July 8 (Bloomberg) -- Bank of America Corp. named Terry Laughlin, currently the top manager overseeing soured loans and foreclosures, as the firm’s next chief risk officer after it earmarked another $20.4 billion to cover bad mortgages.
Laughlin, 56, head of Legacy Asset Servicing, will take the new post late in the third quarter, according to an internal memo obtained today by Bloomberg News. The move fills a vacancy created after former risk chief Bruce Thompson was picked to succeed Chief Financial Officer Charles Noski, 58, who said in April he was stepping aside because of an illness in his family.
Laughlin has tackled the biggest issue weighing on Bank of America since joining the company last year by negotiating settlements with Fannie Mae and Freddie Mac, bond insurer Assured Guaranty Ltd. and last week’s $8.5 billion deal with institutional investors. The lender has dropped 28 percent in the past year of New York trading on concern that mortgage disputes will continue to reduce profits.
“Terry is steeped in the issues which represent the most significant risk we face, and his ultimate transition into the chief risk officer position reflects that and his deep industry expertise,” Chief Executive Officer Brian T. Moynihan said in the memo. “While there is more work ahead, in a relatively short period of time, Terry has helped us make significant progress on our legacy issues.”
Paula Dominick, global compliance executive, will serve as interim chief risk officer until Laughlin begins, the firm said. Gary Lynch, a former U.S. Securities and Exchange Commission enforcement director, will begin as head of legal, compliance and regulatory relations on July 11, the memo said.
The arrival of Lynch, whose hiring was announced in April, may assist the bank’s negotiations with state attorneys general and the U.S. Department of Justice to settle claims the industry mishandled loan servicing.
As chief risk officer, Laughlin must help Moynihan avoid the kinds of mistakes that led to billions of dollars in losses after the 2008 acquisition of Countrywide Financial Corp.
Bank of America said June 29 it will report its sixth quarterly loss since the middle of 2008, citing $20.4 billion in costs, including the settlement, provisions for future claims, legal costs and a writedown of the mortgage unit.
“It’s our job, management’s job, to eliminate risks that we can to allow this company to go forward,” Moynihan, 51, told analysts the same day during a conference call.
Laughlin left his previous post as CEO of Pasadena-based OneWest Bank last year to join Moynihan, a former FleetBoston Financial Inc. colleague. He was named head of the firm’s Legacy Asset Servicing unit on Feb. 4.
As chief risk officer, Thompson has had to deal with the consequences of defective loans inherited in the Countrywide takeover. Thompson had several management roles at the firm’s investment bank, including head of global capital markets, before starting as chief risk officer in January 2010.
To contact the reporter on this story: Hugh Son in New York at email@example.com
To contact the editor responsible for this story: David Scheer at firstname.lastname@example.org