Bank of America (NYSE: BAC) has announced another management reorganization that seems to do nothing to solve the bank’s balance sheet and legal problems. That makes the new structure useless.
Tom Montag becomes a co-chief operating officer. He will run services for institutions and corporations. David Darnell, also a co-chief operating officer, will run businesses that serve consumers. Sallie Krawcheck, who handled wealth management, was fired. Joe Price, who ran consumer banking, is gone too.
CEO Brian Moynihan said it would help to take a layer out of the executive suite. He called the move “de-layering,” which probably is not a word at all.
Moynihan did not bother to announce anything meaningful with the changes. That has been his problem for several weeks. He took $5 billion from Warren Buffett after he said he did not need the money. He sold half of Bank of America’s China Construction Bank stake for $8.3 billion. Those are ways he has brought in cash, but they do not address the problems at the core of the bank’s trouble. His actions do not tell how the financial firm will deal with its troubled loan portfolio or a government suit against the bank based on the premise that it sold mortgage-backed securities to Fannie Mae and Freddie Mac without proper disclosure or risk.
Moynihan should learn a lesson from other companies that have announced new management structures without accompanying them with plans for real change. It looks desperate to create a new executive structure when those new executives are not part of a lucid program to improve the company’s fortunes.
Douglas A. McIntyre