(AFP) – Nov 22, 2011
NEW YORK — Bank of America could face action from regulators if the company is judged to have fallen short with measures to strengthen its business, the Wall Street Journal reported Tuesday.
Bank of America has been operating under a memorandum of understanding since May 2009, following repeated regulatory tussles over the purchase of Merrill Lynch and a downgrade of its confidential supervisory rating.
The Journal, citing people familiar with the situation, said the memorandum had identified governance, risk and liquidity management as problems that had to be fixed.
According to the newspaper, regulators met with Bank of America's board in recent months and said they wanted to see more progress on compliance.
If this does not happen then formal and public action, which could mean more scrutiny and greater restrictions could result, the Journal reported.
Regulators told the board they had become concerned about turnover in key management posts, including the changing of the bank's chief financial officers and chief risk officers twice in the past two years, the report said.
Bank of America has struggled to recover from the 2008 financial crash and its disastrous acquisition of troubled mortgage lender Countrywide Financial, which resulted in lawsuits after the US housing market fell apart.
Investors have been dumping the bank's stock amid fears that its legal woes and the sluggish US economy would prevent it from raising enough capital to meet the Basel III standards imposed after the financial crisis.
The 2008 meltdown exposed many banks as undercapitalized, and the Basel III requirements have proved to be a headache for Bank of America.
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