Brian Moynihan’s Credibility Crunch at Bank of America

Bank of America Chief Executive Officer Brian Moynihan may wish he had stuck to his November vow to fend off mortgage-refund demands with “hand-to-hand combat.” Since January, he has forged a series of multibillion-dollar settlements with buyers and insurers of shoddy loans created by Countrywide, the subprime lender the bank took over in 2008.

So far, the conciliatory approach has backfired. The Charlotte-based firm disclosed this month that Fannie Mae and Freddie Mac, the government-sponsored enterprises that settled with the bank for $3 billion, are stepping up demands that it repurchase soured loans. Attorneys general from New York and Delaware have challenged the bank’s June $8.5 billion deal with institutional investors. And on Aug. 8 bailed-out insurer American International Group said it will seek more than $10 billion from the bank over mortgage securities gone bad. The bank denies the insurer’s assertions. AIG “is the very definition of an informed, seasoned investor, with losses solely attributable to its own excesses and errors,” says Bank of America spokesman Larry DiRita.