Can Brian Moynihan Manage Bank of America?
New CEO Brian Moynihan has soothed relations with regulators, integrated Merrill Lynch and led a profit revival, but housing problems persist.
By Matthew Miller
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In October 7, Bank of America Corp. chief executive Brian Moynihan received a telephone call from Barbara Desoer, president of the bank’s home mortgage division. A storm had been building for two weeks over shoddy paperwork in the U.S. mortgage market, prompting Bank of America, GMAC Mortgage and JPMorgan Chase & Co. to suspend foreclosure filings in 23 states where court orders are required to seize a house and triggering investigations into possibly fraudulent practices by attorneys general from dozens of states. For Bank of America, which originates one in five U.S. mortgages and services nearly 14 million loans worth a total of $2.1 trillion, the controversy carried enormous risks. Desoer, who had launched an internal review of the bank’s procedures on September 22, told the CEO that questions by officials and consumer advocates had reached such a fever pitch that the bank should temporarily freeze all foreclosures.
Moynihan didn’t waste time. The next day, in a bid to get ahead of the problem, the CEO declared a nationwide moratorium on foreclosures while Bank of America checked the documentation on 102,000 delinquent mortgages. “What we are trying to do is clear the air and say we will go back and check our work one more time,” he told reporters at the National Press Club in Washington, where he had traveled for the annual meetings of the International Monetary Fund and the World Bank. Ten days later the bank announced it was resuming foreclosure proceedings, saying its review had not uncovered any errors in loan information. ....