Another day, another executive suite shakeup at foundering Bank of America.
The biggest U.S. bank said Friday it hired Gary Lynch, a former Securities and Exchange Commission enforcement chief, to oversee legal and regulatory relations. It is a big job, as BofA's (BAC) legal costs are soaring and its relationships with its regulators are in tatters, as evidenced by the bank's painful scrape with the Fed over its dividend plans.
Lynch was a London-based vice chairman at Morgan Stanley (MS). He has had a long career on Wall Street and if anyone can undo the damage Moynihan and his crack team have done, it is probably him.
"Gary's global legal and regulatory expertise and relationships will be a valued addition to our leadership," Moynihan said. "We are delighted he has chosen to join Bank of America and help guide the execution of our customer-focused strategy."
BofA also said Charles Noski, who was named chief financial officer just a year ago, will step aside due to family illness. He will become vice chairman.
Bruce Thompson, BofA's chief risk officer, will replace Noski as finance chief when Noski gives up that job at the end of the second quarter. A year isn't long to stay in a highly visible post like CFO, but the bank says the change came at Noski's request.
"We value Chuck's judgment, counsel, and experience," said Moynihan. "I am very pleased he has accepted this leadership position, which also enables him to attend to important personal matters."
But his departure hardly comes as a surprise, after reports this week that Moynihan bypassed him in making the filing last month that advised investors the Federal Reserve had quashed his lunatic plan to increase the bank's dividend in the second half.
And let's face it, someone's head had to roll after the sorry performance BofA has been putting up lately. Its shares have lost a third of their value over the past year, and recent quarters have brought repeated unhappy surprises for investors.
BofA reported an unexpected fourth-quarter loss in January under the weight of a $2 billion home lending writedown, a $4 billion mortgage dispute settlement and $1.5 billion in litigation costs.
On Friday, the bank returned to profitability but missed analyst estimates. BofA noted in Friday's first-quarter earnings release that it took an $847 million hit to pay for representations and warranties claims – covering mortgages that investors and others demand the bank buy back because corners were cut.
That story is far from over, as BofA – thanks to the Countrywide acquisition masterminded by Moynihan's Ahabesque predecessor, Ken Lewis – has the biggest, ugliest mortgage book in the Western hemisphere.
And of course Lynch will have his hands full with legal issues tied to Lewis' other signature deal, the acquisition of Merrill Lynch, which was a big player in the abuse-laden subprime debt market that belatedly is getting the authorities' attention again lately.
Friday's moves come two months after Moynihan hired Terry Laughlin from OneWest Bank to run off some of the worst subprime dross. No word yet on how that's going, but Friday's shakeup shows Moynihan is, at last, aware the clock is ticking on his reign.
Also on Fortune.com:
Follow me on Twitter @ColinCBarr.
America's most delusional bank is back in black, but not as much as Wall Street would like.
Bank of America (BAC) posted a first-quarter profit Friday, reversing the loss it unexpectedly suffered at the end of 2010. But the bottom line was smaller than analysts were expecting, which will only add to questions about CEO Brian Moynihan's leadership following last month's humiliating dividend smackdown at the hands of normally somnolent bank regulators.
The Charlotte, N.C., bank MOREColin Barr - Apr 15, 2011 7:11 AM ET
We may soon find out whether it's possible to shame one of the big U.S. banks by exposing its mortgage missteps.
A series of messages on Twitter Sunday evening promised the release of emails supposedly documenting "fraud and corruption" at Bank of America (BAC). The post, from the anonymous @OperationLeakS handle, said "leaked emails" from the bank would be posted at 5 a.m. London time, which is 1 a.m. in New York.
The release MOREColin Barr - Mar 13, 2011 11:06 PM ET
Say you find yourself losing billions of dollars as your chief rivals – even Citi, for crying out loud -- make good money. How do you explain yourself?
If you're Bank of America (BAC), you write off your latest pathetic performance as "a unique and critical transition year for the company." Then you return to business as usual and hand out million-dollar bonuses like they're Necco Sweethearts.
This is how BofA's chief executive, Brian Moynihan, MOREColin Barr - Feb 1, 2011 11:04 AM ET
Mervyn King, the governor of the Bank of England, said big banks must be reined in -- and soon -- if we're to avoid a replay of the 2008 meltdown.
King made his remarks Monday afternoon at the Economist magazine's Buttonwood conference in Manhattan.
In his speech, King weighs the costs and benefits of various approaches to limiting bank risk-taking, ranging from taxes to higher capital requirements and bigger liquidity pools. He MOREColin Barr - Oct 25, 2010 4:11 PM ET
When it comes to the foreclosure fiasco, Bank of America is looking like America's most vulnerable bank.
BofA (BAC) fell 5% in early trading Friday to a 52-week low below $12, as analysts questioned whether the bank is adequately prepared for legal challenges tied to its handling of foreclosures -- an area where BofA has something short of a sparkling track record.
S&P Equity Research cut its rating on the Charlotte-based MOREColin Barr - Oct 15, 2010 10:39 AM ET
|Apple set for showdown on Capitol Hill over corporate taxes|
|Why I'm protesting against Gap over Bangladesh|
|The biggest merger you didn't hear about today|
|Tesla's fight with America's car dealers|
|Yahoo buys Tumblr, promises to not 'screw it up'|