Federal regulators have warned Bank of America’s board that the bank will face a public enforcement action if it doesn’t take steps to fix its corporate governance, risk management, and liquidity, sources tell the Wall Street Journal. The bank has been operating under a confidential memorandum of understanding directing it to fix those things since May 2009, but in recent months regulators have warned the bank that if it doesn’t shape up, that informal agreement will become a formal, public order.
The warning shocked BofA’s board, which thought its house was in order. “The Fed does not believe Bank of America has done all the work,” one source explained, while bank officials think “they have done all the work and the Fed keeps moving the goal line.” Regulators are said to be particularly concerned about upheaval in the bank’s upper management—in less than two years as CEO, Brian Moynihan has replaced his chief financial officers and chief risk officers twice. (Read more Bank of America stories.)