“War Rooms” and a Crisis of Confidence

by Todd Shriber

While the identity of the major bank is still undisclosed, it is becoming more apparent that Bank of America (BAC), the largest U.S. bank by assets, is in fact the bank that will be the subject of WikiLeaks’ foray into the corporate world. If nothing else, BofA has become the “WikiLeaks Trade,” a notion Trader Daily highlighted last Tuesday when the bank’s stock tumbled more than 3% when the WikiLeaks bank story broke.

The stock has rebounded nicely, but BofA isn’t doing a lot to inspire confidence that it is not the major bank in the cross-hairs of WikiLeaks. How else does one explain the bank forming a “war room” to deal with a potential WikiLeaks situation, a story first reported by Fox Business Network.

BofA’s war room is looking at three businesses that could be the target of the WikiLeaks data dump: mortgage creation, the controversial purchase of infamous subprime lender Countrywide, and the equally controversial acquisition of Merrill Lynch, Fox reported.

It has been argued by plenty of pundits that there is simply very little or even no information left to humiliate big banks like BofA, but that could be the first fallacy.

It might be reasonable to say, “Well, BofA bought a subprime mortgage shop at the top of the housing bubble and the world knows Hank Paulson forced the bank to buy Merrill. What more can be said about these issues?”

But that’s exactly why news of the war room isn’t going to do much to illicit confidence in BofA and its shares, which are down 70% in the past five years. Nothing to hide means no war room. That’s common sense.

Corporate war rooms aren’t all bad. Automaker Ford Motor Co. (F) has used them, as noted by Businessweek, and the company is one of the better corporate turnaround stories in recent memory. In BofA’s case, it’s hard to see this is as a positive. At the end of the day, war rooms are best for the National Football League draft.

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