Moment of Truth for Bank of America's Board

Posted by: Matthew Boyle on October 2, 2009

This is a guest post from Jeremy Garlington, an Atlanta-based leadership consultant and author of blog The Garlington Report (www.povblogger.blogspot.com).

Whoever fills the CEO role at the nation’s largest bank, while sexy and headline grabbing, is not the most pressing need. What’s more important is how the BofA board rights the bank’s leadership course. This obviously includes the coveted prize, a new CEO, but to emphasize that decision at the expense of other more important matters represents bad governance. It also underlines the misguided longly held belief that great talent will solve anything. That’s not the case at the BofA.

Here are several steps that the bank’s board should consider:

1. Replace the Chairman. Board Chairman Walter Massey is now inextricably linked to the former regime as a result of ongoing litigation, government investigation and personal relationship. This is a perceptual non-starter. It also represents a serious first challenge for the board to answer. Massey’s tenure has been brief and has already given rise to a crisis, when investors forced Ken Lewis to sacrifice the Chairman title. The law of unintended consequences has been cruel here so far. Whether Massey can right the ship when he himself is under attack should be the board’s first order of business.

2. Find a way forward or out of the regulatory and judicial jungle. New CEO or no new CEO, BofA needs to move expeditiously with trying to reach settlements across the board on all current legal matters. This may sound a bit pie in the sky. But even a better good faith effort would send a stronger signal. Within this effort also lies a key competency for a new CEO. At least three quarters of the current leadership mandate is making sure the cloud that currently engulfs the bank is lifted.

3. Consult Jamie Dimon at JP Morgan Chase. This step is more search-driven than strategic, but it’s a practical step that only the truly hubris free will consider. Dimon has led an extremely successful, similar sized operation during a similar period of upheaval. No one else has the same knowledge or experience to deal with what faces BofA. To not consult Dimon would be a gross oversight. You can be assured of at least one thing: Whichever high end recruiter gets the assignment will take this step while simultaneously trying to woo talent away from Dimon.

This isn’t about wasting a crisis or trying to bring Superman to lead the nation’s largest bank. It’s about doing what’s right in the wake of months of misdeeds and leadership inertia.

If there is a silver lining, it’s the fact that BofA’s business appears to be on better footing than a year ago when the system collapsed. Yet that also unfortunately in this case speaks to a bank’s greatest self perceived advantage: Time. Time to recover. Time to take more government money. Time to see assets come back. The more time a bank has, the longer it can live. Vice versa, the longer it can continue to do nothing and watch its once vaulted status nose dive into the abyss. Any of the major banks that neglects this consumer reality does so at their peril.

Reader Comments

John K

October 2, 2009 5:54 PM

Great, on-target analysis. Naming a new CEO is no panacea and certainly not a cure for the deeper ailment: a continuing failure of governance at BofA. It is disappointing that the media coverage of Lewis' departure misses this point. Once again, we see most of the business press perpetuating the myth that no problem is too big for the right superhero CEO. It seems we still haven't learned this in corporate America -- or in American politics.

Robert R

October 2, 2009 6:31 PM

Why would Dimon want to help one of his major competitors? How could there be any trust in anything he communicated.

Lewis did a great job all these years Time will show us that he was a great CEO.The Merrill Lynch aquisition will turn out to be part of a great legacy lewis left behind.

BAC stock price in two years will be above $40 a share.

Karl

October 3, 2009 4:57 PM

They're going NUTS at Ripoffreport.com at the BANK OF AMERICA page of that site. WOW!

norman ravitch

October 4, 2009 1:11 PM

The Bank of America has come a long way from the days of its founder, G.P. Giannini, an Italian immigrant who wanted to help people.

norman ravitch

October 4, 2009 1:12 PM

The Bank of America has come a long way from the days of its founder, G.P. Giannini, an Italian immigrant who wanted to help people.

Eric S.

October 6, 2009 12:24 PM

Taking off from Mr. Ravitch's comment, BofA needs to rework its corporate personality, morals, and ethics to again become the class act it was before Hugh McColl (NationsBank) bought the name in spring of 1998. If you buy and trade on the name of a revered business institution, you should have a duty to be a good steward of that reputation. In that, McColl and Ken Lewis failed miserably.

OXYGEN

March 27, 2010 5:11 PM

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