In December, when Brian Moynihan was tapped to be the chief executive of Bank of America, many said he got the job because no one else would take it. Just days before, Robert Kelly, the CEO of Bank of New York Mellon, had become the latest high-profile executive to turn down the post. But in the three months since Moynihan, 50, has taken over the reins at the nation's largest bank, he has used a mix of consumer-friendly initiatives, Washington face time and attention to detail to win over critics. Consumer advocates have applauded the bank's moves on debit cards and foreclosures. Washington officials say he is easier to work with than his predecessor Kenneth Lewis. And analysts have been impressed with Moynihan's knowledge of Bank of America's many businesses.
"He's really come out strong," says analyst Richard Bove, who covers banks at Rochdale Securities. I was not a fan at first, but I have become one."
Moynihan, of course, still has a lot of work to do. He still has to turn around Bank of America's large credit-card business, which has consistently had higher loss rates than competitors. The bank has also been without a chief financial officer since mid-January, though people close to the search say Moynihan recently narrowed his choices down to three people. And Moynihan may have to answer recent claims that the bank used Lehman-like accounting maneuvers to hide assets. Bank of America has denied the allegations.
Nonetheless, for now, Moynihan seems to be making more friends than enemies. So far, his boldest moves have to do with consumers. First of all, in February, the bank stopped charging customers overdraft fees on debit-card purchases they couldn't afford. Instead, when someone doesn't have enough money in their account to cover the purchase, Bank of America simply declines the transaction.
Then in late March, the bank became the first major lender to say it would reduce loan balances of homeowners who owe more than their property is worth. Most other banks have only been willing to lower interest rates. Writing down loan balances for such "underwater" homeowners, while costly for the bank, gives borrowers more incentive to stay current on their mortgage. The Bank of America program, which has won praise from consumer advocates, could help as many as 45,000 borrowers reduce what they owe by $3 billion. "Bank of America is to be commended for launching a program to reduce principal balances on loans that are underwater," said John Taylor, head of the National Community Reinvestment Coalition of Bank of America's program shortly after it was announced. "The rest of the industry should follow suit." (Last week, the Obama Administration announced new programs to help homeowners whose mortgage balances exceed their home's value.)
Moynihan has also made a concerted effort to connect with regulators. Most characterize his predecessor Lewis as indifferent when it came to politicians and policymakers. But Moynihan has prioritized Washington relations, meeting frequently with regulators. Treasury Secretary Timothy Geithner and Moynihan have met three times in so many months. Says one Administration official of Moynihan, "He's a breath of fresh air."
Bank of America employees say Moynihan has been been able to lift morale at the bank, which was battered by the financial crisis. After Bank of America struck a deal to buy Merrill Lynch in late 2008, many of Merrill's employees fled. Now some are coming back. Recently, two top Merrill veterans Todd Kaplan and Sam Chapin rejoined the firm. "When I left it was chaotic around here," says Kaplan, an executive vice chairman at Merrill. "Now the place feels like Merrill did in the 1990s. There's none of the infighting. It's terrific."
Kaplan says Moynihan has impressed clients as well. One thing he hears a lot from clients that have met Moynihan is that he seems very genuine. "That says a lot for a CEO," says Kaplan. "He hasn't lost touch."
Ironically, Moynihan almost didn't stick around long enough at the bank to become its CEO. In late 2008, former CEO Ken Lewis reportedly considering firing Moynihan, who had joined the bank after its 2004 acquisition of FleetBoston Financial, after the executive turned down the post of head of the bank's card division. Lewis even had a press release drafted announcing Moynihan's departure. The bank's board of directors, however, convinced Lewis to keep Moynihan, who was made the bank's chief legal officer and then the head of its retail operations before becoming CEO.
"Moynihan seems to have a deep understanding of the numbers that are key to each one of his bank's divisions," says analyst Bove. "He is really extraordinarily impressive."