With a battered housing market, it seems everyone has grown tired of reading them.
When Bank of America released its letter to shareholders this week, I was a bit apprehensive to continue reading the news. But it’s something that any business blogger wouldn’t want to pass up. After all, there’s controversy every time BofA speaks.
When one of the most heavily pummeled banks by the credit crisis benefited $45 billion in total from the Troubled Asset Relief Program still finds it hard to regain its foot in the financial industry, expect some heavy emotional outpouring on its public statements. CEO Brian Moynihan writes, “Before and during the recent crisis, many of our collective business judgments missed the mark. We believe the changes we’re making now will put us in a much better position to see and respond to macroeconomic risks in the future.”
The Charlotte Observer also adds, “Moynihan said that early in the banking crisis it became clear that customers ‘across all our markets were frustrated with their banking experience.’ The Charlotte bank has responded with statements that better explain credit cards and mortgage loans, simpler products and reduced fees, he said. As for risk management changes, he said the bank is putting in place management routines that foster more open debate on risk-related matters. ‘We’re taking action based on those debates,’ he said.”
Call it a relief (with a bit of sarcasm, of course) that Moynihan is still positive of the future. What a way for admission considering that foreclosure postings are still high, national home values are still depressed and mortgage delinquencies are at its worst state in years. It’s no secret that letters to shareholders by CEOs are both a combination of the company’s key issues and cliché-heavy thoughts. In fact, they’re getting good at covering up how they’ve fallen short of their shareholders’ expectations. Moynihan, who succeeded the controversial Ken Lewis, is no exception to this. But to be fair, he has strong points in his letter for the real estate industry. First, he’s committed to making financial transactions simpler and better for their clients. Second, he’s more confident with the bank’s performance as its coverage on current and future loan losses was successful in 2009. Third, Moynihan did not keep mum about the changes in the company’s compensation package as it now aligns with “long-term financial performance”.
Still, no musings on a better financial environment will make up for the bank’s excessive bonuses to Merrill Lynch executives in a period where heavy losses were experienced. They better make every opportunity to contribute to mortgage holders’ solutions count this time.