CtW Investment Group this week called on the directors ofBank of America and Washington Mutual (WaMu) to explain ways they acted toprotect shareholders from the subprime crisis. The letters sent by the group, which advises union-sponsored pension funds, complete the group’s“Subprime Director Focus List” for the 2008 Proxy Season, which has also targeted risk committees at Merrill Lynch, Citigroup, and others.
The group has said that the banks’ risk committees – Bankof America’s asset quality committee and WaMu’s finance committee – failed tomanage mortgage-related risks, which cost shareholders $71 billion last year.
CtW made its request for the banks to describe how theyprotected shareholders in letters to Bank of
If the banks do not provide information on what they did tomitigate risk, CtW, which stands for “Change to Win,” said it will ask shareholders to withhold their support atthe banks’ annual meetings this spring.
The addition of the banks’ directors also completes CtW’s “subprimedirector list” for the coming proxy season. The group previously said it willwork to hold accountable those directors most culpable for the risk oversightfailures at Citigroup, Merrill Lynch, Morgan Stanley and Wachovia. All sixFocus List banks are expected to hold annual meetings in April, the first beingMorgan Stanley.
The focus list banks account for 88 percent of the $87billion in total subprime-related write-downs and credit losses announced bylarge
“The directors bear ultimate responsibility for thesefailures,” Bill Patterson, CtW executive director, said in a statement. “Moreover,unlike at the vast majority of public companies, oversight and credit risk atboth Bank of America and Washington Mutual is entrusted to a committee that isnot wholly independent. Director conflicts of interest may have compromised thecommittees’ ability to rein in excessive risk taking by management.”