What Does Curl's Exit Say About the Culture at Bank of America?
As everyone knows, banking is all about meritocracy. It's an industry where hard working, talented, engaging, preternaturally attractive people thrive and are paid commensurately with their achievements. So, what happens when someone's ushered to the exit for what appear to be mostly political reasons?
Depending upon your perspective, this appears to be what's happened to Greg Curl at Bank of America.
Curl, one of the former leading contenders for BofA's chief executive's chair and a bosom buddy of ex-chief executive Ken Lewis, will most probably be "retiring" from the bank very soon. His probable exit follows his deprivation of the chief risk officer's job because incoming CEO Brian Moynihan felt he had a "time horizon" that was "different than what I wanted from a chief risk officer."
Why is Curl's exit bad? Well...
1. It suggests Moynihan is prioritizing chumminess over competence
During the speculation about Lewis's successor last year, the New York Magazine said Moynihan's detractors described him as no more than a yes man for Ken Lewis.
If so, you could assume that Moynihan is a highly political beast, who may continue Lewis's propensity to surround himself with non-threatening colleagues.
In an article last year, The Street argued that the "yes man" culture was implanted at BofA by Hugh McColl, the predecessor to Lewis who was responsible for transforming the inconsequential National Bank of North Carolina into Bank of America.
"Bank of America is the house the Hugh built. He handpicked his board to be his lapdogs. He handpicked his successor, Lewis, to carry on exactly in the fashion he had led the bank," alleged the Street. "At the end of the day, the bank's directors were charter members of the "Friends of Hugh" club. Their primary job as a director was to rubber-stamp whatever Hugh wanted to do. If Hugh didn't bring up the issue of succession planning, it didn't need to be considered."
By getting rid of Curl, who was his main rival for the CEO's job, and replacing him with his own people it could be argued that Moynihan is perpetuating BofA's clubby past.
2. Curl knew how everything worked
Curl wasn't Lewis's first choice as CEO for nothing. He and Ken had worked together since 1997 when he was subsumed into BofA following its purchase of Boatmen's Bancshares. Curl helped Lewis build BofA into what it is today. Unfortunately, he's therefore implicated in problem acquisitions (Countrywide and Merrill Lynch), but he may at least be able to offer some helpful suggestions for assimilating them.
By comparison, Moynihan joined in 2004 when BofA merged with FleetBoston Financial and is seen as a little inexperienced.
3. Curl was the chief risk officer at a time when BofA is still carrying many tens of billions of toxic loans
It's not clear what Moynihan's problem with Curl's "time horizon" was, but some consistency would probably have been good here.
To conclude: The real issue with Curl's sudden but not altogether unsurprising exit, is that it carries a nasty whiff of politics. This is good for neither BofA nor the legacy Merrill Lynch part of the business if it wishes to become a lean, mean, meritocratic machine.
On the plus side, BofA bankers can take solace in the thought that theirs is not the only organization where politics take precedence: Morgan Stanley has also suffered departures following the ascension of new chief executive James Gorman.