BofA Pressured To Bust Up the Board

The Wall Street Journal leads off its coverage this morning with an exclusive report saying Washington is putting the heat on Bank of American (BAC) to reshuffle its board, insisting on a fresh injection of blood with more financial industry knowledge and experience. The "unusual influence by the federal government" into Bank of America is significant, particularly when you consider Uncle Sam "doesn't own a stake" in the troubled bank, the newspaper writes. There is some precedent here. The Obama administration also directed Citigroup (C) to clean house on the board level. And, of course, Washington has succeeded in pushing through changes to the boards of General Motors (GM) and AIG (AIG).

Staying on the banking beat, the Financial Times breaks news that Barclays is in discussions to sell its asset-management arm, Barclays Global Investors, for about $10 billion. The bidders include U.S. money manager BlackRock, the FT reports. Barclays has been selling off billions in assets lately to raise capital. The bank sold off iShares last month for $4.2 billion, the newspaper adds, a transaction that set in motion the possible offloading of BGI.

From distressed banks to distressed insurers we go now, and the New York Times and the WSJ, among others, are reporting that six major insurance companies have cleared the first hurdle to get billions in federal bailout funds. The NYT says that Hartford Financial Services Group (HIG), Prudential Financial (PRU), Lincoln National (LNC), Allstate (ALL), Ameriprise (AMP), and Principal Financial Group (PFG) "have all received approval for capital infusions." All told, Uncle Sam is set to deliver $22 billion in aid to the troubled U.S. insurers under TARP provisions, the WSJ writes. The insurers were jockeying for some kind of federal aid as far back as November, the WSJ writes, even going to the trouble of buying savings and loans in the hopes of qualifying as a financial services firm eligible for the first round of TARP funding.

You can't take your eyes off the news nowadays lest you miss another chapter in the dismantling of America's century-old automobile industry. Yesterday Chrysler announced it would close one in four of its more than 3,000 car dealerships around the country, the NYT reports. GM is considering even more radical moves with 2,600 dealerships set to go, CNN Money reports. The closures would represent 42 percent of GM's 6,250 dealerships, which, in total, employ more than 300,000 workers. According to the National Automobile Dealers Association, the anticipated dealership cuts "represent 187,000 jobs, more than the number of people who work for the two car companies in the United States." GM's anticipated actions come as it closes in on a Treasury-brokered deal with the United Auto Workers "that would cut its hourly labor costs by more than $1 billion a year and reduce its $20 billion pledge to the [union] to cover health-care obligations," the WSJ reports, quoting "people familiar with the matter." The deal, which would need the approval of the UAW's 60,000 strong membership, is a tough sell for a union that has long prided itself on protecting its employees. It would lead to another 20,000 layoffs and demonstrates the "big hit" the UAW is prepared to take "in hopes of saving the auto maker, which employed nearly 200,000 UAW workers just a decade ago," the WSJ writes.

Does New York Attorney General Andrew Cuomo ever sleep? The latest swashbuckling scourge of Wall Street excess has persuaded private-equity firm Carlyle Group to change how it does business with public pension funds around the country, "a move he hopes will pressure other officials and investment firms to alter the way the industry operates," the WSJ writes. The changes comes as part of a $20 million settlement agreement of a pay-to-play probe. Additionally, Carlyle Group agreed "to adopt new restrictions on campaign contributions to people who control the purse strings of public pension funds. It also agreed not to hire lobbyists or middlemen, known as placement agents, to bid for pension business." Still on the pension beat, the NYT reports that Charles E.F. Millard, the former Bush administration official in charge of the federal agency that guarantees pensions for 44 million Americans, "is under investigation over his contacts with several major Wall Street firms [including Goldman Sachs (GS) and JPMorgan Chase (JPM)] seeking to obtain lucrative contracts." He also is being investigated on suspicion of "soliciting help from one of the winning firms in his search for a new job once he left office," the NYT writes.

There is trouble in Europe this morning. Germany, the engine of the EU, reported its economy shrank by 3.8 percent in the first quarter, much worse than analysts had expected, the WSJ reports. It's the sharpest-ever fall in Germany's economic growth since records began in the 1970s, leading to fears the country could see a 6 percent contraction this year. 

And, finally, things are going from bad to worse for BofA's Kenneth Lewis. The WSJ this morning reports the 5,700-square-foot South Carolina vacation house the Lewis family shares with restaurant executive Dennis Thompson "remains unsold more than two years after its first listing, and Mr. Lewis has just cut the price 13%, to $3.3 million." Lewis and Thompson went in together in 2002 during more heady times to buy the house for $3 million, the newspaper adds.