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3 Things Bank of America Is Wishing For

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If you've followed the tale of Bank of America (NYSE: BAC  ) since the financial crisis, you know that there are plenty of shortcomings that the bank would like to rectify. One way to determine which of those shortcomings bears the greatest impact on the bank would be to ask CEO Brian Moynihan which ones he would eliminate first.

So, since we don't have a direct line to Moynihan, let's think hypothetically. If a genie showed up on Moynihan's front steps, what are three things that he might wish in order for Bank of America to succeed? And we're following the Aladdin rules here: No killing people, no "falling in love" spells, no asking for more wishes, and no bringing people back from the dead. Now that the rules are clear, let's begin.

Wish No. 1: Clear the legal docket
One of the most visible and deep-rooted problems for B of A since the financial crisis has been the long parade of courtroom battles over transactions between B of A (or its acquired subsidiaries) and investors or other businesses. Probably the single biggest threat to the bank, these legal troubles have cast a shadow of uncertainty that it cannot shake before exiting the courtroom for the last time.

And yet there are still cases to be heard and settlements to be reached. This week posed one of the biggest hurdles for B of A as a $8.5 billion settlement will be reviewed and either approved or dismissed. If the latter occurs, it could mean a big payout from the bank.

So, clearly, Moynihan's first wish would be to have all the current cases against Bank of America withdrawn by the plaintiffs and limit future cases to those outside the spectrum of the financial crisis. With the black veil of legal uncertainty lifted, the bank can refocus that energy into expansion of its operations and develop new opportunities for growth. Not to mention the savings in legal fees.

Wish No. 2: Impress our biggest critics
No one likes to be at the bottom of the list. And for Bank of America, that list usually revolves around customer satisfaction. Earlier this year, J.D. Power and Associates released its findings on customer satisfaction, and though the big banks are gaining momentum with their clients, B of A remained dead last. With JPMorgan (NYSE: JPM  ) ) taking the top spot in the survey, followed by Wells Fargo (NYSE: WFC  ) , Citigroup (NYSE: C  ) , and finally B of A, it's clear that the bank has some major issues to resolve.

This second wish would have to be worded wisely, though, since the best way to tackle it would have to be tailoring the bank's services to the customers, not the other way around. The genie's magic would give the bank something it's failed to find for this problem to date: a solution.

Wish No. 3: Build up confidence
Seeing that the bank now has no worries with legal issues and customers are fully satisfied with its services, it can turn its attention back to investors. Without confidence in management and the bank's outlook, there's nowhere for investors to turn. So skirting cautiously around the limitation for this wish to make investors fall in love with the bank, Moynihan simply wants investors' confidence to grow.

Management has already proved its mettle with a good scrub of the business and record earnings growth. With added shareholder confidence, the bank could see a big boost in share price, leading to more value for both the bank and investors.

Just a little magic
Those who don't believe in magic will never find it, according to Roald Dahl. And though there may be little room for magic in business these days, it can give you a better perspective on some of the most complex issues affecting a company. We may not have heard the three wishes straight from the horse's mouth, but the three issues at hand are big reasons why Bank of America has yet to really take off in the wake of its recent emergence from the stranglehold of the financial crisis. Take away the magic, and you have a company that needs to address three big setbacks -- but management sure is up for the challenge.

Bank of America's stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it's critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool's premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank's operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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