Bank of America (BAC) is operating under a secret U.S. regulatory sanction called memorandum of understanding (MOU), that requires it to overhaul its board and address issues related to risk and liquidity management, The Wall Street Journal reported Thursday, citing people familiar with the situation.
The order was imposed in early May, shortly after shareholders of the Charlotte, N.C., bank stripped Chief Executive Kenneth Lewis of his duties as chairman.
The MOU is the most serious procedural action taken against Bank of America by federal regulators since the financial crisis erupted.
The Journal noted in its report the MOU surprised some Bank Of America executives who had not expected federal regulators to issue such a formal rebuke. It said the bank responded swiftly with six directors resigning since May 26.
Bank of America faces a series of deadlines, some at the end of July and others in August. Citigroup (C) has been operating since last year under a similar order with the Office of the Comptroller of the Currency, the newspaper said.