Bank of America CEO Brian T. Moynihan: “We’re idiots, not crooks.”

Last month Bank of America’s CEO Brian T. Moynihan announced shareholders would receive their first dividend increase since the financial crisis of 2007-2008. But uh-oh, a $30 billion dollar accounting error has them scrambling for a fix.

The Fed regards the incident as bolstering the case for the stress tests because the discovery was handled swiftly, said Barbara Hagenbaugh, a spokeswoman for the central bank.

Can you say “regulatory capture”? Sure you can. The acquisition of Merrill Lynch was in 2009, Bank of America only caught this mistake last week, and you’re happy they are handling it swiftly? How about asking how it got through for 5 years? Bank of America has been structuring those inherited notes since 2009, and only now noticed a problem? Earth to Janet Yellen: this is NOT good news.

But at least Bloomberg is honest about the pressure on Bank of America’s CEO: “Now he’s under pressure to salvage the payout after the company mistakenly inflated capital levels by about $4 billion.” Moynihan isn’t worried about the quality of his bookkeeping, the possibility of other billion dollar mistakes that might be hiding elsewhere in his corporate balance sheet, or the hit Bank of America’s reputation might take and thus their ability to attract business and investors. He’s worried about not getting a dividend increase for shareholders. Yep. That sounds about right. The concern is not about Their Benjamins [clients, customers, and others], but about increasing Our [investors] Benjamins.

The insular mindset is stunning: “‘This is a step backwards for them, it raises credibility issues for management,’ said Jonathan Finger, whose family-owned investment firm, Finger Interests Ltd., owns 900,000 shares of the lender and stands to lose about $144,000 in annual income if Moynihan fails to increase the dividend. ‘Shareholders have suffered a significant period with no dividends, so some respite from that would be welcomed.’”

If this is typical, Bloomberg’s assessment of the pressures is right. This disclosure doesn’t raise credibility issues; it confirms credibility problems. But the investment firm is clearly convinced this is a Black Swan event, and they fear only not getting an increased dividend. If I were Finger Interests, I’d be worried about what OTHER things Bank of America isn’t getting right. Bank of America is pleading “We’re Idiots, not Crooks!” and may well be right in that self-assessment. Such a plea, however, ought not to endear them to their stockholders.

Good grief.

Photo by World Economic Forum under Creative Commons license