Duke Energy Dumps Progress Energy CEO After Merger: Is North Carolina The "Dirty South"?

Progress CEO is out as Duke, Progress complete merger

After Duke Energy and Progress Energy completed their merger Tuesday morning, the combined utility announced that Progress' top executive, Bill Johnson, who had been designated to lead the new firm, has resigned "by mutual agreement."

In an unexpected turn of events, Duke Chairman and Chief Executive Jim Rogers will be CEO of what is now the nation's largest utility.

Rogers had been scheduled to serve as chairman and Johnson as president and CEO.

However, in the announcement early Tuesday of the formal merger closing and the formation of a new board of directors, the new Duke Energy said Rogers was staying and Johnson was out.

Johnson had been a strong advocate for the merger and was planning to buy a home in Charlotte, according to a report in The Charlotte Observer.

Contacted by WRAL.com, a Duke spokesperson in Charlotte said the company had no further comment about Johnson's departure. Company officials also refused to talk about it during a conference call later Tuesday morning.

"That's it," the Duke spokesperson said, referring to the press announcement.

Johnson would not be made available for comment, the spokesman said when asked. He had been CEO at Progress since October 2007, when his predecessor and friend, Robert McGehee, died of a heart attack.

Asked if Johnson's departure would have any impact on Duke's plans for post-merger Progress operations in Raleigh, he replied: "No."

Still, Raleigh officials were caught off guard by the move and expressed some trepidation about the utility's presence in the Capital City.

"(There's) concern and a little disappointment because I think Progress Energy is a great company (and) has been for us for many, many years in the city of Raleigh," City Councilman John Odom said. "I was hoping that they might be a mainstay in downtown Raleigh and Raleigh all over. Now, we have no idea."

Progress previously said it expected to cut at least 700 jobs in Raleigh, where it's name is on the downtown performing arts center and other local groups count on its philanthropy.

"Even though it's a big shake-up on Day 1, you really have to give them some time and see how it plays out," Mayor Nancy McFarlane said. "We're still the state capital. They're still going to be coming to Raleigh for all sorts of things. Right now, I still take them at their word (that) they plan on being a good presence here (and) a good community partner."

Ed Finley, chairman of the North Carolina Utilities Commission, which approved the merger last week, said that company officials never indicated to the commission that Johnson wouldn't be part of the management of the combined utility.

"His departure on the same day the merger is closed and three days after our order may raise questions in the minds of some as to the timing of the decision by those involved in it," Finley said in a statement. "While management structure and succession are important, a more significant emphasis will be on ensuring that the benefits to the ratepayers will materialize as forecasted.

"There is significant management talent within the two companies, and we hope the best lineup will fall quickly into place," he said.

The regulatory approval from North Carolina and South Carolina, which came Monday, were the final hurdles Duke and Progress needed to close the deal.

Progress will now operate as a subsidiary of Duke.

“Having served as CEO of Duke and its predecessor companies for more than 23 years, Jim Rogers is well-suited to lead the integration effort and to drive our combined businesses forward,” Ann Maynard Gray, the lead director of the Duke board, said in a statement. “The board of directors looks forward to working with Jim and the rest of the executive team to enhance our position as a utility with financial strength and a greater ability to meet the needs of our customers.”

Gray made only a brief comment about Johnson, saying he was “instrumental in helping us close the merger with Progress Energy" and wishing him well in the future.




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Sources: McClatchy Newspapers, WCNC, WRAL, Google Maps

Obama's Banking Reform Agenda Hits A Bi-Partisan Wall

Bi-partisanship Banking Reform Stalls



The chances of a bi-partisan compromise on financial reform took another significant hit Tuesday as top Senate Republicans accused the White House of derailing a deal on derivatives trading and bashed the Democratic legislation as perpetuating Wall Street bailouts.

The Republican attacks drew a quick rebuke from the White House and pushed an issue long viewed as ripe for bipartisan agreement deeper into partisan territory. The sharp turn in the tone of the debate suggests Democrats might have to struggle to peel off more than a handful of Republican votes, if that.

After meeting with his members, Senate Minority Leader Mitch McConnell (R-Ky.) said he had “naively” assumed the bill would move forward on a bipartisan basis, and he predicted the overhaul legislation written by Banking Committee Chairman Chris Dodd (D-Conn.) would face “overwhelming Republican opposition.”

“I would say all signs we get from the White House is they’re not interested in talking, they’re not interested in making a deal with us,” McConnell told reporters. “They want to jam through a totally partisan bill. And if they do that, and it looks like the Dodd bill, it will guarantee perpetual taxpayer bailouts of Wall Street banks.”

Republicans are gravitating toward a strategy that defies the conventional wisdom held by Democrats — that the GOP, from a political standpoint, cannot throw up uniform opposition to Wall Street reform as it did with health care reform. A senior Senate Republican aide said the conference believes it has “a strong case to make as to why the bill is bad.”

“People expect us to say no to really bad ideas,” said Sen. John Cornyn, chairman of the National Republican Senatorial Committee. “The Dodd bill ... has a lot of problems.”

In a hastily assembled conference call with reporters Tuesday afternoon, Deputy Treasury Secretary Neal Wolin disputed McConnell point by point, saying charges that the bill would perpetuate Wall Street bailouts “aren’t consistent with the plain language of the bill.”

At the same time, White House deputy communications director Jen Psaki accused Republicans of taking cues from party strategists — naming GOP pollster Frank Luntz, who advised Republicans to attack President Barack Obama’s financial reform plans by calling them “bailouts.”

She said McConnell “reads Luntz’s line and follows Wall Street’s orders.”

“No matter what the bill actually does, they’re going to call it a bailout because that’s what the polls tell them to do,” Psaki wrote on the White House website. “The Senate bill explicitly mandates that a large financial firm that faces failure will be allowed to fail, and it explicitly prohibits the use of any funds to ‘bail out’ a failing firm.”

The back-and-forth appeared to further alienate Republicans and Democrats, who have been struggling for months to reach a compromise on regulatory reform, as tensions over the backroom negotiations spilled into the open. It comes ahead of a White House meeting Wednesday between Obama, McConnell, House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and House Minority Leader John Boehner.

Dodd and Alabama Sen. Richard Shelby, the ranking Republican on the Banking Committee, said they continue to negotiate a compromise on the overall regulatory bill. However, Shelby joined McConnell at a press conference after the Republicans’ weekly policy luncheon and criticized the process.

“We can get a good bill, if they will meet us halfway. And they haven’t yet,” Shelby said. “I hope they will. We continue to be open. But we’re not open to a bad bill, because that would be continuing what we’re doing.”

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McConnell’s criticism of the bill came shortly after Georgia Sen. Saxby Chambliss, ranking Republican on the Agriculture Committee, accused senior administration officials of attempting to thwart a compromise on one of the last major elements of regulatory reform — a proposal to regulate risky derivatives trades, which falls under the jurisdiction of the Agriculture and Banking committees.

In contrast to the partisan bill produced by the Banking Committee, there was some expectation that Chambliss and Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) would reach a bipartisan deal on their portion of the bill to tighten restrictions on derivatives.

But that outcome looked remote after Chambliss issued a statement charging Treasury Secretary Timothy Geithner and Gary Gensler, chairman of the Commodity Futures Trading Commission, with forcing “politics in the pathway of meaningful financial regulatory reform.”

“They seem to be intent on making this a partisan issue without Republican input, which in no way benefits the American people who have endured economic distress as a result of the recent financial crisis,” Chambliss said.

Senate Republicans said Chambliss and Lincoln were nearing a deal, but when Chambliss declined to commit Republican support for the overall bill without seeing final language, the administration pulled back support for any emerging compromise.

A White House official told POLITICO that the administration had expressed concerns to Lincoln in the past “72 hours” about the direction of the derivatives language.

Lincoln aides said she broke with Chambliss over “mandatory exchange trading” — which would place derivatives trades on central market exchanges, making information about the derivatives available in a central location. Currently, derivatives are usually executed as private deals between two parties.

Lincoln supported the mandatory exchange trading. Chambliss didn’t. Once it was clear that a deal with Chambliss was not possible, Lincoln decided to craft a proposal that could win as much support as possible within her own Caucus, aides to the Arkansas Democrat said.

Lincoln pushed ahead with her plan Tuesday, briefing Agriculture Committee Democrats on an approach that was more restrictive than many had expected.

Lincoln’s plan is likely to burnish her standing with progressive groups inside the Democratic Party ahead of her May 18 Senate primary, where she is facing a challenger from the left, Lt. Gov. Bill Halter. Lincoln drew fire from liberals in her party for opposing the public health insurance option in the recent health care reform bill.

And the shift drew immediate praise from a leading progressive voice in the Senate on derivatives, Sen. Maria Cantwell (D-Wash.). “Out of the House and the Senate bills that have been on the table before, it sounds like Blanche Lincoln is going to put the strongest reforms on the table,” she said.

Lincoln would require “mandatory exchange trading” for most derivatives contracts, though there would be an exemption from such requirements for non-financial institutions.



Lincoln’s position is similar to the provision approved by the House Financial Services Committee and is “at least as stringent” as that called for by the Senate Banking Committee, her aides said. Under Lincoln’s proposal, manufacturers, agriculture companies and commodities producers would not be covered by a new requirement to “clear” the trades, or have them settled by a third party.

Chambliss said he continues to talk with Lincoln but the White House “has got to send a message that it wants to see a bipartisan bill, and they haven’t done that.”

“The pushback is kind of brand new,” Chambliss said. “For them to come up and push back on the bipartisan concepts that we’re thinking in terms of [derivatives] is somewhat surprising, because we thought we were working well.”

Wolin rejected Republican assertions that the administration had turned away from bipartisanship.

“We have worked for more than a year with Democrats and Republicans, and we will continue to work with Republicans and Democrats,” Wolin said.

But, he added, Obama and top administration officials have made clear they won’t accept compromises that weaken the Senate bill. “It is important and urgent that we get legislation — but that we get good, strong legislation,” Wolin said.


Sources: Bloomberg News, BOFA, CNN, Politico, Youtube, Google Maps

Moynihan's East Coast Ties Sure To Affect Charlotte BOFA HQ Decisions

BofA names new CEO. Jeffrey Harte, of Sandler O'Neill, discusses Bank of America's choice of Brian Moynihan as its new CEO.

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And Mr. Brian Moynihan It Is!


Big surprise!

Brian Moynihan has long been the inside choice to replace Ken Lewis.

Lewis just got a little too radioactive post-bailout and had to rush his retirement.

However once BAC paid back TARP and did some back channel Lobbying of Congress and Regulators, made a head fake toward an outsider, Moynihan was back on track.

You have to love what Chris Whalen told Bloomberg about Moynihan’s elevation:

"The fact that Regulators would accept this is a complete indictment of the Fed and Office of the Comptroller of the Currency,” said Chris Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based research firm. “Ken Lewis’s cronies were allowed to pick his son".

It does not hurt that Moynihan has deep ties to Boston, pleasing Rep. Barney Frank, ranking godfather of the Banking Industry.

For that reason, be VERY skeptical of reports that Moynihan will be “working from” Charlotte.

Either the guy moves here or not.

I’m guessing not.

It was never really a short-term option to move BAC’s entire HQ to Boston. Too costly.

But let’s watch and see where the real power goes in this operation in the years ahead.





Bank of America Names Brian Moynihan To Replace CEO Ken Lewis


Bank of America Corp., the biggest U.S. lender, promoted Brian T. Moynihan to chief executive officer, opting for an insider to repair the company after the tumultuous takeover of Merrill Lynch & Co. prodded Kenneth D. Lewis into early retirement.

Moynihan, the 50-year-old head of the consumer banking unit, takes over at year’s end, the Charlotte, North Carolina- based bank said yesterday in a statement. Lewis, 62, said in September he’d step down Dec. 31.

“Our core businesses are the right ones, we just have to execute,” Moynihan said in an interview after the board gave him the title of president and CEO. “As the recovery takes hold, we need to do a better job with risk management.”

Bank of America’s new boss must stanch defaults on consumer loans tied to the recession, which led to two losses in the past four quarters. He must also integrate Merrill Lynch and smooth relations with regulators after they clashed with Lewis over the purchase. The bank paid back $45 billion to the U.S. Troubled Asset Relief Program on Dec. 9.

Moynihan takes charge of the biggest U.S. lender by assets and deposits, the No. 1 home lender and the largest issuer of debit cards. He’ll also oversee underwriting, trading and retail brokerage operations of New York-based Merrill Lynch. The bank counts 53 million consumer and small-business customers in 150 countries at 6,000 offices, and the company’s stock is a component of the Dow Jones Industrial Average.

Investors React

“The good news is that he knows the company and isn’t coming from the outside,” said Mike Holland, chairman of Holland & Co. LLC, which manages more than $4 billion. “The fact that he has a background in wealth management and corporate banking is a very good order for what they need.” Holland doesn’t own any shares and said the appointment may turn him into a buyer. The stock was little changed at $15.28 in 9:39 a.m. New York Stock Exchange composite trading.

The board’s six-member search committee, led by Chairman Walter Massey, chose Moynihan during an early afternoon meeting in Charlotte yesterday. The full board assembled at 6 p.m. New York time and after presentations from lawyers, its executive search consultants and Massey, voted unanimously for Moynihan, according to spokesman Robert Stickler.

Moynihan, who had been working with Lewis earlier in the day, said he left his 58th floor office at about 7:30 p.m. after being called into the meeting and was greeted with applause by Lewis and the 13 other directors who were attending; one undisclosed member was connected by phone.

Internal and External

“I was pleased,” Moynihan said when asked about how he responded. The 10-week selection process was worthwhile, he said, “as long as it had a good outcome.”

Bank of America sorted through half a dozen internal candidates including Gregory Curl, 61, the bank’s chief risk officer, who was initially favored by Lewis because of his lengthy experience, a person familiar with the matter has said. Lewis strongly endorsed Moynihan at the meeting, the person said, and repeated it in the company’s statement.

Moynihan was chosen after two board members spoke with the staff of New York State Attorney General Andrew Cuomo and learned that Curl might be the focus of his probe into the Merrill Lynch takeover, the New York Times reported. The newspaper cited a Dec. 7 letter from Cuomo’s office to the bank’s lawyer, Lewis Liman at Cleary, Gottlieb, Steen & Hamilton LLP, that said investigators “are seriously concerned that Mr. Curl has provided testimony that was intentionally or recklessly false.” The bank declined to comment, Stickler said.

Kelly Drops Out

Robert Kelly, 55, CEO at Bank of New York Mellon Corp. and the leading outside candidate, dropped out on Dec. 14 after the board offered a $20 million compensation package, the person said. Kelly was among at least five industry Executives who rebuffed the board’s overtures.

An internal candidate usually is the best choice because “the transition is easier and you usually have to pay the new CEO much less than if you have to go outside,” said Mike McCauley, senior corporate governance officer at the Florida State Board of Administration, which owns 25.4 million Bank of America shares.

Compensation

Moynihan wasn’t among the bank’s five highest-paid executives in 2008, so his compensation wasn’t disclosed at the time and the statement yesterday didn’t discuss the matter.

Moynihan joined Bank of America through its 2004 purchase of FleetBoston Financial Corp., where he led the brokerage and wealth management unit and directed strategic development for six years. At Bank of America, he has been president of the global wealth and investment management unit, spent a month in 2008 as general counsel, then replaced former Merrill Lynch CEO John Thain in January to head the investment bank and wealth management units. In August, he was assigned to head the retail bank, including oversight of credit card operations.

Since Lewis’s resignation announcement, analysts including Richard Bove of Rochdale Securities LLC had cited Moynihan as a favorite for the CEO post because of his ties to search committee directors Charles “Chad” Gifford, Thomas May and Thomas Ryan, three Bostonians who had been on the Fleet board.

Diverse Mix

“The grace period will likely be short as Moynihan is put to the test [and] as Bank of America works to mend bridges with both Investors and Regulators,” Todd Hagerman, an analyst with Collins Stewart Plc, said in a report today. “Moynihan’s success will be measured by his ability to realize long-promised merger synergies and a greater emphasis on organic growth.”

Moynihan must show investors that Bank of America’s diverse businesses can be effectively managed rather than broken into smaller pieces, said David Kotok, chairman of Vineland, New Jersey-based Cumberland Advisors, which oversees $1.2 billion. “There is a question whether this model even works in the post- crisis world,” Kotok said. “He has a task ahead of him.”

Bank of America posted losses in last year’s fourth quarter and the third quarter of 2009. Still, the bank posted a cumulative profit of $6.5 billion for the first nine months of this year, aided by gains at Merrill Lynch from trading stocks, bonds and currencies.

The U.S. injected $45 billion into Bank of America through the purchase of preferred shares, including $20 billion approved in January after the Merrill Lynch takeover to keep the deal from collapsing. The bank redeemed the shares earlier this month after raising $19 billion through a stock sale.

Merrill Merger

Documents released during a congressional investigation of the Merrill purchase show Moynihan as general counsel played a role in conducting the transaction and advising Lewis. The CEO was later criticized by investors and regulators for not telling shareholders about Merrill’s $3.6 billion in employee bonuses and mounting losses.

Moynihan’s relations frayed with Representative Edolphus Towns, a New York Democrat who leads the House Oversight Committee. After Moynihan testified on his role in the Merrill takeover at a Nov. 17 hearing, Towns said he didn’t believe some of the banker’s answers and that Moynihan “didn’t show the kind of leadership a company would seem to need.”

“I hope Mr. Moynihan appreciates the debt Bank of America owes to U.S. taxpayers,” Towns said in a statement yesterday.

Credit Cards

Bank of America is addressing consumer and political concerns by providing more clarity to customers in credit cards, home loans and other retail businesses, Moynihan said. His own success as CEO will be measured by whether customers, investors and employees “say we are doing a better job,” he said.

Moynihan is an Ohio native, a graduate of Brown University and the University of Notre Dame School of Law. The CEO and Bank of America will be based in Charlotte, and there are no plans to move the headquarters, Stickler said.

Moynihan praised Tom Montag, who heads the bank’s capital markets unit, for helping retain senior bankers and noted that Bank of America has ranked second in investment banking fees for three straight quarters.

“To perform that way in these tough economic times is a real testament to that business,” he said.

The bank needs brokerage and investment-banking fees to overcome higher losses in its credit-card and home-loan businesses, which make up about 36 percent of revenue this year. The U.S. unemployment rate stood at 10 percent in November, and

Lewis told employees in September when he announced his departure that “a near double-digit unemployment rate is bad medicine for a bank that serves consumers.” He predicted that “the next two quarters will be difficult.”





Brian Moynihan named Bank of America CEO


Bank of America's board has selected Brian Moynihan as the bank's new chief executive, spokesman Bob Stickler said this evening.

Moynihan, previously the bank's consumer banking head, will have his office in Charlotte and the bank will remain headquartered in Charlotte, Stickler said.



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