BofA CEO Defends Bank: 'We're Doing Right Thing'
Bank of America CEO Brian Moynihan, defending his leadership of the nation's biggest bank, said he would not resign and would not sell the Merrill Lynch brokerage business to raise capital.
"I think we’re doing the right thing," he told CNBC Tuesday, a day before a conference call with a major investor. "I think the management team is doing the right thing. We continue to drive the business. The franchise continues to perform. We built the capital base and we’ll continue to do that."
Bank of America shares rebounded Tuesday after plunging 20 percent the day before when financial analyst Mike Mayo downgraded the shares, citing the need for the firm to raise capital to cover mortgage-related settlements.
Moynihan said the bank has increased its consumer business and has cut costs in order to raise capital, including selling off 23 noncore businesses over the last six quarters. But Merrill Lynch won't be touched, he said.
"Merrill Lynch is actually integrated" into the bank, he said. "There are other things we can sell that are much less important than what Merrill lynch does."
He downplayed the importance of the conference call Wednesday with Fairholme Capital, a major shareholder.
"We talk to investors all the time," he said, pointing out the call was set up weeks ago. "They deserve to have the chance to talk to us about what’s going on. I am confident the questions we get tomorrow will be no different than the questions we get every day."
He also downplayed American International Group's $10 billion lawsuit against the bank on Mondaythat alleged "massive" mortgage fraud.
AIG said the bank and two companies it later bought, Merrill Lynch and Countrywide Financial, cheated AIG when it bought $28 billion in securities backed by home mortgages between 2005 and 2007, at the height of the housing boom.
Moynihan said the issues raised by the AIG lawsuit are no different than other lawsuits filed over the past three years.
Earlier Tuesday, Bofa got a vote of confidence from well-known banking analyst Dick Bove, who called the sell-off in BofA stock on Monday "a little bit obscene."
"This company is so far away from being in trouble or needing additional capital that it's ridiculous," Bove told CNBC. "I think the market's going lower so I'm not buying anything. The fact is, if I were to buy something I would be buying Bank of America aggressively."
Correction: An earlier version had an incorrect number for the amount sought by AIG in its lawsuit.