Woes For Bank Of America Corp As Shareholders Reject Proposal To Breakup of 'BofA'

National financial institution also investigated by SEC for failing to protect sensitive client information.

Bank of America Corp’s (NYSE:BAC) shareholders have turned down a proposal by the consumer advocate group to divide and break up the company into more manageable business units. The decision was made at an annual general meeting on Wednesday in Charlotte, where the banking group’s headquarter is situated.

The proposal presented by the ‘Public Citizen’ was based on the notion that the financial company is deemed “too big to fail”, on top of being too big to manage. They point out that in this way, BAC Stock would curtail the risk of another financial meltdown and can handle the proposed manageable business units better than before. The bank has around less than a quarter of a million employees, $2 trillion in assets, and around 1000 separate companies knotted together.

Analysts are warning that the country, still facing the scars of a recession, is facing additional challenges of new government fines and growing risk, making it really difficult to squeeze in a profit, resulting in GE pulling out of its financial wing.

Public Citizen is not entirely giving up though, and has called on Bank of America directors to go for a provision of the Dodd-Frank law to reform the bank into smaller, safer, and more manageable units.

When contacted for his views, CEO, Brian Moynihan,said that the reason for the disapproval among shareholders has to do with the bank already working on making it a simpler and less risky bank by selling units and cutting expenses to be more customer oriented than before.

However, even though he stated that the company’s past legacy is behind them, it is currently facing investigation for its failure to protect sensitive client accounts. The SEC claims that the financial group executed sophisticated trading schemes using millions of dollars that would otherwise had been used for funding costs. This is also leading to strong indications that a major shakeup in the top management is even more likely, given the dismal quarterly earnings report, which has only darkened the future even more.

There is dissatisfaction with the way Mr. Moynihan is handling the company, preferring a ‘dictator-style’ top down approach, given that he has to put out a number of fires while keeping shareholders happy at the same time. Even when he does post profits, he is still criticized! Therefore, in addition to the bank, Moynihan’s future looks cloudy too.

Bank of America stock price ended the day at $16.30, a 0.30% drop.