Brian Moynihan and Bank of America (NYSE:BAC) have been under an immense amount of scrutiny, but listening to the words of Russian President Vladimir Putin may be exactly what the bank needs to move ahead.
In an interview, Putin once remarked:
People in Russia say that those who do not regret the collapse of the Soviet Union have no heart, and those that do regret it have no brain. We do not regret this, we simply state the fact and know that we need to look ahead, not backwards. We will not allow the past to drag us down and stop us from moving ahead. We understand where we should move. But we must act based on a clear understanding of what happened.
"... the past to drag us down..."
There is simply no denying the reality of the problems that characterized Bank of America -- and the companies it acquired -- in the years running up to and during the financial crisis. Its acquisition of Countrywide will perhaps go down as one of the worst moves ever made, and over a year ago people had estimated the losses from the $4 billion acquisition had exceeded $40 billion.
Yet it isn't simply the past missteps of that have been resolved through settlements that have dragged down Bank of America, but also the $5 debit card fee fiasco, recent allegations surrounding its mortgage modification practices, monumental loan losses, and countless other things over the past five years.
Of course, all of the issues that have beset Bank of America have been a drag not only on the company itself but also on its stock price as well:
Indeed, Bank of America has every reason to be brought down by its past, and it is for this very reason it must see the words of Putin as being so applicable to it.
"We will not allow the past to drag us down and stop us from moving ahead."
Note the confident tone of Putin in the quote, when he states simply "we will not." This is the same attitude that Bank of America and its employees must have as it moves forward.
Slowly, Bank of America has been shedding its non-core assets and has been refining itself as further and further distances itself from the disaster it once was. These moves have allowed its businesses that truly shape the bank -- its corporate and consumer lending operations, wealth management services, and investment banking and trading divisions -- deliver astounding profitability growth over the last year.
Even the slight dip in its Global Banking profitability isn't even the result of poor performance, but instead a roughly $1 billion impact from an accounting benefit of $400 million seen last year versus a $600 million cost this year. Excluding its provision for credit losses (what it expects to write off) net income in Global Banking increases from $3.6 billion to $4.3 million.
As the bank moves ahead, it also must see that its fundamental businesses are not only just a great at delivering returns for shareholders, but can also have a wide-reaching societal impact. Bank of America mustn't let its past mistakes characterize its relationships with its customers -- the roughly 51 million it has -- and the closing sentence from Putin is a great one to hold to as the calendar turns to 2014.
"But we must act based on a clear understanding of what happened."
Indeed the only way for Bank of America and Brian Moynihan to move ahead is that if it approaches the next five years in a way that is entirely shaped by the mistakes it has learned from in the past five. Foundationally, the bank has four core businesses that could propel it to great success in the future, but that will only be recognized if it does not repeat the same mistakes of its checkered past.
Fool contributor Patrick Morris owns shares of Bank of America. The Motley Fool recommends and owns shares of Bank of America and Wells Fargo. It also owns shares of Citigroup and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.