‘Incensed’ Moynihan Fights BofA Critics in Letter Campaign
Bank of America Corp. (BAC) Chief Executive Officer Brian T. Moynihan said he’s “incensed” by public criticism of his company and is pushing back by reminding local leaders of its contributions to their economies.
Moynihan, 52, told employees in a global town hall meeting last week from the firm’s Charlotte, North Carolina, headquarters that the “place to win the battle” over the bank’s battered public image is at the state and municipal level.
Bank of America’s outreach campaign is part of Moynihan’s effort to turn around the lender since he took over as CEO in January 2010 following two taxpayer bailouts. His plan to charge some debit-card users a $5 monthly fee drew reprimands from President Barack Obama and lawmakers, including U.S. Senator Richard Durbin, the Illinois Democrat who said customers should withdraw their deposits in protest.
“I, like you, get a little incensed when you think about how much good all of you do, whether it’s volunteer hours, charitable giving we do, serving clients and customers well,” Moynihan said during the Oct. 18 gathering. To the bank’s critics, he said, “You ought to think a little about that before you start yelling at us.”
Moynihan is laboring to rebuild the bank’s reputation with customers, employees and investors. Even before the debit-card fee sparked protests in Los Angeles and Boston, state attorneys general blamed the bank for using improper documents to justify foreclosures. To help reverse a stock decline this year of more than 50 percent, the lender is cutting expenses by eliminating more than 30,000 jobs.
The firm’s 135 market presidents have made about 1,500 phone calls and visits to local officials and community leaders across the country in two weeks, Anne Finucane, global head of strategy and marketing, said at the meeting. The effort begins with a letter explaining how much the bank lends to area businesses and the employees it has in the region, she said.
The company is trying to improve its standing with local officials and small firms because “research shows us that’s a more important indicator of reputation,” Finucane told employees. The firm has bought print advertising in 27 markets and television ads in 15 markets, she said.
Bank of America’s deposit-taking unit has the greatest concentration of locations in the most populous states, with 980 in California, 651 in Florida, 459 in Texas and 398 in New York, according to data on the Federal Deposit Insurance Corp.’s website. Minnesota, Utah and Colorado each have just one branch, the FDIC data show.
Campaign Makes Sense
“We are seeking to re-engage in a very straightforward manner on the issues people care about most, which is, ‘Are we lending and investing, and how much of it are we doing in that community?’” Finucane, 59, said in an interview. “We’re working to answer that question on a local basis.”
The campaign makes sense as part of a larger effort to improve relations with regulators and investors, said Michael Robinson, a senior vice president of Levick Strategic Communications in Washington and former head of public affairs at the Securities and Exchange Commission.
“When you feel like you’re getting assaulted on every front, you’ve got to move deliberately, you do the grass-roots plan, you work with the analysts and agencies,” said Robinson, who isn’t advising Bank of America. “They are an engine of the economy, and taking every opportunity to quantify that is a smart strategy.”
Bank of America ranked lowest in a 24-bank survey of small business customer satisfaction from J.D. Power and Associates this month. Wells Fargo & Co. (WFC), Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) also were in the bottom five. Earlier this year, Bank of America was named the country’s second-worst company by Consumerist.com after BP Plc, the firm blamed for the worst U.S. offshore oil spill. Consumers Union, the publisher of Consumer Reports that was founded in 1936, owns the website.
Bank of America had the highest customer satisfaction with its telephone service of the four largest U.S. lenders, Vocal Laboratories Inc. said yesterday. Sixty-eight percent of those surveyed were “very satisfied” with their interactions, compared with 63 percent for Wells Fargo, 56 percent for JPMorgan and 52 percent for Citigroup.
The lender’s letter-writing initiative began in early September, before the backlash from debit-card users and the Occupy Wall Street movement gained momentum, said a person with direct knowledge of the plan who asked to remain anonymous because it isn’t public.
In media appearances, Moynihan has avoided directly addressing the complaints from Durbin and others, saying in an Oct. 5 Washington conference that he wanted to “stay away from the politics” of the debate.
Speaking to his employees last week, Moynihan was more combative, saying that critics “usually quiet down pretty quickly when they start to understand the facts and figures.”
He leavened his remarks with humor. When an employee said the CEO must be exhausted from dealing with naysayers, he drew laughter by saying “I’m not tired. Do I look that bad?”
The event followed the bank’s release of third-quarter results, a profit of $6.2 billion after one-time accounting gains. The firm was eclipsed by JPMorgan as the largest U.S. lender by assets during the quarter, and Moynihan told employees that he “could care less” that his company isn’t No. 1 anymore. Moynihan is selling assets and scaling back businesses including mortgage lending to improve capital levels.
Management is most focused on two areas, Chief Financial Officer Bruce Thompson said during last week’s meeting. One is cutting the $2 billion in quarterly expenses at the legacy-asset unit, the so-called bad bank managing the firm’s defaulted and delinquent loans. Most of those stem from the 2008 takeover of subprime lender Countrywide Financial Corp.
The other is to improve trading revenue, which plunged more than 70 percent to $1.07 billion in the quarter as the threat of a Greek default and Standard & Poor’s U.S. credit downgrade roiled markets. There are early signs of a rebound, he said.
“Two weeks into the quarter, we’re doing a lot better so far than we were in August and September,” Thompson said.
The bank rankled some customers this month when its website was hobbled for several days, inviting speculation that the debit-fee increase had spurred an attack by hackers. While the website was never completely down, the fact that people couldn’t use it was “devastating” to employees, said Cathy Bessant, global head of technology and operations.