With no end in sight, the Charlotte based banking giant Bank of America (NYSE: BAC) is once again looking to slash costs in its businesses, this time aiming to take out 16,000 jobs by the end of this year.
Chief Executive Officer Brian Moynihan has been guiding the ship he inherited from ousted CEO Ken Lewis in 2009, and has faced a relentless tidal wave of conflict ever since. The firm has faced thousands of lawsuits, accusations of robo signing in their default process, falling profits, and falling share prices. Moynihan now has the unenviable task of piloting a firm with pieces that either just don’t fit together, or is made for another time, a time before Dodd Frank, before the financial crisis, when the financial supermarket model was the model many of the big banks aspired to. In the new landscape, bigger isn’t necessarily better.
Lewis say the landscape shifting, and reports show he even tried to back out of the deal to buy Merrill Lynch & Co at the end of 2008. While the deal has caused many operational issues for the Charlotte based banking behemoth, it is one of the biggest assets of the firm today. Regulators pressed Lewis to continue with the deal against his reservations, and that deal essentially ended his career, as he was gone within the year.
Moynihan was thrust into a situation perhaps beyond him at the time. Speculation swirled he wasn’t the first choice for the job, as rumors point former Barclays executive Robert Diamond as the top candidate. Moynihan rose out among the home grown candidates from within the firm, and produced gaffes from the start – for example the $5 debit card fee plan which was announced, then quickly pulled back.
Since the rocky start, Moynihan has continued to face angry customers and protestors of the bank’s bailout at the height of the financial crisis. The firm’s revenue has fallen by more than 50%, though they are finally settling lawsuits over the legacy mortgage practices. The job cuts announced will do some to return the bank’s profitability, but perhaps more radical changes to the business structure will be required to put this gargantuan ship on a new path. Moynihan’s Project New BAC, which aims to cut costs and return the bank to its former glory is a lofty goal, but with the firm continuing to struggle, he might not be at the helm long enough to see it entirely through.
