Bank Of America (BAC) Makes The Government Happy, Adds New Directors

In a sign that the federal government is the puppet master of several of America’s largest banks, Bank of America (BAC) has appointed four new directors with extensive bank management backgrounds. They include Donald E. Powell, a former chairman of the FDIC, Susan Bies, a former member of the board of governors in the Federal Reserve system, Paul Jones Jr., former CEO of Compass Bancshares, and William Boardman, a former member of the executive team at Bank One.

Bank of America and the government are a bit late in their action. BAC has essentially been restructured at the direction of the Fed and Treasury. The firm has been forced to raise a sum mandated by the government “stress tests”, and on January 9 the Treasury and FDIC gave Bank of America protection against the possibility of unusually large losses on an asset pool of approximately $118 billion of loans, securities backed by residential and commercial real estate loans and other such assets, which have been marked to current value.

Bank of America says it will pay back the money borrow from the TARP fund before the end of the year.

A new board hardly seems necessary.

Douglas A. McIntyre