Controlling the Financial Strings

Hugo Chavez would be proud.

A report Friday said federal officials are pressuring Bank of America Corp. to revamp its board and bring in directors with more banking experience.

The story in The Wall Street Journal called the regulators’ move "unusual" as the government does not own a stake in the company, and most of the bank’s problems are the result of its purchase of Merrill Lynch & Co., which was advised by regulators.

Bank of America said last week it was looking for new directors, but gave little detail. The announcement came as the government, after completing its stress test of the bank and 18 other financial companies, said Bank of America needed to raise nearly $34 billion. The bank has received $45 billion in government funds as part of the Treasury Department’s $700 billion financial rescue package.

The government is pulling the strings to change the makeup of the board, but it doesn’t even own any part of the company.  There’s nothing wrong with a bank having more experience on its board.  The question is, should the government be exerting pressure to do so? 

Filed under: Economics • Government

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