Behind the shakeup at BofA

by Patricia Sellers

The news that another Fortune Most Powerful Woman — Bank of America (BAC) chief risk officer Amy Brinkley — has fallen was inevitable.

The surprise is that she lasted as long as she did.

The pressure is that intense inside CEO Ken Lewis’ financial-services empire — now the largest U.S. bank by revenues and No. 11 on the Fortune 500, thanks to a run of aggressive acquisitions. The topper, Merrill Lynch, was a rescue that Lewis agreed to during that fateful September 2008 weekend when Lehman Brothers collapsed and the global financial crisis spun out of control. This marked the beginning of the end of Brinkley’s career as BofA’s savvy risk manager and close CEO adviser.

Brinkley, 53, seemed ever-adaptable for three decades. She started at BofA in 1978 as a management trainee in the Commercial Credit department and rose through a variety of jobs, including marketing and consumer products, before taking the top risk post in 2002. As BofA profits compounded and its stock rose as high as $55, Brinkley’s star rose too. She was No. 22 on last year’s Fortune Most Powerful Women list. In the 2007 Most Powerful Women issue, we included her in a feature called “One Step Away,” about six women who could be Fortune 500 CEOs someday.

“Always be open to a broad range of possibilities” when creating a career, she told me.

But as BofA’s troubles grew and the Merrill acquisition came to be viewed as insanely high-priced (even at $29 billion, the ultimate price in the all-stock transaction), somebody had to pay. The official word from BofA is that Brinkley is retiring by mutual agreement. But clearly, she had no choice but to step down. (She declined to comment for this story.) To replace her, Ken Lewis has installed Greg Curl, 60, a 31-year BofA veteran whose most recent job was Global Corporate Strategic Development and Planning executive.

More heads will likely roll. BofA’s stock is now trading around $12. And regulators, who recently required the bank to raise $33.9 billion in new equity, are continuing to pressure Lewis to strengthen the company’s management and board. Directors have been resigning. The latest: former Lowe’s (LOW) CEO Bob Tillman.

Meanwhile, Lewis, 62, has been called to testify before the House Committee on Oversight and Government Reform next Thursday. He’ll be grilled about his knowledge of Merrill’s deteriorating condition at the time he agreed to the buyout.

Amidst all this drama, one other Fortune Most Powerful Woman stands firmly at BofA: Barbara Desoer, president of Bank of America Home Loans & Insurance. She’s been in charge of integrating another buzzed-about acquisition: Countrywide Financial. Certainly, Countrywide has left another black mark on the bank: The SEC yesterday announced that it has filed civil fraud charges against former Countrywide CEO Angelo Mozilo. Even so, this deal looks like a good one: It’s given BofA ownership of 20% of the U.S. mortgage market, at a reasonable acquisition price of $2.5 billion.

Desoer, who started at BofA in 1977 and has headed technology and operations as well as marketing, is nose-to-the-grindstone and low-profile except for an on-stage Q&A last fall with my colleague Geoff Colvin. Ranked No. 27 on the Most Powerful Women list, she’s earned high marks inside the bank and from analysts for integrating Countrywide smoothly, amidst so many distractions.

Maybe it helps that Dosoer is located a world away, in a Los Angeles suburb. Usually it hurts to be far from the center and the CEO. This time, distance might well be an advantage.