Brian Moynihan has held the top spot at Bank of America Corp (NYSE:BAC) for roughly three and a half years, and the bank’s share price is down roughly 20% during his reign. That sounds ugly — but considering the stock was down a crushing 70% for the three and half years before he took over, it doesn’t look so bad.
The vast majority of the blame for the stock’s spiral down is placed on former CEO Ken Lewis, who oversaw most of the bank’s toxic acquisitions. But now, a few disgruntled shareholders are starting to question whether Moynihan is leading a culture of cutting corners and peeving customers in order to cut costs quickly.
The most recent of the heated complaints comes from a familiar voice. Finger Interests Number One filed a rare Sec Form PX14A6G and lambasted Moynihan and team regarding recent accusations from former employees who were allegedly “rewarded for delaying and denying Home Affordable Modification Program (“HAMP”) modifications so that Bank of America Corp (NYSE:BAC) could generate more fees and steer existing borrowers to more profitable in house products.”
A voice from the past
Finger Interest is a familiar voice because it has long been a critic of Bank of America Corp (NYSE:BAC)‘s management and board since the onset of the crisis. In this clip from 2009, Jonathan Finger advocates for the removal of then-CEO Ken Lewis, who would later step down.
While Finger Interest did not call for the removal of Moynihan (the letter lauded the bank’s work to clean up legacy issues and the balance sheet), the distaste for the bank’s culture was palatable.
“If true, the six affidavits filed by former employees of Bank of America in the Massachusetts case are damning, and evidence of unethical behavior and, more importantly point to a corporate culture of not just “short termism”, but of outright corruption and a disregard for laws, regulation, and of course, customers.”
Ouch. The bank has been in recovery mode and generated handsome profits for investors who scooped up shares on the cheap in late 2011 and early 2012, but can its battered reputation with customer begin to weigh the stock down? American Banker released its 2013 survey of bank reputations, and Bank of America Corp (NYSE:BAC) ranked dead last.
Can this really hurt the stock?
Despite the stigma, investors may happily overlook the scathing profiles as long as Bank of America Corp (NYSE:BAC) continues to post more improved financial results.
The harsh criticism makes the news and headlines, but it rarely moves the stock.