Tony Fratto: Bank of America's 'Communications Problem'

Countless times over the past two decades, someone would walk into my office, usually holding a news clip, and announce, "We've got a communications problem."

What they usually had was a "facts" problem that was becoming a communications problem.

Bank of America has invented a new twist: a communications problem that became a facts problem, and is now a growing legal problem.

In a wave of litigation and official probes, investigators reviewing BofA's acquisition of Merrill Lynch last fall, during the height of the financial crisis, are trying to determine whether bank officials misled regulators and shareholders on the nature of the transaction and made adequate disclosures of Merrill Lynch bonuses and expected losses.

Your Money on

The apparently too-tricky-by-half public and investor communications strategy by BofA (and Merrill) now has senior officers of the bank facing potential legal jeopardy.

The Crisis: 1 Year Later - A CNBC Special Report - See Complete Coverage
The Crisis: 1 Year Later - A CNBC Special Report - See Complete Coverage

It didn't have to be this way.

BofA officials should have better understood the environment they were in - one that allowed for complete transparency. Fear of a total collapse of the financial system created enormous leeway for the public airing - and resolving - of all dirty laundry. Regulators and investors had incentives aligned to work through nearly any obstacle to BofA's acquisition of Merrill.

So instead of being recognized for bringing a sinking ship into a safe harbor - a simple public relations strategy well managed by other institutions like JPMorgan Chase- BofA has managed to run both ships aground on the rocks.

Tony Fratto is a CNBC on-air contributor and most recently served as Deputy Assistant to the President and Deputy Press Secretary for the Bush Administration.