Bank of America is revamping its board of directors. A few of its current directors are bumping up against the retirement age of 72, so the bank has announced plans to add four new faces around the conference table to support President and CEO Brian Moynihan. The four new members are Sharon Allen, Linda Hudson, Jack Bovender and R. David Yost. What experience do they bring to the table? And are they good choices, or is BofA walking in JPMorgan’s unfortunate footsteps?
The first thing one notes is that none of the new four have ever worked for a bank. Until her retirement in 2010 Sharon Allen was the first independent chair of the board at Big 4 accounting firm Deloitte LLP. Of course, Deloitte does have many banks as its clients. After all, it was the auditor that gave Standard Chartered the all clear as the bank went on to process at least a quarter of a trillion in illegal transactions with Iranian entities. Francine McKenna describes Deloitte’s role as noted in the damning report from the New York Department of Financial Services:
As a “service provider” Deloitte apparently aided and abetted the bank’s continued illegal activities by sharing confidential information about other clients’ similar illegal activities and “watering down” reports to the regulators.
This happened in 2005, during Allen’s tenure.
The other new board members have considerably less experience with banks. They do, however, hail from industries whose fortunes are closely tied to the federal government’s budget priorities. Jack Bovender is the former CEO of the Hospital Corporation of America (HCA). R. David Yost headed AmerisourceBergen, a large pharmaceutical distributor. Finally, Linda Hudson is the current CEO of BAE Systems, which is the world’s second-largest defense contractor. We can assume that all three have experience in running a business while keeping close tabs on which way the political winds were blowing. How serious are the perpetual calls to drive down healthcare costs? Will budget sequestration go through and how would that affect the government’s defense spending? You can bet that some amount of lobbying has played a role in each of these companies’ business strategies. (See this for example.) This experience will surely help Bank of America as it continues to operate in a highly politicized environment and tries to fend off efforts to better regulate it and its Too Big to Fail brethren.