MarketWatch First Take
Bank of America CEO just can't win9/20/12 12:47 PM ET (MarketWatch)
Corrects the name of Sandy Weill's employer.
SAN FRANCISCO (MarketWatch) -- No wonder no one wanted to run
Four years after it was bailed out, the bank is again looking to slash costs. This time it's aiming to cut 16,000 jobs it had promised to eliminate by the end of the year.
Chief Executive Brian Moynihan has the unenviable task of scaling down the sprawl built by Ken Lewis, who exited at the end of 2009. Lewis got to run B. of A. (BAC) in the overleveraged days when acquisitions were relatively low-risk propositions.
Lewis's mistake was realizing too late how the financial crisis had changed the landscape. When he tried to get out of buying Merrill Lynch & Co. at the end of 2008, regulators leaned on him to follow through on the deal. His failure to force the issue was the final nail in his career. He was gone in a year.
Moynihan wasn't the first choice to clean up the mess. Speculation swirled that Robert Diamond of
Moynihan was a general counsel at Fleet Boston, one of Lewis's acquisitions in better times. He didn't have a a bad reputation, but he wasn't seen as the second coming of Dimon, either.
Disappointment washed over the investment community. And Moynihan didn't let them down at first. He produced gaffe after gaffe in word and deed. Anyone remember the $5 monthly debit-card fee?
But in the past three years, he has scaled the bank down. Revenue has fallen by more than 50%. Moynihan has settled lawsuits over the bank's legacy practices in the mortgage markets. He's done all this amid withering criticism of the bank and in the face of Occupy protests.
Job cuts are never popular, but at this point Moynihan has to be numb. Almost nothing he does is going to be well-received. Even the stock didn't respond well to the cuts. He's the Charlie Brown of too-big-to-fail banking.
Moynihan may not have been the best man for the job. But he's doing it.