* Moynihan says unsettling times for clients and staff
* CEO says bank taking aggressive action on legacy issues
* Reassures staff the bank will weather latest crisis
By Joseph A. Giannone
NEW YORK, Aug 9 With Bank of America Corp
(BAC.N) stock in freefall, Chief Executive Brian Moynihan moved
to reassure employees that the big, bloodied bank was on the
right path and could weather the current storm.
"We are aggressively taking action to put the legacy
mortgage issues behind the company -- even at great short-term
cost -- and to help get the U.S. housing market going again,"
he said in a letter to the bank's nearly 288,000 employees late
on Monday. "We have weathered challenging times before and we
The largest commercial bank's stock price sank 20 percent
on Monday to its lowest level since the end of March 2009, a
period when many investors were worried the U.S. government
might nationalize BofA and other banks saddled under unwanted
mortgage and credit assets.
Now Moynihan, besieged by a weak economy choppy markets and
a stream of litigation and regulatory probes, is under the gun
to keep clients and employees from fleeing the ship.
"This is an unsettling time -- not just for our
shareholders, but also for all of our teammates," he wrote.
Moynihan said the bank's capital ratios are much stronger
than during the financial crisis of 2008, when the Charlotte
commercial bank received a $45 billion bailout by the Treasury
Department. Bank of America had been weakened by its 2008
takeover of mortgage giant Countrywide and its agreement to
rescue hard-hit investment bank Merrill Lynch.
And with the exception of the residential mortgage
business, which continues to get slammed by falling home prices
and legal fallout stemming from the crisis, Bank of America's
businesses are all in the black, he said.
Stocks broadly have plunged in the past week, capped off by
frenzied selling on Monday after Standard & Poor's cut its
rating on U.S. government debt to AA-plus.
On top of that, BofA was clobbered by news that insurer
American International Group filed suit seeking $10 billion for
losses on mortgage securities.
Moynihan said the bank's capital ratios and excess cash are
higher than they were a year ago, and that most of its legacy
mortgage issues have been resolved. BofA has reserved $18
billion to settle outstanding mortgage-related issues.
"Most of the factors driving market volatility are beyond
our control," he said, "but for matters within our control, we
are taking action."
Moynihan's letter is one part of a full-court press by Bank
of America management to soothe customers and employees during
these unsettled days.
Bank of America wealth and investment management president,
Sallie Krawcheck early on Monday taped a message of reassurance
for the bank's Merrill Lynch, U.S. Trust and retirement
services advisers and employees.
Krawcheck late on Friday had canceled a teleconference with
the press, which had scheduled for Monday morning to discuss a
quarterly survey of the views of affluent investors.
"Sallie and those guys are so focused on advisers right now
they don't have time for the call," a spokesman said.
Moynihan will on Wednesday submit to a public grilling from
hedge fund Fairholme Capital founder Bruce Berkowitz, one of
the bank's top shareholders. Fairholme set up the call and
solicited questions from investors before BofA shares sank.
In midday Tuesday trading, Bank of America shares rose 7
percent to $6.99 a share, about one-third its June 30 reported
(Reporting by Joseph A. Giannone and Joe Rauch; editing by