Moynihan Becomes Obama’s Top Wall Street Ally

Moynihan Becomes Obama’s Top Wall Street Ally on Rules Overhaul

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By Julianna Goldman and Hans Nichols

May 13 (Bloomberg) -- The Obama administration has found abanker it can do business with: Bank of America Corp.’s BrianMoynihan.

While many U.S. banks’ chief executive officers publiclyoppose at least some elements of President Barack Obama’s planfor financial regulation, Moynihan, 50, is winning White Housepraise for his stance. He backs a consumer financial protectionagency, addresses shortcomings the administration finds with hisbank’s home-loan modification program, and pursues small-business initiatives in collaboration with the White House,Bloomberg Businessweek reports in its May 17 issue.

“He has been willing to speak out bravely in his industryon the need for reform measures,” says Valerie Jarrett, Obama’sliaison to corporate America who has met with Moynihan at theWhite House several times. “And he has been willing to come toWashington and roll up his sleeves and work on the issue.”

One of Moynihan’s assets may be that he is a fresh face. Hetook over as the bank’s CEO Jan. 1, and unlike his predecessor,Kenneth Lewis, isn’t tainted by public outrage over the $700billion bailout for banks. Nor has he been targeted by aSecurities and Exchange Commission suit -- now settled --alleging that investors were misled about bonuses and lossesduring Bank of America’s 2009 acquisition of Merrill Lynch & Co.

Earnings Rise

Moynihan, who has also visited Treasury Secretary TimothyGeithner and White House economic adviser Lawrence Summers, hasproven that it is possible to please both the administration andshareholders. In April, Charlotte, North Carolina-based Bank ofAmerica, the largest U.S. bank, posted first-quarter profit of$3.18 billion, compared with a loss of $194 million in thefourth quarter of last year and a $1 billion loss in the quarterbefore that.

Moynihan’s strategy is a “complete turnabout” from theLewis era, says Anton Schutz, who manages $270 million offinancial stocks, including shares of Bank of America, at MendonCapital Advisors Corp. in Rochester, New York.

“It’s really important that he continue to keep the imageof Bank of America on the upward trajectory with theadministration and with investors,” he says. “If you’re anembattled CEO, it’s going to reflect in your stock price.”

Bank of America’s shares closed at $17.07 yesterday in NewYork Stock Exchange composite trading, up 13.35 percent sinceMoynihan took over.

Administration officials say Moynihan’s cooperation hasgiven him a distinctive place among bankers.

Treasury Dinner

Less than a month into his tenure as CEO, Moynihan attendeda dinner at the Treasury with Geithner and other administrationofficials and the heads of several banks, including Bank of NewYork Mellon Corp., US Bancorp and BB&T Corp. Throughout the Jan.20 dinner, some executives criticized what they described as theadministration’s populist tone toward Wall Street, an attendeesays.

Moynihan was more attuned to the public anger toward hisindustry and called on the group to help restore trust in banks,the attendee says.

“In addition to being an active leader of his bank, he hasalso expressed a willingness to work with the administration andhave a level of corporate responsibility beyond the bank,”Jarrett says. “We appreciate that effort.”

Moynihan, in an April 30 interview with Fox BusinessNetwork, said there is a “tough” tone in Washington, thoughObama had done “a great job” and is “working hard to try tofigure out a solution.”

Critic Dimon

That praise stands in contrast with comments by JPMorganChase & Co.’s CEO, Jamie Dimon. He has visited the White Houseat least four times in the past seven months, records show, andwas largely supportive of the administration’s efforts to rescuethe economy last year. As the regulatory overhaul wasintroduced, he took a more combative stance.

Last June, when Obama previewed his proposal, Dimon warnedin the Wall Street Journal against the “pendulum swinging toofar.” In January, he criticized Obama’s plan to tax recipientsof financial bailout funds that had repaid their loans, saying“using tax policy to punish people is a bad idea.”

Joseph Evangelisti, a spokesman for New York-basedJPMorgan, said in an interview, “Jamie Dimon has said publiclythat he has no problem with banks paying for bailouts in theirown industries, but not for companies in other industries.”

Last month, in a Chicago speech, Dimon said banks support80 percent of the overhaul plan.

Jarrett dismisses any suggestion of a popularity contestamong bankers.

“This isn’t about relationships,” she says. “It’s aboutissues.”

Just His Style

Anne Finucane, Bank of America’s chief marketing officer,says the cooperative attitude is part of Moynihan’s managementstyle. “I don’t think that Brian’s way of leading a company isto start with a stick in the eye,” she says.

Still, Finucane says Moynihan isn’t on board with all theregulatory proposals. His bank wants any regulation to pre-empttougher state laws, even on the proposed consumer agency, and hehas misgivings about a proposal to restrict derivatives tradingby commercial banks, she says.

“There is going to be regulatory reform and while we maynot be comfortable with every part of it, I think we know it’s areality,” Finucane says.

Cooperation with the administration makes business sensefor the CEO of a bank that has more than 10 percent of U.S.deposits and about 60 million individual and small-businesscustomers, Finucane says.

“These actions weren’t taken to win friends inWashington,” she says. “The industry has experienced a lowmoment in its reputation, and we are very anxious to get back tobusiness.”

To contact the reporter on this story:Julianna Goldman in Washington at [e-mail];Hans Nichols in Washington at [e-mail]