Bank of America has been placed under a regulatory sanction that requires the firm to redesign both its board and its policies towards risk and liquidity, according to the Wall Street Journal. BofA is bound to a memorandum of understanding that dictates that the bank must address its defects or face penalty.
The memorandum, imposed in May, contains a series of deadlines that BofA must adhere to. These deadlines include the reseating of a majority of its directors; BofA has so far replaced four of its 16 directors.
Much of the memorandum’s focus is on stabilizing BofA after its acquisition of Merrill Lynch earlier this year. “Management has taken on significant risk, perhaps more than anticipated at the time the acquisition was proposed,” said one official. “More than normal supervisory attention will be required for the foreseeable future.”
Other banks that have received similar memoranda include Citigroup, which is in negotiations with the Federal Deposit Insurance Corp., and smaller regional banks Colonial BancCorp and Riverview Bancorp.