Bank of America Submits Its Bid for Dumbest Move of the Week

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It was a relatively slow Monday morning for me, spent trying to kick-start my brain with a few cups of coffee, when Bank of America (NYSE: BAC  ) jolted me into action -- and gave me a great laugh.

Good ol' B of A announced Monday that it is hiring former Citigroup (NYSE: C  ) CFO Sallie Krawcheck to take over the bank's global wealth and investment management operations. The Wall Street Journal also speculated that Krawcheck could enter the running to take over for Ken Lewis as CEO down the road.

For those not familiar with Krawcheck, she was a well-known analyst at Sanford C. Bernstein -- an arm of AllianceBernstein (NYSE: AB  ) -- and eventually became CEO of the same firm. She later moved over to Citigroup, first to run the Smith Barney unit, then, in 2004, to take over as CFO of the company.

Many questions come to mind here. For instance, does Bank of America envy the position that Citigroup is currently in? Or did Krawcheck leave her 2004-2007 stint as Citi's CFO off of her resume?

After all, she disastrously misread the position that Citi was in back at the height of the bubble and helped set the stage for the collapse of the bank. In a Fortune interview back in 2006, she responded to a question about consumer borrowing by saying, "On a macro basis, I think consumers are acting pretty rationally. ... The consumer doesn't seem stretched. I wouldn't bet against U.S. consumers. They're pretty rational folks." Oops!

To be sure, the role she'll be taking at Bank of America seems more suited to her background and experience at Sanford and probably leaves less room to mess up as massively as she did at Citi. However, if Bank of America is really considering her for CEO, then the bank either has a weird sense of humor or hates its shareholders.

I'm all for some shaking-up in the C-suites at major financial institutions like B of A, Citi, JPMorgan Chase (NYSE: JPM  ) and AIG (NYSE: AIG  ) , but it'd be great to see them bringing in some new blood rather than simply recycling the same people who were at the helm when our economic Titanic was headed right for the iceberg.

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Fool contributor Matt Koppenheffer (still) owns shares of Bank of America, but does not own shares of any of the other companies mentioned in this article. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool’s disclosure policy has some very smooth moves.

Read/Post Comments (6) | Recommend This Article (34)

Comments from our Foolish Readers

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  • Report this Comment On August 04, 2009, at 1:07 PM, Teacherman1 wrote:

    I don't know what happened at Citi, but the financial community seems to have a much higher opinion of her than you do. You, of course, are entitled to your opinion, just as I am, but I don;t seem to see much in your article to support that opinion. Just my opinion, and worth exactly what I am charging for it.

  • Report this Comment On August 04, 2009, at 1:19 PM, TideGoesOut wrote:

    Results matter. When we look at any sort of money managers (fund/corporation.whatever), the judgment is made based on past performance.


    The unfortunate aspect of reality is that once you get into a certain position, you have risen and it's hard as hell to fall, no matter how badly you've performed (barring completely illegal fraud activities like Madoff, and even then it took them many years to do something about it).

    One of the most important things I teach my kid is consequences. If they do bad things, they are punished, if they do an good job, they are rewarded.

    That's one thing that the market needs: parental supervision. I hate saying that because I do believe in a free market, but clearly most folks in control can't manage a damned thing and still get rewarded for it. That needs to stop.

  • Report this Comment On August 04, 2009, at 1:30 PM, Teacherman1 wrote:

    I'm not sure what that comment was about, but for the record, the reason she was "demoted" by Pandit, was her insistence that Citi take care of it's investors who were damaged in the "Auction Rate" securities that they were sold. She is known for her honesty and insistence that the "right thing" be done. And by the way, the section that she ran was profitable, and has the fewest problems of those that make of the "convoluted dysfunctional monster", put together by Sandy Weill, that ruined Citi Bank, the "Bank". With all of the un-welcomed disclosures coming out at BAC, I'm sure the Govt. is very pleased by her joining the bank. Just my opinion, and worth exactly what I am charging for it. I am long both C and BAC, with real money.

  • Report this Comment On August 04, 2009, at 1:44 PM, ByrneShill wrote:

    I'm with you Matt. Still own the POS. I feel the hate coming from Charlotte toward me. If she becomes CEO I might reverse my position and short the POS.

  • Report this Comment On August 04, 2009, at 8:41 PM, alawyshius wrote:

    MERCY MERCY..`Lil ole southern gal is back in the big time!

    Will be interesting to see how the BofA "culture" fits Sally! :-)

    Hope she does not set her hopes too high gunning to be Ken`s successor! Odds are SLIM and SLIM LEFT TOWN!

    Probably smart move that she stays in NY rather than move to CLT. That way she can continue to run into her former friend Mr Pandit!

    Will be VERY interesting to see how this move plays out! My bet is on Bryan Moynihan as next CEO.

  • Report this Comment On August 07, 2009, at 8:02 AM, multi007 wrote:

    BAC will surge once they annouce Lewis is replaced. Even though I personally think Lewis made some fantastic deals with Country Wide and Merill, and I really dont care if he did not tell the shareholders. Bottom line is this company will come out of this quite possible double its all time high. Lewis is the whipping boy no doubt about it. Sally Krawcheck on the other hand hasnt received the backlash (that would be appropriate) from Citi's downfall. Not sure why Sally escaped but Lewis didnt. Perhaps it has to do with Paulson's threatening Lewis and not Krawcheck. I guess its ok to threaten a CEO but not a CFO?

    In my opinion, Lewis could be considered a hero. He bailed out two major financial firms on his own with BAC money at a time when EVERYONE thought we were in financial armagedeon. Imagine what the world would have thought, or imagine the run on banks, or the further financial collapses we would have had if BAC did not step up to buy Country and Merrill. Now BAC is starting to reap the rewards of their labor.

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