BU Now » Bank of America

BofA, Citi hid debt like Lehman

Dick Taffe — Thu, 27 May 2010 17:41:23 +0000

Bank of America and Citigroup brushed off reports that they incorrectly hid from investors billions in debt — similar to what Lehman Brothers did — to obscure its true level of risk. Company documents filed with regulators show the two Wall Street banks classified some short-term repurchase agreements (“repos”) as sales, which they should have shows as borrowings. Law Professor Elizabeth Nowicki, a former SEC and Wall Street attorney, says such “repo” transactions should have been disclosed — even if they were legal.

“Isn’t it material to one poker player to know that all the other poker players at the table regularly cheat in other games, even if none of the players actually cheats in the game then being played? Bank of America, Citi, and other banks using repos can count on being sued promptly by investors.”

Contact Elizabeth Nowicki, 518-867-5355, enowicki@bu.edu

BofA settlement with SEC okayed

Dick Taffe — Mon, 22 Feb 2010 19:47:17 +0000

A federal judge okayed a $150 million Bank of America settlement with the SEC to end civil charges accusing the nation’s largest bank with misleading shareholders when it acquired Merrill Lynch. But law Professor Elizabeth Nowicki, both a former SEC and Wall Street attorney, says it is likely a short-lived “win” for BofA because the judge said in his written opinion that the bank failed to adequately disclose facts to its shareholders.

“It will turn out to be a huge loss for BofA given that the lawyers in the other pending lawsuits against it will use the judge’s words in the settlement opinion to help guide their litigation.”

Contact Elizabeth Nowicki, 617-353-2807, enowicki@bu.edu

BofA balks at SEC settlement

Dick Taffe — Thu, 18 Feb 2010 20:42:29 +0000

Bank of America is balking at suggestions from a federal judge that an outside compensation consultant be appointed as part of BofA’s settlement with the SEC. The judge has twice rejected as too small settlement proposals in the case involving BofA not disclosing both losses and bonuses when it merged with Merrill Lynch. Law Professor Elizabeth Nowicki, a veteran of both Wall Street and the SEC, says Bank of America shareholders are not being treated fairly.

“The fact that Bank of America executives continue to publicly balk at suggestions that are intended to protect shareholders indicates that nothing has changed at the top levels of BofA since last year, when its executives ignored the interests of its shareholders regarding the Merrill Lynch investors.”

Contact Elizabeth Nowicki, 617-353-2807, enowicki@bu.edu

BofA/S.E.C. settlement still unsettled

Dick Taffe — Tue, 09 Feb 2010 20:49:18 +0000

Federal Judge Jed Rakoff suggests he may reject a $150 million proposed deal reached between Bank of America and the Securities and Exchange Commission to settle charges the bank misled shareholders when it took over Merrill Lynch. Law Professor Elizabeth Nowicki, once an S.E.C. attorney, says she’s sympathetic to the S.E.C, but applauds the judge’s judicial guts.

“I am delighted that Judge Rakoff is unwilling to accept on blind faith a seemingly weak resolution of a very important and fairly egregious case.”Contact Elizabeth Nowicki, 617-353-2807, enowicki@bu.edu

BofA sued for securities fraud

Dick Taffe — Thu, 04 Feb 2010 20:27:29 +0000

Bank of America (and its then CEO and CFO) is being sued by New York’s attorney general for securities fraud for misleading shareholders and the government about BofA’s merger with Merrill Lynch. Law Professor Tamar Frankel, an authorities on securities law and legal ethics and author of “Trust and Honesty: America’s Business Culture at a Crossroad,” says this civil court trial should be enlightening.

“The value of the attorney general of New York’s proceedings against Bank of America executives may be in the exposure of the way in which the managers of other people’s money dealt with other people’s money. We ought to know; they perhaps ought to understand.”

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

Wellesley lawyer new BofA CEO

Dick Taffe — Thu, 17 Dec 2009 19:05:37 +0000

Bank of American has tapped Wellesley attorney Brian Moynihan as its new CEO, promoting him up from head of the bank’s consumer and small-business operations. Former Federal Reserve Bank examiner Mark T. Williams, who teaches finance in the BU School of Management, says BofA needs a risk-management veteran, not a lawyer, at its helm.

“In filling this critical position with attorney Brian Moynihan, BofA is not fixing its root problems. BofA has a risk-management problem that it still needs to sort out. For long-term growth and stability, this bank needs to be run by an experienced banker, preferably one who has weathered a few recessions and is risk-management focused.”

Contact Mark T. Williams, 617-358-2789, williams@bu.edu

SEC widens BofA/Merrill probe

Dick Taffe — Fri, 11 Dec 2009 21:25:35 +0000

The Securities and Exchange Commission is widening its probe of the Bank of American take-over Merrill Lynch to go beyond failing to disclose bonuses paid to Merrill employees to now include failure to disclose ML’s mounting losses. Law Professor Elizabeth Nowicki, a former SEC and Wall Street attorney, says it’s about time.

The SEC’s expanding probe of Bank of America’s egregious disclosure failures regarding Merrill Lynch is shocking only in that it has taken the SEC so long to expand it. The BofA disclosure problems are so blatant that even an ill-informed law student could identify them.”

Contact Elizabeth Nowicki, 617-353-2807, enowicki@bu.edu

BofA to repay TARP loans

Dick Taffe — Thu, 03 Dec 2009 22:32:03 +0000

Bank of America has received Fed approval to repay the $45 billion in Troubled Asset Relief Program bailout loans it got from taxpayers over the past year. Former Federal Reserve Bank examiner Mark T. Williams, who teaches finance in the School of Management, says the payback might be too early.

“Banks are beginning to earn their way back to health, and BofA is on much stronger financial footing than even six months ago. But banks still need to rebuild capital positions that were destroyed over a long period of wonton risk taking.”

Contact Mark T. Williams, 617-358-2789, williams@bu.edu

BofA CEO Lewis resigning

Dick Taffe — Thu, 01 Oct 2009 15:52:01 +0000

After months of legal scrutiny of Bank of America’s takeover of Merrill Lynch, BofA CEO Ken Lewis says he’ll step down at year’s end. School of Management Professor James Post, an authority on corporate governance and business ethics, says the momentous changes that Lewis orchestrated left BofA vulnerable and Lewis himself personally accountable.

“What brought Lewis to this decision is the complex interplay of leadership, governance, and accountability.”

Contact James Post, 617-353-4162, jepost@bu.edu

SEC sues Bank of America

Dick Taffe — Mon, 03 Aug 2009 20:23:44 +0000

Without admitting guilt, Bank of American paid a $33 million fine after the SEC sued it for lying to investors about the payment of $5.8 billion in bonuses to Merrill Lynch employees after BofA bought Merrill. School of Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial law, says it’s an odd deal.

“In light of the Treasury’s significant ownership position in Bank of America, the SEC’s fine has the appearance of the government punishing itself. In terms of the amount of the fine, in the context of the magnitude of the Merrill deal, the penalty seems like a parking ticket.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu