As part of our effort to make the InvesGuard blog more effective and impactful, each week we will try to summarize and present the past week’s most exciting news.

 

The big shocker for last week of course, was the big question mark that remained after Kenneth Lewis’ sudden (but not unexpected) resignation announcement. In yet another Board failure, (we’ve blogged about their other failures here) Bank of America’s Board failed to create a back up plan to the most important corporate position.

 

Our list of other notable events from last week also includes:

 

Xerox which started the week by reporting their impending buyout of ACS. The deal valued at $4 billion will open new doors for Xerox in terms of Business Off shoring Services catapulting it in the leagues of IBM, Accenture and others.

 

The House Oversight Committee held a hearing on Wednesday September 30th to gauge the role credit rating agencies played in the financial crisis. At the end of the hearing, what stood out the most was the presence of a possible conflict of interest within Moody’s compliance function. The biggest shocker yet was the fact that the outside counsel appointed by Moody’s to hold an inquiry into Mr. Kolchinsky’s claims of wrongdoings by Moody, did not submit a written report adding to the vagueness of the entire investigation. InvesGuard live blogged extensively for this event. You can see our observations here.

 

Interestingly, the chairman of this House Oversight Committee, Chairman Edolphus Towns is also the recipient of one of the ‘VIP’ loans from Bank of America (through Countrywide).It is alleged that the program offered loans to politically influential figures and other favored borrowers at more attractive terms than were available to the general public.

 

Tropical Storm Parma hit the coast of Philippinesimmediately after Storm Ketsana hit the area a week earlier.

 

The fact that Bank of America’s Board is scurrying around for a Chief Executive Officer for their company, speaks volumes about the functioning of their Board.

 

The credit and mortgage crisis has been around for sometime now. The deal with Merrill blew up in Bank of America’s face more than a few months back and it is now that the Board starts looking for a CEO successor?

 

The Board of Directors at Bank of America has been lacking in a few critical areas besides of course CEO succession planning. Consider for example, that through 2008, members of such a large financial behemoth’s Asset Quality Board Committee included the publisher of a Spanish language newspaper and a retired executive of a telecommunications software company. With the Asset Quality Board Committee required to provide financial and risk oversight including approving credit risk policies as required by the Basel II accord, credit concentrations, credit risk inherent in some products, read mortgage securities) , it is hard to see how these committee members were selected to serve on the Asset Quality committee without relevant experience.

 

Besides, staffing critical Board committees with members having irrelevant experience, some of the Board members were CEO’s themselves. It is easy to see how succession planning was given the short end of the stick when such CEO board members may have been over extended- managing their own companies while trying to provide strategic oversight to others.

 

With some Board changes that Bank of America has made in the last few months, shareholders can hopefully expect better oversight.

 

Just for the record, as per the last proxy statement, the Corporate Governance Board Committee responsible for succession planning, held only 4 meetings during all of 2008. Seems kind of less doesn’t it especially when you consider that Board meetings were held 13 times during 2008? Of course only 2/3rds of all the directors attended these meetings. Quite a sorry figure there….and of course as far as compensation was concerned, directors were nicely rewarded with the lowest any director earned during 2008 hovering around $120,000.