The Governance Crisis Continues
Week two of Bank of America’s (BofA) ongoing governance debacle shows no signs of improvement. The bank and its board face mounting criticism from all directions, resulting in hasty decisions like the on-again, off-again “emergency CEOs” that few understand, much less believe, could be a true solution. Mainstream media continues to focus on the speculative “horse race” of who will fill the CEO role, rather than addressing what is actually needed to put the bank back on track.
Until someone steps up and says, “Stop, wait a minute! We’re headed in the wrong direction,” nothing will change. Unfortunately, based on the pattern we’ve seen so far, it seems nothing will change about this situation’s outcome. Not even the credits.
Board Leadership Failure
This situation represents a Board Leadership 101 failure—a reactive, rather than proactive, approach to a crisis. In business, as in life, nothing positive happens when decisions are made under duress. Unfortunately, that’s exactly where BofA finds itself: under constant pressure with no clear, strategic vision for the future.
Deeper Questions About the Bank’s Future
The issue goes beyond selecting a CEO. It raises deeper questions about the bank’s identity and future. Will BofA continue to operate under the aggressive Southern culture established by Hugh McColl and carried forward by Ken Lewis? Or is it time for the bank to turn the page and redefine itself as the nation’s largest and most responsible financial institution in the post-collapse era?
To borrow a witty phrase from a friend: Will grits remain thicker than water?
A Disconnect Between Culture and Candidates
None of the internal candidates identified so far seem to represent the current culture of the bank, yet BofA is still largely defined by its Charlotte-based approach to business. This brings up even more critical questions:
Should BofA move its headquarters to New York to better engage with regulators and other key constituencies?
Will the new CEO possess the necessary external experience to prioritize what’s most important, rather than simply addressing what’s urgent?
Or, will the bank fall deeper into the trap of becoming a quasi-governmental agency, with an unclear mission and focus?
A Defensive and Bureaucratic Approach
So far, Board Chairman Walter Massey has not demonstrated a strong grasp of these fundamental issues. Every move thus far has been bureaucratic and defensive, given the bank’s current challenges. Sending signals that an internal candidate might take the helm hardly indicates bold leadership or change. This approach makes little sense unless the board isn’t serious about shaking things up—something always worth considering.
The Need for Clear Leadership
Even General Motors’ (GM) board—in the midst of its slip toward bankruptcy—sent clearer signals about what was at stake. In comparison, BofA remains profitable in certain business areas but continues to struggle with leadership at the top, which is often where the most crucial decisions are made.
Meanwhile, competitors like JP Morgan Chase and Citigroup are eagerly watching, ready to capitalize on BofA’s leadership vacuum.
Conclusion: Time for Bold Action
At this point, it’s clear that BofA’s leadership issues need to be addressed in a way that aligns with the responsibilities of a major corporation. If the bank fails to step up and address these problems, shareholders and stakeholders should demand better leadership—across the board.