Choosing BofA’s CEO

September 30, 2009

Running a bank the size of BofA is impossible. So long as the Fed does its best to make the banking system profitable, you could put a baked Alaska in charge and the bank would throw off billions of dollars a year in profits. The job of the CEO is not really about managing down, so much as managing out — repairing relationships with Andrew Cuomo, Sheila Bair, Barney Frank, Mary Shapiro, Elizabeth Warren, and other Washington VIPs. The board will want an experienced manager, to be sure. But they’ll really want someone with political skills, who can calm the savage beast that has woken up DC and which is eyeing the giant of Charlotte.

Which is one reason it’s not so ridiculous that Sallie Krawcheck is being talked of as a serious contender for the top job at BofA. She has the kind of credibility as a straight-shooter that the company desperately needs, and she might be able to mollify some of the bank’s more antagonistic foes.

Meanwhile, if the board starts looking at external candidates, all such candidates must be thinking in the back of their head that a very similar opening is likely to appear at Citigroup sooner rather than later. Vikram Pandit has done amazingly well just to outlast Ken Lewis — his ability to stay in his job is impressive, even if it’s largely a function of the fact that Citi has no succession plan. But as the last of the great destroyers of value still to be drawing a paycheck, he can’t last much longer.

It’s a good time, then, to be a potential megabank CEO. But it’s still a thankless job. Both banks are too big to manage, and both are likely to be broken up eventually. And that kind of decision can’t come from a new CEO: it has to come from the board.


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