Moynihan shakes up BofA management
Bank of America (BAC) CEO Brian Moynihan shook up the company's management to align it with the bank's three core customer groups: consumers, companies and institutional investors in part of an ongoing internal reorganization. Gone are Sallie Krawcheck, who was head of the bank's wealth management unit and Joseph Price, who oversaw consumer banking. Both had been hired by Moynihan's predecessor, Ken Lewis. Moynihan named David Darnell and Tom Montag to the newly created positions of co-chief operating officers, accountable for all of the company's operating units. The reorganization is effective immediately. Darnell will oversee consumer businesses serving individual customers and clients including deposit, card, home mortgage, wealth management and small business. Montag will oversee businesses that serve companies and institutional investors, including middle-market commercial and large corporate banking, institutional investor services, and the global markets sales and trading businesses. "Today is a significant step in the continued transformation of our company," said Moynihan. "David and Tom are leaders skilled at driving profitability and growth," he said. "They are accountable now for delivering our entire franchise to all our customers and clients." Moynihan praised both Krawcheck and Price. Krawcheck joined BofA in 2009 after leaving Citigroup the year before. "Sallie has led the wealth management businesses through an important integration with the broader franchise," he said, "de-layering and simplifying at the scale in which we operate requires difficult decisions. Price was named president of consumer, small business and card banking at Bank of America in early 2010. "Joe is a veteran of Bank of America who has contributed in many roles to building the company into what it is today. Most recently, Joe has been leading through fundamental change in consumer and small business banking, which is profitable and poised for growth," Moynihan said. BofA began removing a layer of operations management, aligning leaders with its customer groups, and simplifying the organization as part of "Project New BAC," begun in April 2011, the bank said. Other changes will be forthcoming across the consumer, home loans and support areas covered by the first phase of Project New BAC, and are expected to result in significant expense reductions as the first phase concludes in coming weeks. A second phase of restructuring will begin in October and conclude in March 2012. Bank of America's stock has been hammered this year as the bank struggles to regain its footing amid a continuing housing crisis. Losses and lawsuits have mounted, primarily related to the firm's acquisition of subprime lender Countrywide Financial Corp. in January 2008. On Friday, BofA was one of several major banks sued by the Federal Housing Finance Agency, the government entity that oversees Fannie Mae and Freddie Mac. The lawsuit alleges the bank misrepresented the quality of mortgages sold to the government-sponsored enterprises. It is just one of several similar suits against the bank. Bank of America has been forced to mark down billions of dollars worth of the troublesome Countrywide mortgage portfolio since acquiring it. In the first quarter, BofA paid out roughly $3 billion to settle representation and warranty claims from Fannie and Freddie. It also settled with the monoline insurer Assured Guaranty (AGO) for $1.6 billion. More recently, BofA settled with a group of investors led by Bank of New York Mellon (BK: 19.53 -2.11%) for $8.5 billion over soured MBS in a settlement that has since been challenged by other investors and the New York attorney general. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.