Bank of America search deadline looms

CEO Ken Lewis may have to postpone his planned departure if the board can't find a suitable replacement.

By TheStreet Staff Nov 23, 2009 12:04PM

TheStreet.comBy Lauren Tara LaCapra, TheStreet.com

 

Bank of America's (BAC) search for a new chief executive, and its dance of death with departing CEO Ken Lewis, has only gotten tougher as its self-imposed Thanksgiving deadline nears.

 

Lewis may have to postpone his planned departure on Dec. 31 if the board is unable to find a suitable replacement. Some shareholders would like him to entirely reverse his decision to leave, and some board members remain unhappy with his departure.

 

Speculation has heated up that Lewis will remain in his post since Rochdale Securities analyst Richard Bove published reports last week advocating for Lewis to be the "next" CEO. Reports on Monday in the Wall Street Journal and Bloomberg indicate the search will at least be extended, and that Lewis may lengthen his departure timeline until a qualified and willing replacement is found.

 

Outside candidates under serious consideration are few and far between, due to pay restrictions and Bank of America's status as a bank that received "exceptional assistance," thereby giving regulators special authority over its operations. Internal candidates are sure to be scrutinized intensely for any connections to the Merrill Lynch deal.

One of them, Brian Moynihan, was grilled by lawmakers last week, with Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, questioning his qualifications.

 

Moynihan and director Charles "Chad" Gifford both deflected questions about whether the executive -- a lawyer by training who now heads consumer and small-business banking -- is in consideration for the top spot, but his name has been tossed around as a top candidate for months. The other potential internal successor is Chief Risk Officer Greg Curl, whom Lewis reportedly prefers.

 

Several candidates under consideration earlier in the process are now reportedly out of the running, including Citigroup director Michael O'Neill, who had once been an executive at BankAmerica before it merged into Bank of America; PNC Financial Senior Vice Chairman William Demchak; Bill Winters, the former head of investment banking at JPMorgan Chase; JPMorgan Chase's head of retail banking, Charles Scharf; U.S. Bancorp CEO Richard Davis; Bank of New York Mellon CEO Robert Kelly; BlackRock CEO Larry Fink; recently deposed GMAC CEO Alvaro de Molina, who was Bank of America's CFO a few years ago; and Citigroup executive Eugene McQuade.

 

The outsiders are either dissatisfied with the pay options and Bank of America's situation, or are happy in their current roles. Another former Bank of America CFO, James Hance, hasn't yet been contacted, according to a prominent investor.

 

Whoever does take the reins at Bank of America will have to feel an obligation to the bank, or an obligation to the country and its taxpayers. But even that will be difficult.

 

Lewis, one of the most devoted and experienced Bank of America executives, is apparently too frustrated to stay on board. Executive suites at other troubled firms capsized by the financial crisis are not encouraging.

 

American International Group lost Edward Liddy, who had agreed to take the job for $1 a year, left after a short and aggrieved tenure. New CEO Robert Benmosche recently threatened to leave after just three months because of scuffles with lawmakers. David Moffett left Freddie Mac in March for similar reasons after a similarly short tenure. Freddie has now had four acting leaders since mid-2008.

 

Bank of America's board would like to avoid that scenario by finding someone with the grit and experience to take on a long-term role and avoid a rocky transition process. The circumstances have made it more difficult, however, and it appears that whatever decision they make may not come by Thursday, which is at least the third target date sine the process began.

 

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