New CEO inheriting heavy load at bank

Tapped Wednesday to be the next chief executive of Bank of America Corp., the 50-year-old Wellesley resident faces a host of challenges, from cleaning up billions of dollars in troubled loans to mollifying politicians upset about the company’s receipt of taxpayer money and its controversial purchase of investment bank Merrill Lynch.

But perhaps his most challenging task is answering different camps in Washington, D.C., that are pushing the bank in op posite directions. President Obama and members of Congress are pressuring Bank of America and other institutions to help propel the economy into recovery by increasing lending to businesses. Meanwhile, regulators want banks to avoid the kind of reckless lending that got the industry into so much trouble, by being more prudent about who they loan money to.

“That is the core issue - that balance,’’ said NStar chief executive and Bank of America director Thomas May, a member of the six-person search committee that nominated Moynihan. “There is a difference of opinion from the politician to the regulator. But that is nothing new in banking and it’s nothing new to Brian and his career.’’

In Charlotte, N.C., where Bank of America is based, Moynihan spoke to employees for the first time as CEO-to-be. Noting that acquisitions have already built the foundation for the company to be a soup-to-nuts financial services provider, he sketched a simple but highly focused assignment for himself and his employees.

“We just have to flat out execute,’’ Moynihan said. “We don’t have to think about buying something. We don’t have to think about something we don’t have. We have everything. . . . It’s just about execution.’’

Meanwhile in Boston, Moynihan’s appointment was a tonic to the business community, which has watched as prominent companies such as Moynihan’s former employer, FleetBoston Financial Corp., and Gillette got bought up by out-of-state corporations that call the shots from a distance. “Psychologically, I think it’s a great statement for the city,’’ real estate executive Kevin Phelan said.

Local politicians such as US Representative Barney Frank, who chairs the House Committee on Financial Services, believe the city will be spared deep cuts in Bank of America’s employment ranks with Moynihan at the helm. The company employs 8,000 people in Massachusetts.

The excitement extended to Providence, where Moynihan got his start at a law firm that handled business for Fleet Bank, which was bought by Bank of America in 2004. V. Duncan Johnson hired Moynihan fresh out of law school in 1984, for the firm now known as Edwards Angell Palmer & Dodge. Moynihan’s local ties will almost certainly help the region, Johnson said. “It might be unquantifiable at this point, but it’s just going to have huge benefits,’’ Johnson said.

Moynihan has said he doesn’t foresee major changes in the company. Its headquarters will remain in Charlotte, he said this week, and its presence in Boston isn’t expected to change much.

But his focus is now national and international. Among Moynihan’s early challenges will be to shift his mind-set, from a defensive position, in which he’s been explaining Bank of America’s actions to Congress and regulators, to being a CEO who leads the company forward.

“He’s been intimately involved in the regulatory side of things. Part of his challenge is going to be to disengage from that,’’ said Cornelius Hurley, director of Boston University’s Morin Center for Banking and Financial Law. “In his role as CEO, he’s got to run a business.’’

The company already took one major step forward last week when it repaid $45 billion in taxpayer aid it received as part of the government’s support of the financial industry during the credit crisis. Yet lingering in Washington is the feeling that Bank of America and other institutions that received help didn’t live up to their part of the bargain by lending enough to forestall or soften the recession.

Bank of America has a particular cross to bear on this front because of the controversy surrounding its purchase of Merrill Lynch. Both the Securities and Exchange Commission and New York attorney general are investigating whether the company misled shareholders about the size of losses Merrill was incurring before they voted on the acquisition, as well as suppressed information about bonuses Merrill executives planned to pay employees. Already the SEC has brought one set of fraud charges against the bank in the matter.

Add to that Washington’s concerns about banks foreclosing on delinquent homeowners or dunning credit card and checking account holders with late fees, and Bank of America’s business and political agendas become almost indistinguishable.

Frank said Moynihan is committed to dealing with issues important to Washington, such as foreclosures and lending. “He’s got a better understanding of the political climate’’ than other executives, Frank said.

In an interview Wednesday, Moynihan noted one of Bank of America’s recent attempts to improve its standing with customers: simplifying credit card rates and fees, and easy-to-understand disclosure of account terms.

But his twin tasks of improving Bank of America’s business lines and political standing is complicated by an economy struggling with 10 percent unemployment and a housing market still plagued by foreclosures. In its most recent quarter Bank of America reported a $1 billion loss, mostly from credit card holders defaulting on their bills. The amount of troubled loans on its books more than doubled from a year earlier.

Other important internal matters facing Moynihan include finishing the assimilation of Merrill Lynch and another troubled company it bought last year, mortgage lender Countrywide Financial, into the larger corporation. It is now has 282,000 employees in 42 countries.

Despite all these travails, Moynihan takes over a company that, in the eyes of some financial analysts, has been through the war and survived: It is fundamentally sound, all its major pieces are in place, and its strategy to be a provider of complete financial services to clients anywhere in the world can work.

“The stage has already been set for improved operating performances,’’ said Anthony Polini , an analyst with the Raymond James financial company. “With no penalties, fumbles, or interceptions,’’ he added, the company and Moynihan “should be able to put a lot of points up on the board over the next few years.’’

Todd Wallack can be reached at twallack@globe.com; Beth Healy can be reached at bhealy@globe.com.