The largest bank in the United States is going through a complexity crisis. Faced with the continued consequences of its bad behavior during the financial crisis, Bank of America is embarking on a massive effort to streamline the company after reporting an astounding $8.8 billion loss last quarter. Reports emerged Thursday morning that 600 branches would close, and earlier this week, CEO Brian Moynihan sent top executives Sallie Krawcheck and Joe Price packing as part of a process he described as "de-layering and simplifying." The entire reorganization initiative is known as Project New BAC, and though the full details of the plan won't emerge until Moynihan addresses shareholders on Monday, we're starting to hear scattered cries to split the company up.
"At some point, it gets too big to manage," money manager Brian Wenzinger told The New York Times. "Smaller works better, and the less complicated it is, the better it can work."
A Bank of America break-up would most likely involve spinning off Merrill Lynch, but experts are sharply divided on the benefits of doing so. It would be a bold move to say the least. On one hand, Merrill Lynch has been doing well. Dealbook called Merrill Lynch "a surprising bright spot for the troubled bank, increasing its client base since the 2009 takeover by Bank of America." As president of Bank of America's Global Wealth & Investment Management division--of which Merrill Lynch is the keystone--Krawcheck helped Merrill Lynch bring in $7.6 billion in profits last year. Needless to say, lots of folks were confused by her departure.