingers in the pie that have made the process more torturous."

Though Tarp may have been part of the problem in finding Lewis' successor, Front said, regulators' willingness to let B of A out of Tarp raised hopes. "The issue would have been much more difficult had that not been arranged with regulators."

Finally, some argue that the media circus surrounding the deliberations and accounts of every high-profile rejection have complicated the process. "Anxiety builds every time someone turns it down," said a managing director at one of B of A's largest institutional investors, who asked not to be named. "The embarrassment level is high for the board, and it goes up every time a 'no' response is publicized."

The publicity began in earnest on Sept. 30, when Lewis touched off a succession crisis with his unexpected announcement that he would retire at yearend. The move seemed to catch the board flat-footed. Lewis reportedly encouraged the board to consider Gregory Curl or Brian Moynihan, two insiders, though he also left open the possibility an outsider would get the nod. It is unclear how much of his advice the board seriously considered.

The board formed a six-member committee to oversee the search, including Massey, former FleetBoston Financial Corp. chief Charles Gifford, energy executive Thomas May and drugstore chain executive Thomas Ryan, who were already on a special committee to review strategic initiatives. Also on the search committee are former Federal Deposit Insurance Corp. chairman Donald Powell, who joined the board in June, and DuPont Co.'s chairman, Charles Holliday, who became a director in September. Russell Reynolds was hired to assist the committee.

Some observers say the best move for the board would have been to name Curl or Moynihan to succeed Lewis after a brief search process, but it had to scrap that plan when the government and shareholders pushed for an outsider.

Townsend said the situation should be a lesson to all CEOs and boards to shore up succession planning by doing all the heavy lifting before there is a vacancy. He said the biggest mistake the board can make now is rush the process to play catch-up. "I would prefer that they make the right choice and not a controversial one right now," he said. "Why hurry? I don't see the need."

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