3 Bank of America execs fired
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NEW YORK — Bank of America fired three employees who managed the firm's business with Enron after the third-biggest bank lost $231 million when the energy trader filed for bankruptcy.
The bank dismissed Jo Tamalis, the client manager for Enron, and Marcia Bateman and James Allred, who oversaw loans to the Houston firm, said spokeswoman Georgie Shields. Steve Bragg, head of energy and power banking, resigned yesterday, Shields said.
Shields declined to comment on why the executives were fired. She said Bragg resigned to pursue other opportunities. Tamalis and Allred declined to comment, and Bateman couldn't be reached.
Bragg didn't immediately return a call.
Bank of America is the first bank to fire executives because of Enron's collapse. Other financial firms from J.P. Morgan Chase to Citigroup, which wrote off more than $2.7 billion in the fourth quarter because of Enron and Argentina's debt default, may take similar steps, investors say.
"If you assume they were responsible, you as an investor like to see people held accountable," said Phil Larkins, market strategist for Legacy South, which owns 200,000 Bank of America shares.
The Bank of America firings are some of the ripple effects in the financial-services industry from Enron's collapse. Congressional investigators are demanding names of investors in limited partnerships Enron used to inflate earnings and hide debt from shareholders. Merrill Lynch executives invested in one of the partnerships, which also drew money from Citigroup, American International Group and other firms.
Bank of America was one of the biggest lenders to Enron as part of a $3 billion credit facility that was arranged by J.P. Morgan and Citigroup.
"Bankers have made a lot of bad judgment calls regarding Enron," said Carl Domino, president of Northern Trust Value Investors, which holds Bank of America shares.
The largest bankruptcy helped push J.P. Morgan and FleetBoston Financial into their first quarterly losses in years. J.P. Morgan Chase wrote off $456 million of trading losses and loans to Enron and still has exposure to potential losses of $2.06 billion. Bank of America said this month loans and other business with Enron cost the company $231 million.
For Bank of America, the losses on loans to Enron came after a string of bad loans hurt the firm's earnings.