How Moynihan Forced Sallie Krawcheck Out
Sallie Krawcheck got Sontaged.
Krawcheck, the most powerful woman on Wall Street, stepped down Tuesday night from her position running Bank of America's two wealth management units. She has no immediate plans for the future, said a person familiar with the matter.
Krawcheck ran the Merrill Lynch financial advisory business as well as the US Trust advisory business. But she was an outsider at Bank of America , with few ties to any of the powerful cliques within the bank.
Officially, her position was eliminated as part of company streamlining. "De-layering" as chief executive Brian Moynihan put it.
The head of US Trust, Keith Banks, and the head of Merrill Lynch's brokerage, John Thiel, will now report to David Darnell, who had been running Bank of America's commercial banking operations.
Krawcheck was not fired. She was simply offered what amounts to a demotion. Instead of reporting to Bank of America's chief executive, she would have reported to Darnell. Krawcheck decided to leave--as Bank of America CEO Brian Moynihan knew she would.
"For a person at her level in this business, it just doesn't make sense for her to report to anyone below the CEO level," a person familiar with her thinking said.
Krawcheck has not publicly commented on her departure.
Many Merrill Lynch veterans are surprised that Krawcheck was not offered the co-chief operating officer position that Darnell got. (Tom Montag, who has been running the banking operations of Bank of America, has also been named co-chief operating officer.) They had assumed that the great performance of Bank of America's wealth management business would keep Krawcheck safe in her position.
"Why would you get rid of Sallie? Why didn't she get tapped as co-chief operating officer?" one long time Merrill employee asked.
One senior executive Merrill Lynch, who spoke on the condition of anonymity, said he now wonders if Krawcheck's performance may have "written her pink slip."
"Moynihan feels like he's under siege. Krawcheck was a possible replacement for him if the board lost faith in Brian. With her gone, his job is safer," the executive said.
Krawcheck was tapped for the job of running wealth management by former Bank of America CEO Ken Lewis. Ever since Lewis stepped down, there has been rumors that various factions at the bank had it out for her.
There's an ironic parallel between Sallie Krawcheck's entrance and her exit. When Krawcheck was named head of wealth management, the head of Merrill's brokerage, Dan Sontag, stepped down rather than accept what would have amounted to a demotion. Now it seems Krawcheck has taken the same path.
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