Tuesday, 12 February 2008

Bank of America and Washington Mutual added to sub-prime 'focus list'

It's Change To Win again. Full release here.

Washington, February 12 – Citing risk management failures that cost shareholders $71 billion in 2007, the CtW Investment Group has called on three directors of Bank of America (NYSE:BAC) and three directors of Washington Mutual (NYSE:WM) to describe what they did to protect shareholders from excessive mortgage-related risk over the past two years. Absent a compelling response, CtW said it will urge shareholders vote to against the directors at the banks’ 2008 annual meetings in April.

CtW made its request in letters to Bank of America directors Jackie M. Ward, Frank P. Bramble, Sr. and Robert L. Tillman and Washington Mutual directors Mary Pugh, Stephen E. Frank and William G. Reed, Jr. The six directors sit on the board committee designated to oversee risk for their respective banks: the Asset Quality Committee at Bank of America and the Finance Committee at Washington Mutual. CtW sent the letters last week and released them today via its web site.

“The meltdown of the U.S. mortgage market is among the worst financial disasters of the past 50 years,” said Bill Patterson, Executive Director of the CtW Investment Group. “At the epicenter of this crisis are Bank of America, Washington Mutual and four other U.S. banks whose failure to manage mortgage-related risk not only destroyed almost $300 billion in combined shareholder value, but also helped destabilize the global capital markets and precipitate a credit crunch that now threatens to throw the U.S. economy into recession.”

The addition of the two banks’ directors completes CtW’s “Subprime Director” Focus List for the 2008 proxy season. CtW previously announced that it will work to hold accountable those directors most culpable for the risk oversight failures at Citigroup, Merrill Lynch, Morgan Stanley and Wachovia. All six Focus List banks are expected to hold annual meetings in April, starting with Morgan Stanley, which could file its proxy statement as soon as next week.

CtW’s six Focus List banks account for 88% of the $87 billion in total subprime-related writedowns and credit losses announced by large U.S. banks since the beginning of 2007, according to a recent analysis by Bloomberg.

No comments: