John Paulson and Sallie Krawcheck are staking a lot on the revival of Bank of America's fortunes. The hedge fund supremo is now the beleaguered institution's fourth-largest shareholder after buying 168 million shares last quarter, according to a regulatory filing. Meanwhile Citigroup's former wealth management and finance chief has been brought in to run asset management and B of A's Merrill Lynch brokerage — and she snapped up $1 million-worth of shares.

These might seem like a gamble. After all, B of A is hardly out of the woods. Its core operations are likely to continue losing money for the rest of the year and the bank will probably need to add to loan loss reserves in 2010. Takeovers struck both at the height of bull market and in the depths of the crisis either used up precious capital or revealed poor risk management — or both — and left the bank in need of $45 billion of support from the U.S. taxpayer. And the shenanigans surrounding year-end losses and bonuses at Merrill cost chief Ken Lewis the chairman's role and his reputation.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.