Rich Guys Club

The bull is breathing all over Wall Street.

A little more than a year after Merrill Lynch was officially swallowed by Bank of America, many of the executives of the once storied Wall Street firm — which used the animal that is synonymous with rising stock markets as its mascot — have landed in leadership positions around the financial world.

On Monday, John Thain, who was Merrill’s chief executive when the firm sold to BofA, got the top job at troubled lender CIT. Thain said he was interested in the opportunity to revitalize the small-business lender. “CIT can and will serve an important role in the recovery of the U.S. economy and the creation of jobs,” Thain told reporters.

Read More: – by Stephen Gandel, Time

The New York Attorney General’s office said Thursday it is filing civil charges against Bank of America and its former CEO Ken Lewis, saying the bank misled investors about Merrill Lynch when it acquired the Wall Street bank in late 2008.

Civil charges were also being filed against Joe Price, the bank’s former chief financial officer. Price is now head of the bank’s consumer banking division.

At the same time New York Attorney General Andrew Cuomo’s office was filing its civil charges, the Securities and Exchange Commission also reached a settlement to resolve charges it brought against Bank of America over similar issues.

Lewis stepped down from Bank of America on Dec. 31 after almost a year of strife that followed the bank’s purchase of Merrill Lynch.

Read More: – by Stephen Bernard, the Associated Press

New York Attorney General Andrew Cuomo filed fraud charges against Bank of America and its former top executives this morning, alleging the bank manipulated the company’s shareholders and the federal government in order to carry out a merger with Merrill Lynch.

According to the lawsuit, former CEO Ken Lewis and former CFO Joe Price hid more than $16 billion worth of losses at Merrill from shareholders in order to ensure their approval of the merger. But after shareholders voted to buy the ailing firm, the bank approached the government to demand an infusion of taxpayer cash. Without bailout funds, they told regulators, BofA would be unable to complete the merger. The government capitulated and funneled $20 billion of TARP money into the bank.

Attorney General Cuomo called Bank of America’s conduct “a classic example of how the actions of our nation’s largest financial institutions led to the near-collapse of our financial system”:

Read More: – the Huffington Post

Federal regulators have expanded their charges against Bank of America Corp. over billions in bonuses paid at Merrill Lynch.

The Securities and Exchange Commission is accusing Bank of America of failing to disclose mounting losses at Merrill before a shareholder vote approving the combination of the two firms. The SEC said Monday it has asked a federal judge in Manhattan to allow it to file the new charges.

Read More: – The Associated Press

Bank of America Corp., the biggest U.S. bank, expects to pay record bonuses to some investment bankers while keeping the overall cost of incentive compensation below previous years, according to a company spokesman.

“Some people will be getting very good bonuses because they had a very good year,” spokesman Robert Stickler said. The overall pool “will not be a record,” he said.

Compensation at financial institutions is under scrutiny after the U.S. government bailed out companies including Citigroup Inc., American International Group Inc. and Bank of America at the height of the financial crisis. Bank of America repaid $45 billion in U.S. bank-rescue assistance in December, freeing the Charlotte, North Carolina-based lender from federal pay restrictions.

“It’s unfortunate timing both politically and socially to be paying out big bonuses,” said Shaun Springer, chief executive officer of Square Mile Services Ltd., which advises London financial firms on pay. “But banks have never paid a penny more in compensation than is demanded of them by the competition.”

Read More: – By David Mildenberg and Gavin Finch, Bloomberg

In the end, the home court advantage proved the winner.

Bank of America ( BAC – news – people ) named an internal candidate, Brian Moynihan, to become its new chief executive late Wednesday, drawing an end to a protracted search for someone to lead the beleaguered bank after its current chief executive, Kenneth Lewis, steps down at year end.

His appointment, effective Jan. 1, will mark the first time in recent memory the Charlotte, N.C.-based bank will be led by someone who didn’t come up through the ranks at its predecessor organization, North Carolina National Bank, which over the last decade and a half grew into the sprawling Bank of America behemoth through acquisitions.

Moynihan, 50, is a lawyer by background and has long been a contender for the top slot, though recently he competed with Gregory Curl, 61, the bank’s chief risk officer, and a few outside candidates. He comes from the executive ranks of FleetBoston Financial, which was acquired by Bank of America in 2004 under Lewis’ watch.

Most recently Moynihan has been running consumer and small business banking, though he has held a variety of operating and staff positions since the Fleet deal, and he was a point person in the contentious acquisition of Merrill Lynch earlier this year.

Read More: – by Liz Moyer, Forbes

IT WAS less of a goodbye kiss and more of a farewell hand-off in the face. Thirteen months after getting government cash from the Troubled Asset Relief Programme, America’s megabanks have stampeded to repay it before the new year, desperate to escape the stigma and meddling it has brought. On December 9th Bank of America (BofA) said it had repaid the $45 billion of preferred stock owned by the state and sold $19 billion of new ordinary shares. Citigroup and Wells Fargo announced similar plans on December 14th. (JPMorgan Chase, the other megabank, repaid the state in June.)

In total this month the government should get $90 billion of preferred stock (really a form of debt) repaid, while the banks will raise some $50 billion of common equity to boost their capital. The state will tear up its loss-sharing agreement with Citi. It also intends to sell its $25 billion of ordinary shares in the bank within a year, although immediate plans to flog $5 billion-worth were put on ice after Citi’s shares dipped too low for the Treasury’s taste. That blip aside, the banks are feeling perkier. BofA, which has struggled mightily to hire a new chief executive, managed to appoint Brian Moynihan, a company insider, to the role on December 16th.

For taxpayers relief at being repaid should be tempered by the fact that they are still on the hook for these too-big-to-fail firms. Regulation could help. The House of Representatives approved a bill on December 11th that avoids immediate surgery but would allow supervisors to beat up banks that pose a “grave threat” by, for example, blocking mergers and even forcing disposals. The bill also says creditors must take a “haircut” of up to 10% if a bank fails. But this is pretty tepid stuff: as soon as creditors sense a failure is imminent, they will refuse to roll their loans over, starting a run. The Senate is still ruminating on its own bill. It may take until the middle of next year for a final law to be passed. One Wall Street hedge-fund manager speaks for many when he says “the banks aren’t afraid” of the government any more.

Read More: – The Economist

 The Onion

Once heralded as a shrewd innovator, embattled CEO Ken Lewis is now leaving Bank Of America. Here are some key missteps from the past 18 months that have cast a pall over his tenure:

-Thought bank had so much more money than it actually did
-Accidentally set the Canton, OH branch on fire during a visit
-Mailed out millions of checks that incorrectly read “Bank of Armenia”
-Problems involving banks, America
-Caught placing cameras in Bank of America’s women’s locker room

Read More:

The Huffington Post

Talk about kicking people when they’re down.

Banks and credit unions made an eye-popping $24 billion in overdraft fees in 2008, according to a report released Tuesday by the nonprofit Center for Responsible Lending.

That’s a 35 percent increase from 2006.

The report estimates that about 51 million people were affected – meaning that one in six Americans were hit, on average, with $470 in overdraft fees last year.

The fees, which banks levy when approving check, debit card and ATM transactions despite a customer’s lack of sufficient funds, have become a source of big business for financial institutions: nearly half of all banks and credit unions make more money from overdraft services than they make in profits, according to Moebs Services, an economic research firm. The firm estimates banks will make $27 billion off overdraft programs this year, and says this is the first time banks have raised their overdraft fees during a recession.

Read More:

Huffington Post, Lila Shapiro

For those of you worried about Ken Lewis’ financial well-being since his announcement on Wednesday night that he was stepping down as Bank of America’s CEO, rest easy: he’s set to walk away with a $53 million pension plan. Fortune reports that this money will come from a pension plan, frozen years ago, that awarded certain top executives with extra benefits.

Ironically, BofA decided to freeze this so-called supplemental executive retirement plan at the same time it got rid of golden parachutes, citing the need to better align executive compensation with investor returns. By any measure, those have been poor at BofA of late….

But before BofA made its compensation switch, Lewis had participated for more than a decade in the supplemental pension plan — racking up the more than $50 million supplemental plan account.

That $53 million isn’t all Lewis will be walking away with — in addition to retirement benefits, there are millions in accumulated stock and other compensation. As the Fortune piece notes, assessing Lewis’ “walking away pay is an inexact science.” A Reuters piece puts Lewis’ total at $125 million, and adds that he may be facing a “reckoning with the U.S. government’s pay czar [Kenneth Feinberg].”

Read More: