The largest bank in the United States is going through a complexity crisis. Faced with the continued consequences of its bad behavior during the financial crisis, Bank of America is embarking on a massive effort to streamline the company after reporting an astounding $8.8 billion loss last quarter. Reports emerged Thursday morning that 600 branches would close, and earlier this week, CEO Brian Moynihan sent top executives Sallie Krawcheck and Joe Price packing as part of a process he described as "de-layering and simplifying." The entire reorganization initiative is known as Project New BAC, and though the full details of the plan won't emerge until Moynihan addresses shareholders on Monday, we're starting to hear scattered cries to split the company up. 

"At some point, it gets too big to manage," money manager Brian Wenzinger told The New York Times. "Smaller works better, and the less complicated it is, the better it can work."

A Bank of America break-up would most likely involve spinning off Merrill Lynch, but experts are sharply divided on the benefits of doing so. It would be a bold move to say the least. On one hand, Merrill Lynch has been doing well. Dealbook called Merrill Lynch "a surprising bright spot for the troubled bank, increasing its client base since the 2009 takeover by Bank of America." As president of Bank of America's Global Wealth & Investment Management division--of which Merrill Lynch is the keystone--Krawcheck helped Merrill Lynch bring in $7.6 billion in profits last year. Needless to say, lots of folks were confused by her departure. 

"Here's how best to explain what happened to Sallie Krawcheck yesterday: Krawcheck was the head of Merrill Lynch’s Thundering Herd, reporting directly to Bank of America CEO Brian Moynihan," hypothesized Felix Salmon at Reuters. "But Merrill Lynch's Thundering Herd is no longer particularly important to Bank of America."

Some big-time investors seem to sense that and believe that both Bank of America and Merrill Lynch would be better off on their own. Nelson Schwartz at The New York Times reports:

"As a stockholder in Bank of America, I feel like Merrill Lynch would be worth $7 a share on its own, at least," said Buzzy Geduld, who sold his brokerage firm--Herzog, Heine, Geduld--to Merrill in 2000, and now owns more than 2.5 million shares in Bank of America. "I think the upside is terrific."

No one disputes the idea that Bank of America has become too complex. In some ways, the company resembles a crazy quilt assembled through acquisitions pursued by Mr. Moynihan's predecessor, Kenneth D. Lewis, whose deal-making culminated in 2008 with the purchase of both Merrill Lynch and Countrywide Financial, the subprime mortgage giant at the root of many of Bank of America's problems today.

One could also make the case that Moynihan pushed out Krawcheck in order to avoid spinning off Merrill Lynch. But that leaves analysts unsatisfied; they think that Bank of America needs to make more drastic changes than a shuffling of executive leadership. The other drastic alternative would be to declare bankruptcy for Countrywide, the disaster of a mortgage unit that Bank of America acquired in the wake of the financial crisis., but that would send a bad message to investors about the company being able to clean up the mess. As such, Moynihan won't even talk about that option.

Between now and Monday, Bank of America's complexity problem is matched only by the complexity of opinions over how to fix it. Shedding Merrill Lynch's thundering herd of 16,000 financial analysts would certainly simplify the company, but it would also cost it profits. Nevertheless, Bank of America needs to do something unpredictable. "[Moynihan] has got to know there are more losses ahead, enough to kill a bank," said analyst Lou Barnes. "No model exists for what happens next."