The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational
investment bank
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
holding company
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
headquartered at the
Bank of America Corporate Center
The Bank of America Corporate Center is an 871 ft (265 m) skyscraper in Uptown Charlotte, North Carolina. Designed by Argentine architect César Pelli and HKS Architects, and best known as the headquarters of the namesake Bank of Americ ...
in
Charlotte, North Carolina
Charlotte ( ) is the most populous city in the U.S. state of North Carolina. Located in the Piedmont region, it is the county seat of Mecklenburg County. The population was 874,579 at the 2020 census, making Charlotte the 16th-most populo ...
. The bank was founded in
San Francisco
San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
, after
JPMorgan Chase
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the ...
, and the second largest bank in the world by market capitalization. Bank of America is one of the Big Four banking institutions of the United States. It serves approximately 10.73% of all American bank deposits, in direct competition with JPMorgan Chase, Citigroup, and
Wells Fargo
Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...
. Its primary financial services revolve around
commercial bank
A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit.
It can also refer to a bank, or a division of a large bank, which deals with co ...
ing,
wealth management
Wealth management (WM) or wealth management advisory (WMA) is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from affluent to high-net-worth (HNW) and ultra-high ...
, and investment banking.
One branch of its history stretches back to the U.S.-based
Bank of Italy
The Bank of Italy ( Italian: ''Banca d'Italia'', informally referred to as ''Bankitalia''), (), is the central bank of Italy and part of the European System of Central Banks. It is located in Palazzo Koch, via Nazionale, Rome. The bank's cur ...
Italian immigrants
, image = Map of the Italian Diaspora in the World.svg
, image_caption = Map of the Italian diaspora in the world
, population = worldwide
, popplace = Brazil, Argentina, United States, France, Colombia, Canada, P ...
San Francisco, California
San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
, Giannini acquired
Banca d'America e d'Italia
Deutsche Bank S.p.A. is an Italian bank based in Milan, Lombardy. It is a subsidiary of Deutsche Bank A.G..
History
Banca dell'Italia Meridionale was found in 1917. It was acquired by Amadeo Giannini, the founder of Bank of Italy (United States) i ...
(Bank of America and
Italy
Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical ...
) in 1922. The passage of landmark federal banking legislation facilitated a rapid growth in the 1950s, quickly establishing a prominent market share. After suffering a significant loss after the 1998 Russian bond default, BankAmerica, as it was then known, was acquired by the Charlotte-based
NationsBank
NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. The company named NationsBank was formed through the merger of several other banks in 1991, and prior to that had been through mul ...
for
US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
62 billion. Following what was then the largest bank acquisition in history, the Bank of America Corporation was founded. Through a series of mergers and acquisitions, it built upon its commercial banking business by establishing Merrill Lynch for wealth management and Bank of America Merrill Lynch for investment banking in 2008 and 2009, respectively (since renamed BofA Securities).Cohan, William D. (September 2009), "An offer he couldn't refuse", ''
The Atlantic
''The Atlantic'' is an American magazine and multi-platform publisher. It features articles in the fields of politics, foreign affairs, business and the economy, culture and the arts, technology, and science.
It was founded in 1857 in Boston, ...
''
Both Bank of America and Merrill Lynch Wealth Management retain large market shares in their respective offerings. The
investment bank
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
District of Columbia
)
, image_skyline =
, image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...
and more than 40 other countries. Its commercial banking footprint encapsulates 46 million consumer and small business relationships at 4,600 banking centers and 15,900
automated teller machine
An automated teller machine (ATM) or cash machine (in British English) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, fun ...
s (ATMs).
The bank's large market share, business activities, and economic impact has led to numerous lawsuits and investigations regarding both mortgages and financial disclosures dating back to the 2008 financial crisis. Its corporate practices of servicing the
middle class
The middle class refers to a class of people in the middle of a social hierarchy, often defined by occupation, income, education, or social status. The term has historically been associated with modernity, capitalism and political debate. Com ...
and wider banking community has yielded a substantial market share since the early 20th century. , Bank of America has a $313.5 billion market capitalization, making it the 13th largest company in the world. As the sixth largest American public company, it garnered $102.98 billion in sales . Bank of America was ranked #25 on the 2020 Fortune 500 rankings of the largest US corporations by total revenue. Likewise, Bank of America was also ranked #8 on the 2020 Global 2000 rankings done by Forbes. Bank of America was named the "World's Best Bank" by the ''
Euromoney Institutional Investor
Euromoney Institutional Investor PLC is one of Europe's largest business and financial information companies which has interests in business and financial publishing and event organization. It was listed on the London Stock Exchange and was a c ...
'' in their 2018 Awards for Excellence.
History
The Bank of America name first appeared in 1923, with the formation of
Bank of America, Los Angeles
The Bank of America, Los Angeles, was established in 1923 by Orra E. Monnette, emerging from a series of mergers between Los Angeles–based banks between 1909 and 1923. The formation of BoA L.A. predates the creation of the Bank of America, mergi ...
. In 1928, it was acquired by
Bank of Italy
The Bank of Italy ( Italian: ''Banca d'Italia'', informally referred to as ''Bankitalia''), (), is the central bank of Italy and part of the European System of Central Banks. It is located in Palazzo Koch, via Nazionale, Rome. The bank's cur ...
of San Francisco, which took the Bank of America name two years later.
The eastern portion of the Bank of America franchise can be traced to 1784, when
Massachusetts Bank
BankBoston was a bank based in Boston, Massachusetts, which was created by the 1996 merger of Bank of Boston and BayBank. One of its predecessor banks started in 1784, but the merged BankBoston was short-lived, being acquired by Fleet Bank in 199 ...
was chartered, the first federally chartered joint-stock owned bank in the United States and only the second bank to receive a charter in the United States. This bank became
FleetBoston
FleetBoston Financial was a Boston, Massachusetts-based bank created in 1999 by the merger of Fleet Financial Group and BankBoston. In 2004 it merged with Bank of America; all of its banks and branches were converted to Bank of America.
History ...
, with which Bank of America merged in 2004. In 1874,
Commercial National Bank
Commercial National Bank was a bank formed in Charlotte, North Carolina on 18 February 1874, which was a predecessor to the American Commercial Bank which then helped form North Carolina National Bank. NCNB changed their name to NationsBank in 1991 ...
was founded in Charlotte. That bank merged with American Trust Company in 1958 to form American Commercial Bank. Two years later it became
North Carolina National Bank North Carolina National Bank (NCNB) was a bank based in Charlotte, North Carolina, prior to 1960 called American Commercial Bank. It was one of the top banking institutions. From 1974 to 1983, the bank was run by Chairman and Chief Executive Office ...
when it merged with Security National Bank of Greensboro. In 1991, it merged with C&S/
Sovran
''Sovran'' is Draconian's sixth studio album released October 30, 2015, through Napalm Records. It's the first album with new singer Heike Langhans (:LOR3L3I:, ISON) after the departure of Lisa Johansson in 2011. It's also the last album to fea ...
Corporation of
Atlanta
Atlanta ( ) is the capital and most populous city of the U.S. state of Georgia. It is the seat of Fulton County, the most populous county in Georgia, but its territory falls in both Fulton and DeKalb counties. With a population of 498,715 ...
and
Norfolk
Norfolk () is a ceremonial and non-metropolitan county in East Anglia in England. It borders Lincolnshire to the north-west, Cambridgeshire to the west and south-west, and Suffolk to the south. Its northern and eastern boundaries are the No ...
to form
NationsBank
NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. The company named NationsBank was formed through the merger of several other banks in 1991, and prior to that had been through mul ...
.
The central portion of the franchise dates to 1910, when Commercial National Bank and Continental National Bank of Chicago merged in 1910 to form Continental & Commercial National Bank, which evolved into Continental Illinois National Bank & Trust.
Bank of Italy
The history of Bank of America dates back to October 17, 1904, when Amadeo Pietro Giannini founded the
Bank of Italy
The Bank of Italy ( Italian: ''Banca d'Italia'', informally referred to as ''Bankitalia''), (), is the central bank of Italy and part of the European System of Central Banks. It is located in Palazzo Koch, via Nazionale, Rome. The bank's cur ...
in San Francisco. In 1922, Bank of America, Los Angeles was established with Giannini as a minority investor. The two banks merged in 1928 and consolidated with other bank holdings to create what would become the largest banking institution in the country. In 1918, another corporation, Bancitaly Corporation, was organized by A. P. Giannini, the largest stockholder of which was Stockholders Auxiliary Corporation. This company acquired the stocks of various banks located in New York City and certain foreign countries.
In 1928, Giannini merged his bank with
Bank of America, Los Angeles
The Bank of America, Los Angeles, was established in 1923 by Orra E. Monnette, emerging from a series of mergers between Los Angeles–based banks between 1909 and 1923. The formation of BoA L.A. predates the creation of the Bank of America, mergi ...
, headed by Orra E. Monnette. Bank of Italy was renamed on November 3, 1930, to Bank of America National Trust and Savings Association, which was the only such designated bank in the United States at that time. Giannini and Monnette headed the resulting company, serving as co-chairs.
Expansion in California
Giannini introduced branch banking shortly after 1909 legislation in California allowed for branch banking in the state, establishing the bank's first branch outside San Francisco in 1909 in San Jose. By 1929 the bank had 453 banking offices in California with aggregate resources of over US$1.4 billion. There is a replica of the 1909 Bank of Italy branch bank in History Park in San Jose, and the 1925
Bank of Italy Building Bank of Italy is the Bank of Italy or Banca d'Italia, the central bank of Italy.
Or it may refer to:
*Bank of Italy (United States), a bank established in San Francisco, California and the forerunner of the Bank of America.
Or Bank of Italy or Ban ...
is an important downtown landmark. Giannini sought to build a national bank, expanding into most of the western states as well as into the
insurance industry
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
, under the aegis of his holding company,
Transamerica Corporation
The Transamerica Corporation is an American holding company for various life insurance companies and investment firms operating primarily in the United States, offering life and supplemental health insurance, investments, and retirement services. ...
. In 1953 regulators succeeded in forcing the separation of
Transamerica Corporation
The Transamerica Corporation is an American holding company for various life insurance companies and investment firms operating primarily in the United States, offering life and supplemental health insurance, investments, and retirement services. ...
and Bank of America under the
Clayton Antitrust Act
The Clayton Antitrust Act of 1914 (, codified at , ), is a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act seeks to prevent anticompetitive practices in their incipie ...
. The passage of the
Bank Holding Company Act of 1956
The Bank Holding Company Act of 1956 (, ''et seq.'') is a United States Act of Congress that regulates the actions of bank holding companies.
The original law (subsequently amended), specified that the Federal Reserve Board of Governors must appr ...
prohibited banks from owning non-banking subsidiaries such as insurance companies. Bank of America and Transamerica were separated, with the latter company continuing in the insurance sector. However, federal banking regulators prohibited Bank of America's interstate banking activity, and Bank of America's domestic banks outside California were forced into a separate company that eventually became
First Interstate Bancorp
First Interstate Bancorp was a bank holding company based in the United States that was taken over in 1996 by Wells Fargo. Headquartered in Los Angeles, it was the nation's eighth largest banking company.
The name (along with the company logo) h ...
, later acquired by Wells Fargo and Company in 1996. Only in the 1980s, with a change in federal banking legislation and regulation, could Bank of America again expand its domestic consumer banking activity outside California.
New technologies also allowed the direct linking of
credit card
A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...
s with individual bank accounts. In 1958, the bank introduced the BankAmericard, which changed its name to
Visa
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
in 1977.
A coalition of regional bankcard associations introduced Interbank in 1966 to compete with BankAmericard. Interbank became Master Charge in 1966 and then MasterCard in 1979. Available through SpringerLink.
Expansion outside California
Following the passage of the
Bank Holding Company Act of 1956
The Bank Holding Company Act of 1956 (, ''et seq.'') is a United States Act of Congress that regulates the actions of bank holding companies.
The original law (subsequently amended), specified that the Federal Reserve Board of Governors must appr ...
by the US Congress, BankAmerica Corporation was established for the purpose of owning and operating Bank of America and its subsidiaries.
Bank of America expanded outside
California
California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
in 1983, with its acquisition, orchestrated in part by
Stephen McLin Stephen McLin (born November 11, 1946, St. Louis), son of Leonard Dale and Hazel (Goodlett) McLin was a longtime executive in the banking industry who came to the industry from an engineering, rather than a finance background.
McLin, the oldest of ...
, of
Seafirst Corporation
Seafirst Corporation was an American bank holding company based in Seattle, Washington. Its banking subsidiary, Seafirst Bank, was the largest bank in Washington, with 235 branches and 497 ATMs across the state.
Formed in 1929 via the merger ...
of
Seattle
Seattle ( ) is a seaport city on the West Coast of the United States. It is the seat of King County, Washington. With a 2020 population of 737,015, it is the largest city in both the state of Washington and the Pacific Northwest regio ...
,
Washington
Washington commonly refers to:
* Washington (state), United States
* Washington, D.C., the capital of the United States
** A metonym for the federal government of the United States
** Washington metropolitan area, the metropolitan area centered o ...
, and its wholly owned banking subsidiary, Seattle-First National Bank. Seafirst was at risk of seizure by the federal government after becoming insolvent due to a series of bad loans to the
oil industry
The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transportation (often by oil tankers and pipelines), and marketing of petroleum products. The larges ...
. BankAmerica continued to operate its new subsidiary as Seafirst rather than Bank of America until the 1998 merger with NationsBank.
BankAmerica experienced huge losses in 1986 and 1987 due to the placement of a series of bad loans in the
Third World
The term "Third World" arose during the Cold War to define countries that remained non-aligned with either NATO or the Warsaw Pact. The United States, Canada, Japan, South Korea, Western European nations and their allies represented the " First ...
, particularly in
Latin America
Latin America or
* french: Amérique Latine, link=no
* ht, Amerik Latin, link=no
* pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived f ...
. The company fired its CEO, Sam Armacost in 1986. Though Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, Clausen was appointed to replace Armacost. The losses resulted in a huge decline of BankAmerica stock, making it vulnerable to a hostile
takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...
.
First Interstate Bancorp
First Interstate Bancorp was a bank holding company based in the United States that was taken over in 1996 by Wells Fargo. Headquartered in Los Angeles, it was the nation's eighth largest banking company.
The name (along with the company logo) h ...
of Los Angeles (which had originated from banks once owned by BankAmerica), launched such a bid in the fall of 1986, although BankAmerica rebuffed it, mostly by selling operations. It sold its FinanceAmerica subsidiary to Chrysler and the brokerage firm Charles Schwab and Co. back to Mr. Schwab. It also sold
Bank of America and Italy
Deutsche Bank S.p.A. is an Italian bank based in Milan, Lombardy. It is a subsidiary of Deutsche Bank A.G..
History
Banca dell'Italia Meridionale was found in 1917. It was acquired by Amadeo Giannini, the founder of Bank of Italy (United States) ...
to
Deutsche Bank
Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Sto ...
. By the time of the 1987 stock-market crash, BankAmerica's share price had fallen to $8, but by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade.
BankAmerica's next big acquisition came in 1992. The company acquired Security Pacific Corporation and its subsidiary
Security Pacific National Bank
Security Pacific National Bank (SPNB) was a large U.S. bank headquartered in Los Angeles, California. It was acquired by Bank of America in 1992.
History
On September 1, 1868, Hellman, Temple and Co. opened their first bank branch in Lo ...
in California and other banks in
Arizona
Arizona ( ; nv, Hoozdo Hahoodzo ; ood, Alĭ ṣonak ) is a state in the Southwestern United States. It is the 6th largest and the 14th most populous of the 50 states. Its capital and largest city is Phoenix. Arizona is part of the Fou ...
,
Idaho
Idaho ( ) is a state in the Pacific Northwest region of the Western United States. To the north, it shares a small portion of the Canada–United States border with the province of British Columbia. It borders the states of Montana and Wyomi ...
,
Oregon
Oregon () is a state in the Pacific Northwest region of the Western United States. The Columbia River delineates much of Oregon's northern boundary with Washington, while the Snake River delineates much of its eastern boundary with Idaho. T ...
, and
Washington
Washington commonly refers to:
* Washington (state), United States
* Washington, D.C., the capital of the United States
** A metonym for the federal government of the United States
** Washington metropolitan area, the metropolitan area centered o ...
, which Security Pacific had acquired in a series of acquisitions in the late 1980s. This represented, at the time, the largest bank acquisition in history. Federal regulators, however, forced the sale of roughly half of Security Pacific's
Washington
Washington commonly refers to:
* Washington (state), United States
* Washington, D.C., the capital of the United States
** A metonym for the federal government of the United States
** Washington metropolitan area, the metropolitan area centered o ...
subsidiary, the former
Rainier Bank
Rainier Bancorporation was the Seattle-based parent corporation of Rainier National Bank, a Washington state bank with branches throughout the state. Rainier traced its roots back to the National Bank of Commerce, which was founded by Richard Ho ...
, as the combination of Seafirst and Security Pacific Washington would have given BankAmerica too large a share of the market in that state. The Washington branches were divided and sold to West One Bancorp (now U.S. Bancorp) and
KeyBank
KeyBank, the primary subsidiary of KeyCorp, is a regional bank headquartered in Cleveland, Ohio, and is the only major bank based in Cleveland. KeyBank is one of the largest banks in the United States.
Key's customer base spans retail, small b ...
. Later that year, BankAmerica expanded into Nevada by acquiring Valley Bank of Nevada.
In 1994 BankAmerica acquired the Continental Illinois National Bank and Trust Co. of Chicago. At the time, no bank possessed the resources to bail out Continental, so the federal government operated the bank for nearly a decade.
Illinois
Illinois ( ) is a state in the Midwestern United States. Its largest metropolitan areas include the Chicago metropolitan area, and the Metro East section, of Greater St. Louis. Other smaller metropolitan areas include, Peoria and Rockf ...
then regulated branch banking extremely heavily, so Bank of America Illinois was a single-unit bank until the 21st century. BankAmerica moved its national lending department to Chicago in an effort to establish a financial beachhead in the region.
These mergers helped BankAmerica Corporation to once again become the largest U.S. bank holding company in terms of deposits, but the company fell to second place in 1997 behind North Carolina's fast-growing
NationsBank Corporation
NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. The company named NationsBank was formed through the merger of several other banks in 1991, and prior to that had been through mul ...
, and to third in 1998 behind
First Union
First Union Corporation was a bank holding company that provided commercial and retail banking services in eleven states in the eastern U.S. First Union also provided various other financial services, including mortgage banking, credit card, inv ...
Corp.
On the capital markets side, the acquisition of Continental Illinois helped BankAmerica to build a leveraged finance origination- and distribution business, which allowed the firm's existing broker-dealer, BancAmerica Securities (originally named BA Securities), to become a full-service franchise. In addition, in 1997, BankAmerica acquired
Robertson Stephens
Robertson Stephens is a wealth management firm serving high net worth individuals and family offices. The firm is registered with the United States Securities and Exchange Commission as an investment advisor.
Robertson Stephens was founded as ...
, a San Francisco–based investment bank specializing in high technology for $540 million. Robertson Stephens was integrated into BancAmerica Securities, and the combined subsidiary was renamed "BancAmerica Robertson Stephens".
Merger of NationsBank and BankAmerica
In 1997, BankAmerica lent
hedge fund
A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as s ...
NationsBank
NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. The company named NationsBank was formed through the merger of several other banks in 1991, and prior to that had been through mul ...
of Charlotte acquired BankAmerica in October 1998 in what was the largest bank acquisition in history at that time.
While NationsBank was the nominal survivor, the merged bank took the better-known name of Bank of America. Hence, the holding company was renamed Bank of America Corporation, while NationsBank, N.A. merged with Bank of America NT&SA to form Bank of America, N.A. as the remaining legal bank entity. The combined bank operates under Federal Charter 13044, which was granted to Giannini's Bank of Italy on March 1, 1927. However, the merged company was and still is headquartered in Charlotte, and retains NationsBank's pre-1998 stock price history. All
U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
(SEC) filings before 1998 are listed under NationsBank, not Bank of America. NationsBank president, chairman, and CEO
Hugh McColl
Hugh L. McColl Jr. (born 18 June 1935) is a fourth-generation banker and the former Chairman and CEO of Bank of America. Active in banking since around 1960, McColl was a driving force behind consolidating a series of progressively larger, mos ...
, took on the same roles with the merged company.
In 1998, Bank of America possessed combined assets of $570 billion, as well as 4,800 branches in 22 states. Despite the size of the two companies, federal regulators insisted only upon the divestiture of 13 branches in
New Mexico
)
, population_demonym = New Mexican ( es, Neomexicano, Neomejicano, Nuevo Mexicano)
, seat = Santa Fe
, LargestCity = Albuquerque
, LargestMetro = Tiguex
, OfficialLang = None
, Languages = English, Spanish ( New Mexican), Navajo, Ke ...
, in towns that would be left with only a single bank following the combination. The broker-dealer, NationsBanc Montgomery Securities, was named
Banc of America Securities
In the English language, banq and banc are coined words pronounced identically to the word "bank". Both terms have been adopted by financial services companies and others to satisfy legal restrictions on the usage of the word ''bank''. The compo ...
in 1998.
2001 to present
In 2001, McColl stepped down and named Ken Lewis as his successor.
In 2004, Bank of America announced it would purchase Boston-based bank
FleetBoston Financial
FleetBoston Financial was a Boston, Massachusetts-based bank created in 1999 by the merger of Fleet Financial Group and BankBoston. In 2004 it merged with Bank of America; all of its banks and branches were converted to Bank of America.
Histor ...
for $47 billion in cash and stock. By merging with Bank of America, all of its banks and branches were given the Bank of America logo. At the time of merger, FleetBoston was the seventh largest bank in United States with $197 billion in assets, over 20 million customers and revenue of $12 billion. Hundreds of FleetBoston workers lost their jobs or were demoted, according to ''
The Boston Globe
''The Boston Globe'' is an American daily newspaper founded and based in Boston, Massachusetts. The newspaper has won a total of 27 Pulitzer Prizes, and has a total circulation of close to 300,000 print and digital subscribers. ''The Boston Glob ...
''.
On June 30, 2005, Bank of America announced it would purchase credit card giant
MBNA
MBNA Corporation was a bank holding company and parent company of wholly owned subsidiary MBNA America Bank, N.A., headquartered in Wilmington, Delaware, prior to being acquired by Bank of America in 2006.
History
The former Maryland National ...
for $35 billion in cash and stock. The
Federal Reserve Board
The Board of Governors of the Federal Reserve System, commonly known as the Federal Reserve Board, is the main governing body of the Federal Reserve System. It is charged with overseeing the Federal Reserve Banks and with helping implement the m ...
gave final approval to the merger on December 15, 2005, and the merger closed on January 1, 2006. The acquisition of MBNA provided Bank of America a leading domestic and foreign credit card issuer. The combined Bank of America Card Services organization, including the former MBNA, had more than 40 million U.S. accounts and nearly $140 billion in outstanding balances. Under Bank of America, the operation was renamed FIA Card Services.
Bank of America operated under the name BankBoston in many other Latin American countries, including Brazil. In May 2006, Bank of America and
Banco Itaú
Banco Itaú S.A. was a former Brazilian bank that merged with Unibanco on November 4, 2008, to form Banco Itaú Unibanco.
History
Banco Itaú began in 1945 under the name ''Banco Central de Crédito'' (Central Bank of Credit) and later changed ...
(Investimentos Itaú S.A.) entered into an acquisition agreement, through which Itaú agreed to acquire BankBoston's operations in Brazil, and was granted an exclusive right to purchase Bank of America's operations in
Chile
Chile, officially the Republic of Chile, is a country in the western part of South America. It is the southernmost country in the world, and the closest to Antarctica, occupying a long and narrow strip of land between the Andes to the east a ...
and
Uruguay
Uruguay (; ), officially the Oriental Republic of Uruguay ( es, República Oriental del Uruguay), is a country in South America. It shares borders with Argentina to its west and southwest and Brazil to its north and northeast; while bordering ...
, in exchange for Itaú shares. The deal was signed in August 2006.
Prior to the transaction, BankBoston's Brazilian operations included asset management, private banking, a credit card portfolio, and small, middle-market, and large corporate segments. It had 66 branches and 203,000 clients in Brazil. BankBoston in Chile had 44 branches and 58,000 clients and in Uruguay, it had 15 branches. In addition, there was a credit card company, OCA, in Uruguay, which had 23 branches. BankBoston N.A. in Uruguay, together with OCA, jointly served 372,000 clients. While the BankBoston name and trademarks were not part of the transaction, as part of the sale agreement, they cannot be used by Bank of America in Brazil, Chile or Uruguay following the transactions. Hence, the BankBoston name has disappeared from Brazil, Chile and Uruguay. The Itaú stock received by Bank of America in the transactions has allowed Bank of America's stake in Itaú to reach 11.51%. Banco de Boston de Brazil had been founded in 1947.
On November 20, 2006, Bank of America announced the purchase of The United States Trust Company for $3.3 billion, from the
Charles Schwab Corporation
The Charles Schwab Corporation is an American multinational financial services company. It offers banking, commercial banking, investing and related services including consulting, and wealth management advisory services to both retail and instit ...
. US Trust had about $100 billion of assets under management and over 150 years of experience. The deal closed July 1, 2007.
On September 14, 2007, Bank of America won approval from the Federal Reserve to acquire LaSalle Bank Corporation from
ABN AMRO
ABN or abn may refer to:
Companies
* ABN AMRO Group, a Dutch bank group
* ABN AMRO, sometimes referred to as "ABN" in shorthand, is a Dutch state-owned bank
* Algemene Bank Nederland, a now-defunct Dutch bank
Radio, news and television organizat ...
for $21 billion. With this purchase, Bank of America possessed $1.7 trillion in assets. A Dutch court blocked the sale until it was later approved in July. The acquisition was completed on October 1, 2007. Many of LaSalle's branches and offices had already taken over smaller regional banks within the previous decade, such as Lansing and Detroit-based
Michigan National Bank
Michigan National Bank was a bank founded in Lansing, Michigan, which was established on 31 December 1940 when Howard J Stoddard consolidated six Michigan banks: First National Bank and Trust Company of Grand Rapids, First National Trust and S ...
. The acquisition also included the
Chicago Marathon
The Chicago Marathon is a marathon (long-distance foot race) held every October in Chicago, Illinois. It is one of the six World Marathon Majors. Thus, it is also a World Athletics Label Road Race. The Chicago Marathon is the fourth-largest r ...
event, which ABN AMRO acquired in 1996. Bank of America took over the event starting with the 2007 race.
The deal increased Bank of America's presence in
Illinois
Illinois ( ) is a state in the Midwestern United States. Its largest metropolitan areas include the Chicago metropolitan area, and the Metro East section, of Greater St. Louis. Other smaller metropolitan areas include, Peoria and Rockf ...
,
Michigan
Michigan () is a U.S. state, state in the Great Lakes region, Great Lakes region of the Upper Midwest, upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the List of U.S. states and ...
, and
Indiana
Indiana () is a U.S. state in the Midwestern United States. It is the 38th-largest by area and the 17th-most populous of the 50 States. Its capital and largest city is Indianapolis. Indiana was admitted to the United States as the 19th s ...
by 411 branches, 17,000 commercial bank clients, 1.4 million retail customers, and 1,500 ATMs. Bank of America became the largest bank in the Chicago market with 197 offices and 14% of the deposit share, surpassing
JPMorgan Chase
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the ...
.
LaSalle Bank
LaSalle Bank Corporation was the holding company for LaSalle Bank N.A. and LaSalle Bank Midwest N.A. (formerly Standard Federal Bank). With US$116 billion in assets, it was headquartered at 135 South LaSalle Street in Chicago, Illinois. LaSa ...
and LaSalle Bank Midwest branches adopted the Bank of America name on May 5, 2008.
Ken Lewis, who had lost the title of chairman of the board, announced that he would retire as CEO effective December 31, 2009, in part due to controversy and legal investigations concerning the purchase of Merrill Lynch.
Brian Moynihan
Brian Thomas Moynihan (born October 9, 1959) is an American investment banker, businessman and the chairman and CEO of Bank of America. He joined the board of directors, following his promotion to president and CEO in 2010.
Early life and educat ...
became president and CEO effective January 1, 2010, and afterward credit card charge offs and delinquencies declined in January. Bank of America also repaid the $45 billion it had received from the Troubled Assets Relief Program.
Acquisition of Countrywide Financial
On August 23, 2007, the company announced a $2 billion
repurchase agreement
A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a form of short-term borrowing, mainly in government securities. The dealer sells the underlying security to investors and, by agreement between the two pa ...
for
Countrywide Financial
Countrywide is one of the UK's largest integrated property services group including residential property surveying, a collaboration of estate agents, and corporate services. It employs circa 8,500 personnel nationwide, working across 650+ estat ...
. This purchase of
preferred stock
Preferred stock (also called preferred shares, preference shares, or simply preferreds) is a component of share capital that may have any combination of features not possessed by common stock, including properties of both an equity and a debt inst ...
was arranged to provide a
return on investment
Return on investment (ROI) or return on costs (ROC) is a ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably ...
of 7.25% '' per annum'' and provided the option to purchase
common stock
Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently outside of the United States. They are known as equity shares or ordinary shares in the UK and other Comm ...
at a price of $18 per share.
On January 11, 2008, Bank of America announced that it would buy Countrywide Financial for $4.1 billion. In March 2008, it was reported that the
Federal Bureau of Investigation
The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, ...
(FBI) was investigating Countrywide for possible fraud relating to home loans and mortgages. This news did not hinder the acquisition, which was completed in July 2008, giving the bank a substantial market share of the mortgage business, and access to Countrywide's resources for servicing mortgages. The acquisition was seen as preventing a potential bankruptcy for Countrywide. Countrywide, however, denied that it was close to bankruptcy. Countrywide provided mortgage servicing for nine million mortgages valued at $1.4 trillion as of December 31, 2007.
This purchase made Bank of America Corporation the leading mortgage originator and servicer in the U.S., controlling 20–25% of the home loan market. The deal was structured to merge Countrywide with the Red Oak Merger Corporation, which Bank of America created as an independent subsidiary. It has been suggested that the deal was structured this way to prevent a potential bankruptcy stemming from large losses in Countrywide hurting the parent organization by keeping Countrywide bankruptcy remote. Countrywide Financial has changed its name to
Bank of America Home Loans
Bank of America Home Loans is the mortgage unit of Bank of America. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006, Countrywide financed 20% of all mortgages in the United States, at a value of abou ...
.
In December 2011, the
Justice Department
A justice ministry, ministry of justice, or department of justice is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a ...
announced a $335 million
settlement
Settlement may refer to:
*Human settlement, a community where people live
*Settlement (structural), the distortion or disruption of parts of a building
* Closing (real estate), the final step in executing a real estate transaction
*Settlement (fin ...
with Bank of America over discriminatory lending practice at Countrywide Financial. Attorney General
Eric Holder
Eric Himpton Holder Jr. (born January 21, 1951) is an American lawyer who served as the 82nd Attorney General of the United States from 2009 to 2015. Holder, serving in the administration of President Barack Obama, was the first African Amer ...
said a federal probe found discrimination against qualified African-American and Latino borrowers from 2004 to 2008. He said that minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.
Acquisition of Merrill Lynch
On September 14, 2008, Bank of America announced its intention to purchase Merrill Lynch & Co., Inc. in an all-stock deal worth approximately $50 billion. Merrill Lynch was at the time within days of collapse, and the acquisition effectively saved Merrill from bankruptcy. Around the same time Bank of America was reportedly also in talks to purchase
Lehman Brothers
Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, a ...
, however a lack of government guarantees caused the bank to abandon talks with Lehman. Lehman Brothers filed for bankruptcy the same day Bank of America announced its plans to acquire Merrill Lynch. This acquisition made Bank of America the largest financial services company in the world.
Temasek Holdings
Temasek Holdings (Private) Limited, or simply Temasek, is a Singaporean state holding company owned by the Government of Singapore. Incorporated on 25 June 1974, Temasek owns and manages a total of US$496.59 billion (S$671 billion) in assets u ...
, the largest shareholder of Merrill Lynch & Co., Inc., briefly became one of the largest shareholders of Bank of America, with a 3% stake. However, taking a loss
Reuters
Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world.
The agency was esta ...
estimated at $3 billion, the
Singapore
Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, bor ...
sovereign wealth fund
A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as ...
sold its whole stake in Bank of America in the first quarter of 2009.
Shareholders of both companies approved the acquisition on December 5, 2008, and the deal closed January 1, 2009. Bank of America had planned to retain various members of the then Merrill Lynch's CEO,
John Thain
John Alexander Thain (born May 26, 1955) is an American businessman, investment banker, and former chair and CEO of the CIT Group.
Thain was the last chairman and chief executive officer of Merrill Lynch before its merger with Bank of America. ...
's management team after the merger. However, after Thain was removed from his position, most of his allies left. The departure of Nelson Chai, who had been named Asia-Pacific president, left just one of Thain's hires in place: Tom Montag, head of sales and trading.
The bank, in its January 16, 2009, earnings release, revealed massive losses at Merrill Lynch in the fourth quarter, which necessitated an infusion of money that had previously been negotiated with the government as part of the government-persuaded deal for the bank to acquire Merrill. Merrill recorded an operating loss of $21.5 billion in the quarter, mainly in its sales and trading operations, led by Tom Montag. The bank also disclosed it tried to abandon the deal in December after the extent of Merrill's trading losses surfaced, but was compelled to complete the merger by the U.S. government. The bank's stock price sank to $7.18, its lowest level in 17 years, after announcing earnings and the Merrill mishap. The market capitalization of Bank of America, including Merrill Lynch, was then $45 billion, less than the $50 billion it offered for Merrill just four months earlier, and down $108 billion from the merger announcement.
Bank of America CEO Kenneth Lewis testified before Congress that he had some misgivings about the acquisition of Merrill Lynch and that federal official pressured him to proceed with the deal or face losing his job and endangering the bank's relationship with federal regulators.
Lewis's statement is backed up by internal emails subpoenaed by Republican lawmakers on the House Oversight Committee. In one of the emails, Richmond Federal Reserve President
Jeffrey Lacker
Jeffrey M. Lacker (born September 27, 1955) is an American economist and was president of the Federal Reserve Bank of Richmond until April 4, 2017. He is now a Distinguished Professor in thDepartment of Economicsat the Virginia Commonwealth Unive ...
threatened that if the acquisition did not go through, and later Bank of America were forced to request federal assistance, the management of Bank of America would be "gone". Other emails, read by Congressman Dennis Kucinich during the course of Lewis' testimony, state that Mr. Lewis had foreseen the outrage from his shareholders that the purchase of Merrill would cause, and asked government regulators to issue a letter stating that the government had ordered him to complete the deal to acquire Merrill. Lewis, for his part, states he didn't recall requesting such a letter.
The acquisition made Bank of America the number one
underwriter
Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liabilit ...
of global
high-yield debt
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a Bond (finance), bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default (finance), defau ...
, the third largest underwriter of global equity and the ninth largest adviser on global mergers and acquisitions. As the credit crisis eased, losses at Merrill Lynch subsided, and the subsidiary generated $3.7 billion of Bank of America's $4.2 billion in profit by the end of quarter one in 2009, and over 25% in quarter 3 2009.
On September 28, 2012, Bank of America settled the class-action lawsuit over the Merrill Lynch acquisition and will pay $2.43 billion. This was one of the first major securities class action lawsuits stemming from the financial crisis of 2007–2008 to settle. Many major financial institutions had a stake in this lawsuit, including Chicago Clearing Corporation,
hedge fund
A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as s ...
s, and bank trusts, due to the belief that Bank of America stock was a sure investment.
Federal Troubled Asset Relief Program
On January 16, 2009, Bank of America received $20 billion and a guarantee of $118 billion in potential losses from the U.S. government through the
Troubled Asset Relief Program
The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by President ...
(TARP). This was in addition to the $25 billion given to the bank in the fall of 2008 through TARP. The additional payment was part of a deal with the U.S. government to preserve Bank of America's merger with Merrill Lynch. Since then, members of the U.S. Congress have expressed considerable concern about how this money has been spent, especially since some of the recipients have been accused of misusing the bailout money. Then CEO Ken Lewis was quoted as claiming "We are still lending, and we are lending far more because of the TARP program." Members of the U.S. House of Representatives, however, were skeptical and quoted many anecdotes about loan applicants (particularly small business owners) being denied loans and credit card holders facing stiffer terms on the debt in their card accounts.
According to an article in ''
The New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...
'' published on March 15, 2009, Bank of America received an additional $5.2 billion in government bailout money via the bailout of
American International Group
American International Group, Inc. (AIG) is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. , AIG companies employed 49,600 people.https://www.aig.com/content/dam/aig/amer ...
.
As a result of its federal bailout and management problems, ''
The Wall Street Journal
''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'' reported that the Bank of America was operating under a secret "memorandum of understanding" (MOU) from the U.S. government that requires it to "overhaul its board and address perceived problems with risk and liquidity management". With the federal action, the institution has taken several steps, including arranging for six of its
directors
Director may refer to:
Literature
* ''Director'' (magazine), a British magazine
* ''The Director'' (novel), a 1971 novel by Henry Denker
* ''The Director'' (play), a 2000 play by Nancy Hasty
Music
* Director (band), an Irish rock band
* ''D ...
to resign and forming a Regulatory Impact Office. Bank of America faces several deadlines in July and August and if not met, could face harsher penalties by federal regulators. Bank of America did not respond to ''The Wall Street Journal'' story.
On December 2, 2009, Bank of America announced it would repay the entire $45 billion it received in TARP and exit the program, using $26.2 billion of excess liquidity along with $18.6 billion to be gained in "common equivalent securities" (
Tier 1 capital
Tier 1 capital is the core measure of a bank's financial strength from a regulator's point of view.By definition of Bank for International Settlements. It is composed of ''core capital'', which consists primarily of common stock and disclosed res ...
). The bank announced it had completed the repayment on December 9. Bank of America's Ken Lewis said during the announcement, "We appreciate the critical role that the U.S. government played last fall in helping to stabilize financial markets, and we are pleased to be able to fully repay the investment, with interest.... As America's largest bank, we have a responsibility to make good on the taxpayers' investment, and our record shows that we have been able to fulfill that commitment while continuing to lend."
Bonus settlement
On August 3, 2009, Bank of America agreed to pay a $33 million fine, without admission or denial of charges, to the
U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
(SEC) over the non-disclosure of an agreement to pay up to $5.8 billion of bonuses at Merrill. The bank approved the bonuses before the merger but did not disclose them to its shareholders when the shareholders were considering approving the Merrill acquisition, in December 2008. The issue was originally investigated by
New York Attorney General
The attorney general of New York is the chief legal officer of the U.S. state of New York and head of the Department of Law of the state government. The office has been in existence in some form since 1626, under the Dutch colonial government o ...
Andrew Cuomo
Andrew Mark Cuomo ( ; ; born December 6, 1957) is an American lawyer and politician who served as the 56th governor of New York from 2011 to 2021. A member of the Democratic Party, he was elected to the same position that his father, Mario Cu ...
, who commented after the suit and announced a settlement that "the timing of the bonuses, as well as the disclosures relating to them, constituted a 'surprising fit of corporate irresponsibility and "our investigation of these and other matters pursuant to New York's
Martin Act
The Martin Act (New York General Business Law article 23-A, sections 352–353) is a New York anti-fraud law, widely considered to be the most severe blue sky law in the country. Passed in 1921, it grants the Attorney General of New York expansive ...
will continue." Congressman Kucinich commented at the same time that "This may not be the last fine that Bank of America pays for how it handled its merger of Merrill Lynch." A federal judge,
Jed Rakoff
Jed Saul Rakoff (born August 1, 1943) is a Senior United States district judge of the United States District Court for the Southern District of New York.
Education
Rakoff was born in Philadelphia, Pennsylvania on August 1, 1943. He grew up in ...
, in an unusual action, refused to approve the settlement on August 5.
A first hearing before the judge on August 10 was at times heated, and he was "sharply critic l of the bonuses. David Rosenfeld represented the SEC, and Lewis J. Liman, son of
Arthur L. Liman
Arthur Lawrence LimanHaberman, Clyde ''The New York Times'', July 18, 1997. Accessed April 2, 2009. (November 5, 1932 – July 17, 1997) was a partner at the New York law firm Paul, Weiss, Rifkind, Wharton & Garrison, and was well known for his ...
, represented the bank. The actual amount of bonuses paid was $3.6 billion, of which $850 million was "guaranteed" and the rest was shared among 39,000 workers who received average payments of $91,000; 696 people received more than $1 million in bonuses; at least one person received a more than $33 million bonus.
On September 14, the judge rejected the settlement and told the parties to prepare for trial to begin no later than February 1, 2010. The judge focused much of his criticism on the fact that the fine in the case would be paid by the bank's shareholders, who were the ones that were supposed to have been injured by the lack of disclosure. He wrote, "It is quite something else for the very management that is accused of having lied to its shareholders to determine how much of those victims' money should be used to make the case against the management go away," ... "The proposed settlement," the judge continued, "suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders but also of the truth."
While ultimately deferring to the SEC, in February 2010, Judge Rakoff approved a revised settlement with a $150 million fine "reluctantly", calling the accord "half-baked justice at best" and "inadequate and misguided". Addressing one of the concerns he raised in September, the fine will be "distributed only to Bank of America shareholders harmed by the non-disclosures, or 'legacy shareholders, an improvement on the prior $33 million while still "paltry", according to the judge. Case: SEC v. Bank of America Corp., 09-cv-06829,
United States District Court for the Southern District of New York
The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of New York State. Two of these are in New York City: New ...
Edolphus Towns
Edolphus "Ed" Towns Jr. (born July 21, 1934) is an American politician who served in the United States House of Representatives from 1983 to 2013. A Democrat from New York, Towns was Chairman of the House Oversight and Government Reform Committee ...
In 2010, the U.S. government accused the bank of defrauding schools, hospitals, and dozens of state and local government organizations via misconduct and illegal activities involving the investment of proceeds from municipal bond sales. As a result, the bank agreed to pay $137.7 million, including $25 million to the Internal Revenue Service and $4.5 million to the state attorney general, to the affected organizations to settle the allegations.
Former bank official Douglas Campbell pleaded guilty to antitrust, conspiracy, and wire fraud charges. , other bankers and brokers are under indictment or investigation.
On October 24, 2012, the top
federal prosecutor
An assistant United States attorney (AUSA) is an official career civil service position in the U.S. Department of Justice composed of lawyers working under the U.S. Attorney of each U.S. federal judicial district. They represent the federal gove ...
in
Manhattan
Manhattan (), known regionally as the City, is the most densely populated and geographically smallest of the five boroughs of New York City. The borough is also coextensive with New York County, one of the original counties of the U.S. state ...
filed a lawsuit alleging that Bank of America fraudulently cost American taxpayers more than $1 billion when Countrywide Financial sold toxic mortgages to
Fannie Mae
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the N ...
and
Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons Corner, Virginia. On May 23, 2016, the Second U.S. Circuit Court of Appeals ruled that the finding of fact by the jury that low quality mortgages were supplied by Countrywide to Fannie Mae and Freddie Mac in the "Hustle" case supported only "intentional breach of contract," not a fraud. The action, for civil fraud, relied on provisions of the Financial Institutions Reform, Recovery and Enforcement Act. The decision turned on lack of intent to defraud at the time the contract to supply mortgages was made.
Downsizing (2011 to 2014)
During 2011, Bank of America began conducting personnel reductions of an estimated 36,000 people, contributing to intended savings of $5 billion per year by 2014.
In December 2011, ''Forbes'' ranked Bank of America's financial wealth 91st out of the nation's largest 100 banks and thrift institutions.
Bank of America cut around 16,000 jobs in a quicker fashion by the end of 2012 as revenue continued to decline because of new regulations and a slow economy. This put a plan one year ahead of time to eliminate 30,000 jobs under a cost-cutting program, called Project New BAC.
In the first quarter of 2014, Berkshire bank purchased 20 Bank of America branches in Central and eastern New York for 14.4 million dollars. The branches were from Utica/Rome region and down the Mohawk Valley east to the capital region.
In April and May 2014, Bank of America sold two dozen branches in Michigan to
Huntington Bancshares
Huntington Bancshares Incorporated is an American bank holding company headquartered in Columbus, Ohio. The company is ranked 521st on the Fortune 500, and is 26th on the list of largest banks in the United States.
The company's banking sub ...
. The locations were converted to Huntington National Bank branches in September.
As part of its new strategy Bank of America is focused on growing its mobile banking platform. , Bank of America has 31 million active online users and 16 million mobile users. Its retail banking branches have decreased to 4,900 as a result of increased mobile banking use and a decline in customer branch visits. By 2018, the number of mobile users has increased to 25.3 million and the number of locations fell to 4,411 at the end of June.
Sale of stake in China Construction Bank
In 2005, Bank of America acquired a 9% stake in
China Construction Bank
China Construction Bank Corporation (CCB) is one of the " big four" banks in China. In 2015, CCB was the 2nd largest bank in the world by market capitalization and 6th largest company in the world. The bank has approximately 13,629 domestic branc ...
, one of the Big Four banks in China, for $3 billion. It represented the company's largest foray into China's growing banking sector. Bank of America has offices in Hong Kong, Shanghai, and
Guangzhou
Guangzhou (, ; ; or ; ), also known as Canton () and alternatively romanized as Kwongchow or Kwangchow, is the capital and largest city of Guangdong province in southern China. Located on the Pearl River about north-northwest of Hong Kon ...
and was looking to greatly expand its Chinese business as a result of this deal. In 2008, Bank of America was awarded Project Finance Deal of the Year at the 2008 ALB Hong Kong Law Awards. In November 2011, Bank of America announced plans to divest most of its stake in the China Construction Bank.
In September 2013, Bank of America sold its remaining stake in the
China Construction Bank
China Construction Bank Corporation (CCB) is one of the " big four" banks in China. In 2015, CCB was the 2nd largest bank in the world by market capitalization and 6th largest company in the world. The bank has approximately 13,629 domestic branc ...
for as much as $1.5 billion, marking the firm's full exit from the country.
$17 billion settlement with Justice Department
In August 2014, Bank of America agreed to a near–$17 billion deal to settle claims against it relating to the sale of toxic mortgage-linked securities including subprime home loans, in what was believed to be the largest settlement in U.S. corporate history. The bank agreed with the
U.S. Justice Department
The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United States ...
to pay $9.65 billion in fines, and $7 billion in relief to the victims of the faulty loans which included homeowners, borrowers, pension funds and municipalities. Real estate economist
Jed Kolko
Jed David Kolko is an American economist serving as the Under Secretary of Commerce for Economic Affairs in the Biden administration.
Early life and education
Kolko was raised in Rochester, New York. He earned a Bachelor of Arts degree in soc ...
said the settlement is a "drop in the bucket" compared to the $700 billion in damages done to 11 million homeowners. Since the settlement covered such a substantial portion of the market, he said for most consumers "you're out of luck."
Much of the government's prosecution was based on information provided by three whistleblowers – Shareef Abdou (a senior vice president at the bank), Robert Madsen (a professional appraiser employed by a bank subsidiary), and Edward O'Donnell (a Fannie Mae official). The three men received $170 million in whistleblower awards.
DOD Community Bank
Bank of America has formed a partnership with the
United States Department of Defense
The United States Department of Defense (DoD, USDOD or DOD) is an executive branch department of the federal government charged with coordinating and supervising all agencies and functions of the government directly related to national sec ...
creating a newly chartered bank DOD Community Bank ("Community Bank") providing full banking services to military personnel at 68 branches and ATM locations on U.S. military installations in
Guantanamo Bay Naval Base
Guantanamo Bay Naval Base ( es, Base Naval de la Bahía de Guantánamo), officially known as Naval Station Guantanamo Bay or NSGB, (also called GTMO, pronounced Gitmo as jargon by members of the U.S. military) is a United States military bas ...
Cuba
Cuba ( , ), officially the Republic of Cuba ( es, República de Cuba, links=no ), is an island country comprising the island of Cuba, as well as Isla de la Juventud and several minor archipelagos. Cuba is located where the northern Caribbea ...
,
Diego Garcia
Diego Garcia is an island of the British Indian Ocean Territory, a disputed overseas territory of the United Kingdom. It is a militarised atoll just south of the equator in the central Indian Ocean, and the largest of the 60 small islands of ...
,
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
Italy
Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical ...
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korean Peninsula and sharing a land border with North Korea. Its western border is formed by the Yellow Sea, while its eas ...
, the
Netherlands
)
, anthem = ( en, "William of Nassau")
, image_map =
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Kingdom of the Netherlands
, established_title = Before independence
, established_date = Spanish Netherl ...
, and the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
. Even though Bank of America operates Community Bank, customer services are not interchangeable between the two financial institutions, meaning that a Community Bank customer cannot go to a Bank of America branch and withdraw from their account and vice versa. Deposits made into checking and savings accounts are insured by the
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cr ...
up to $250,000 despite the fact that none of Community's operating branches are located within the jurisdictional borders of the United States.
Decision not to finance makers of military-style guns
In April 2018, Bank of America announced that it would stop providing financing to makers of military-style weapons such as the
AR-15
An AR-15-style rifle is any lightweight semi-automatic rifle based on the Colt AR-15 design. The original ArmaLite AR-15 is a scaled-down derivative of Eugene Stoner's ArmaLite AR-10 design. The then Fairchild Engine and Airplane Corporatio ...
rifle. In announcing the decision, Bank of America referenced recent mass shootings and said that it wanted to "contribute in any way we can" to reduce them.
Return to expansion (2015–present)
In 2015, Bank of America began expanding organically, opening branches in cities where it previously did not have a retail presence. They started that year in
Denver
Denver () is a consolidated city and county, the capital, and most populous city of the U.S. state of Colorado. Its population was 715,522 at the 2020 census, a 19.22% increase since 2010. It is the 19th-most populous city in the Unit ...
, followed by
Minneapolis–Saint Paul
Minneapolis–Saint Paul is a metropolitan area in the Upper Midwestern United States centered around the confluence of the Mississippi, Minnesota and St. Croix rivers in the U.S. state of Minnesota. It is commonly known as the Twin Cities ...
and Indianapolis, in all cases having at least one of its Big Four competitors, with
Chase Bank
JPMorgan Chase Bank, N.A., doing business as Chase Bank or often as Chase, is an American national bank headquartered in New York City, that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and fin ...
being available in Denver and Indianapolis, while
Wells Fargo
Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...
is available in Denver and the Twin Cities. The Twin Cities market is also the home market of U.S. Bancorp, the largest non-Big Four rival.
In January 2018, Bank of America announced an organic expansion of its retail footprint into
Pittsburgh
Pittsburgh ( ) is a city in the Commonwealth of Pennsylvania, United States, and the county seat of Allegheny County. It is the most populous city in both Allegheny County and Western Pennsylvania, the second-most populous city in Pennsylva ...
and surrounding areas, to supplement its existing commercial lending and investment businesses in the area. Before the expansion, Pittsburgh had been one of the largest US cities without a retail presence by any of the Big Four, with locally based PNC Financial Services (no. 6 nationally) having a commanding market share in the area; this coincided with Chase making a similar expansion into Pittsburgh. By the end of the fiscal year 2020, Bank of America had become Pittsburgh's 16th largest bank by deposits, which considering the dominance of PNC and BNY Mellon in the market is considered relatively impressive. By 2021, Bank of America had moved up to 12th in the market.
In February 2018, Bank of America announced it would expand into Ohio across the state's three biggest cities (
Cleveland
Cleveland ( ), officially the City of Cleveland, is a city in the U.S. state of Ohio and the county seat of Cuyahoga County. Located in the northeastern part of the state, it is situated along the southern shore of Lake Erie, across the U.S. ...
,
Columbus
Columbus is a Latinized version of the Italian surname "''Colombo''". It most commonly refers to:
* Christopher Columbus (1451-1506), the Italian explorer
* Columbus, Ohio, capital of the U.S. state of Ohio
Columbus may also refer to:
Places ...
, and
Cincinnati
Cincinnati ( ) is a city in the U.S. state of Ohio and the county seat of Hamilton County. Settled in 1788, the city is located at the northern side of the confluence of the Licking and Ohio rivers, the latter of which marks the state line wit ...
), which are strongholds of Chase. Columbus serves as the bank's hub in Ohio due to its central location as the state's capital, its overall size and growth, and an existing Bank of America call center for its credit card division in suburban Westerville. Within a year of entering Ohio, Columbus quickly saw the bank become the 5th largest in the market by deposits, behind only banks either based in Ohio (
Fifth Third Bank
Fifth Third Bank (5/3 Bank), the principal subsidiary of Fifth Third Bancorp is an American bank holding company headquartered in Cincinnati, Ohio. Fifth Third is one of the largest consumer banks in the Midwestern United States, Fifth Third ...
and locally based
Huntington Bancshares
Huntington Bancshares Incorporated is an American bank holding company headquartered in Columbus, Ohio. The company is ranked 521st on the Fortune 500, and is 26th on the list of largest banks in the United States.
The company's banking sub ...
) or have a major presence as a result of an acquisition of an Ohio-based institution (Chase and PNC), and ahead of US Bancorp (also with a large presence due to acquiring an Ohio-based bank), Ohio-based
KeyBank
KeyBank, the primary subsidiary of KeyCorp, is a regional bank headquartered in Cleveland, Ohio, and is the only major bank based in Cleveland. KeyBank is one of the largest banks in the United States.
Key's customer base spans retail, small b ...
, and several local institutions. As of 2021, Bank of America is the 9th largest bank by deposits in all of Ohio.
Operations
Bank of America generates 90% of its revenues in its domestic market. The core of Bank of America's strategy is to be the number one bank in its domestic market. It has achieved this through key acquisitions.
Consumer Banking
Consumer Banking, the largest division in the company, provides financial services to consumers and small businesses including, banking, investments, merchant services, and lending products including business loans, mortgages, and credit cards. It provides stockbroker services via
Merrill Edge Merrill may refer to:
Places in the United States
*Merrill Field, Anchorage, Alaska
*Merrill, Iowa
* Merrill, Maine
*Merrill, Michigan
* Merrill, Mississippi, an unincorporated community near Lucedale in George County
*Merrill, Oregon
*Merrill, Wi ...
, a specific
division
Division or divider may refer to:
Mathematics
*Division (mathematics), the inverse of multiplication
*Division algorithm, a method for computing the result of mathematical division
Military
*Division (military), a formation typically consisting ...
for investment and related services (such as research and call center counsel) after Merrill Lynch became a subsidiary of Bank of America. The consumer banking division represented 38% of the company's total revenue in 2016. The company earns revenue from interest income, service charges, and fees. In addition, the company is a
mortgage servicer A mortgage servicer is a company to which some borrowers pay their mortgage loan payments and which performs other services in connection with mortgages and mortgage-backed securities. The mortgage servicer may be the entity that originated the mor ...
. It competes primarily with the retail banking arms of America's three other megabanks: Citigroup,
JPMorgan Chase
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the ...
, and
Wells Fargo
Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...
. The Consumer Banking organization includes over 4,600 retail financial centers and approximately 15,900
automated teller machine
An automated teller machine (ATM) or cash machine (in British English) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, fun ...
s.
Bank of America is a member of the
Global ATM Alliance
The Global ATM Alliance is a joint venture of several major international banks that allows customers of their banks to use their automated teller machine (ATM) card or debit card at another bank within the alliance with no international ATM access ...
, a joint venture of several major international banks that provides for reduced fees for consumers using their ATM card or check card at another bank within the Global ATM Alliance when travelling internationally. This feature is restricted to withdrawals using a debit card and users are still subject to foreign currency conversion fees, credit card withdrawals are still subject to cash advance fees and foreign currency conversion fees.
Global Banking
The Global Banking division provides banking services, including investment banking and lending products to businesses. It includes the businesses of Global Corporate Banking, Global Commercial Banking, Business Banking, and Global Investment Banking. The division represented 22% of the company's revenue in 2016.
Before Bank of America's acquisition of Merrill Lynch, the Global Corporate and Investment Banking (GCIB) business operated as
Banc of America Securities
In the English language, banq and banc are coined words pronounced identically to the word "bank". Both terms have been adopted by financial services companies and others to satisfy legal restrictions on the usage of the word ''bank''. The compo ...
LLC. The bank's investment banking activities operate under the Merrill Lynch subsidiary and provided
mergers and acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
advisory,
underwriting
Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liabili ...
, capital markets, as well as sales & trading in fixed income and equities markets. Its strongest groups include
Leveraged Finance
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money ( leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loa ...
mortgage-backed securities
A mortgage-backed security (MBS) is a type of asset-backed security (an 'instrument') which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a government agency or investment ba ...
The Global Wealth and Investment Management (GWIM) division manages the investment assets of institutions and individuals. It includes the businesses of Merrill Lynch Global Wealth Management and U.S. Trust and represented 21% of the company's total revenue in 2016. It is among the 10 largest U.S. wealth managers. It has over $2.5 trillion in client balances. GWIM has five primary lines of business: Premier Banking & Investments (including Bank of America Investment Services, Inc.), The Private Bank, Family Wealth Advisors, and Bank of America Specialist.
Global Markets
The Global Markets division offers services to institutional clients, including trading in
financial securities
A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
. The division provides research and other services such as securities service,
market maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the ''bid–ask spread'', or ''turn.'' The benefit to the firm is that i ...
, and risk management using derivatives. The division represented 19% of the company's total revenues in 2016.
Labor
On April 9, 2019, the company announced minimum wage will be increased beginning May 1, 2019, to $17.00 an hour until it reaches a goal of $20.00 an hour in 2021.
Offices
The Bank of America principal executive offices are located in the Bank of America Corporate Center, Charlotte, North Carolina. The skyscraper is located at 100 North Tryon Street, and stands at 871 ft (265 m), having been completed in 1992.
In 2012, Bank of America cut ties to the
American Legislative Exchange Council
The American Legislative Exchange Council (ALEC) is a nonprofit organization of conservative state legislators and private sector representatives who draft and share model legislation for distribution among state governments in the United State ...
(ALEC).
International offices
Bank of America's Global Corporate and Investment Banking has its U.S. headquarters in Charlotte, European headquarters in Dublin, and Asian headquarters in Hong Kong and Singapore.
Corporate Governance
Charitable efforts
In 2007, the bank offered employees a $3,000 rebate for the purchase of hybrid vehicles. The company also provided a $1,000 rebate or a lower interest rate for customers whose homes qualified as energy efficient. In 2007, Bank of America partnered with Brighter Planet to offer an eco-friendly credit card, and later a debit card, which help build renewable energy projects with each purchase. In 2010, the bank completed construction of the 1 Bank of America Center in
Charlotte center city
Uptown Charlotte, also called Center City, is the central business district of Charlotte, North Carolina. The area is split into four wards by the intersection of Trade and Tryon Streets, and bordered by Interstate 277 and Interstate 77. The ar ...
. The tower, and accompanying hotel, is a
LEED-certified
Leadership in Energy and Environmental Design (LEED) is a
green building certification program used worldwide. Developed by the non-profit U.S. Green Building Council (USGBC), it includes a set of rating systems for the design, construction ...
building.
Bank of America has also donated money to help health centers in Massachusetts and made a $1 million donation in 2007 to help homeless shelters in Miami.
In 1998, the bank made a ten-year commitment of $350 billion to provide affordable mortgages, build affordable housing, support small businesses and create jobs in disadvantaged neighbourhoods.
In 2004, the bank pledged $750 million over a ten-year period for community development lending and affordable housing programs.
Chief Executive Officer
List of CEOs
#
Hugh McColl
Hugh L. McColl Jr. (born 18 June 1935) is a fourth-generation banker and the former Chairman and CEO of Bank of America. Active in banking since around 1960, McColl was a driving force behind consolidating a series of progressively larger, mos ...
Brian Moynihan
Brian Thomas Moynihan (born October 9, 1959) is an American investment banker, businessman and the chairman and CEO of Bank of America. He joined the board of directors, following his promotion to president and CEO in 2010.
Early life and educat ...
(2010– )
CEO Pay Ratio
Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, publicly traded companies are required to disclose (1) the median total annual compensation of all employees other than the CEO and (2) the ratio of the CEO's annual total compensation to that of the median employee (
CEO Pay Ratio The CEO Pay Ratio is a wage ratio. Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, publicly traded companies are required to disclose (1) the median total annual compensation of all employees other than ...
).
Total 2018 compensation for
Brian Moynihan
Brian Thomas Moynihan (born October 9, 1959) is an American investment banker, businessman and the chairman and CEO of Bank of America. He joined the board of directors, following his promotion to president and CEO in 2010.
Early life and educat ...
, CEO, amounted to $22,765,354, and total compensation of the median employee was determined to be $92,040. The resulting pay ratio is estimated to be 247:1.
Lawsuits
Mortgage abuses
In August 2011, Bank of America was sued for $10 billion by
American International Group
American International Group, Inc. (AIG) is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. , AIG companies employed 49,600 people.https://www.aig.com/content/dam/aig/amer ...
over an alleged "massive fraud" on mortgage debt. Another lawsuit filed against Bank of America, pertained to $57.5 billion in
mortgage-backed securities
A mortgage-backed security (MBS) is a type of asset-backed security (an 'instrument') which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a government agency or investment ba ...
Bank of America sold to
Fannie Mae
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the N ...
and
Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons Corner, Virginia.discriminated against Hispanic and
African-American
African Americans (also referred to as Black Americans and Afro-Americans) are an ethnic group consisting of Americans with partial or total ancestry from sub-Saharan Africa. The term "African American" generally denotes descendants of ensl ...
homebuyers from 2004 to 2008, prior to being acquired by BofA. In September 2012, BofA settled out of court for $2.4 billion in a class action lawsuit filed by BofA shareholders who felt they were misled about the purchase of Merrill Lynch.
On February 9, 2012, it was announced that the five largest mortgage servicers (Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo) agreed to a historic settlement with the federal government and 49 states. The settlement, known as the National Mortgage Settlement (NMS), required the servicers to provide about $26 billion in relief to distressed homeowners and indirect payments to the states and the federal government. This settlement amount makes the NMS the second largest civil settlement in U.S. history, only trailing the
Tobacco Master Settlement Agreement
The Tobacco Master Settlement Agreement (MSA) was entered on November 23, 1998, originally between the four largest United States tobacco companies ( Philip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard – the "original participati ...
. The five banks were also required to comply with 305 new mortgage servicing standards. Oklahoma held out and agreed to settle with the banks separately.
On October 24, 2012, American
federal prosecutor
An assistant United States attorney (AUSA) is an official career civil service position in the U.S. Department of Justice composed of lawyers working under the U.S. Attorney of each U.S. federal judicial district. They represent the federal gove ...
s filed a $1 billion
civil lawsuit
-
A lawsuit is a proceeding by a party or parties against another in the civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used in reference to a civil actio ...
against Bank of America for
mortgage fraud
Mortgage fraud refers to an intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property.
Criminal offenses may be prosecuted in eith ...
under the
False Claims Act
The False Claims Act (FCA), also called the "Lincoln Law", is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. It is the federal government's primary litigat ...
, which provides for possible penalties of triple the damages suffered. The government asserted that
Countrywide
Countrywide is one of the UK's largest integrated property services group including residential property surveying, a collaboration of estate agents, and corporate services. It employs circa 8,500 personnel nationwide, working across 650+ estat ...
, which was acquired by Bank of America, rubber-stamped mortgage loans to risky borrowers and forced taxpayers to guarantee billions of bad loans through
Fannie Mae
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the N ...
and
Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons Corner, Virginia.Preet Bharara
Preetinder Singh Bharara (; born October 13, 1968) is an Indian-born American lawyer, author, podcaster and former federal prosecutor who served as the United States Attorney for the Southern District of New York from 2009 to 2017. He is curren ...
, the United States attorney in
Manhattan
Manhattan (), known regionally as the City, is the most densely populated and geographically smallest of the five boroughs of New York City. The borough is also coextensive with New York County, one of the original counties of the U.S. state ...
, the inspector general of
FHFA
The Federal Housing Finance Agency (FHFA) is an independent federal agency in the United States created as the successor regulatory agency of the Federal Housing Finance Board (FHFB), the Office of Federal Housing Enterprise Oversight (OFHEO), ...
and the special inspector for the
Troubled Asset Relief Program
The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by President ...
. In March 2014, Bank of America settled the suit by agreeing to pay $6.3 billion to Fannie Mae and Freddie Mac and to buy back around $3.2 billion worth of mortgage bonds.
A $7.5 million settlement was reached in April 2014 with former chief financial officer for Bank of America, Joe L. Price, over allegations that the bank's management withheld material information related to its 2008 merger with Merrill Lynch. In August 2014, the
United States Department of Justice
The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United Stat ...
and the bank agreed to a $16.65 billion agreement over the sale of risky, mortgage-backed securities before the
Great Recession
The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
; the loans behind the securities were transferred to the company when it acquired banks such as Merrill Lynch and Countrywide in 2008. As a whole, the three firms provided $965 billion of mortgage-backed securities from 2004 to 2008. The settlement was structured to give $7 billion in consumer relief and $9.65 billion in penalty payments to the federal government and state governments;
California
California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...
, for instance, received $300 million to recompense public pension funds. The settlement was the largest in United States history between a single company and the federal government.
Unfair billing practices
In April 2014, the Consumer Financial Protection Bureau (CFPB) ordered Bank of America to provide an estimated $727 million in relief to consumers harmed by practices related to credit card add-on products. According to the Bureau, roughly 1.4 million customers were affected by deceptive marketing of add-on products, and 1.9 million customers were illegally charged for credit monitoring and reporting services they were not receiving. The deceptive marketing misconduct involved telemarketing scripts containing misstatements and off-script sales pitches made by telemarketers that were misleading and omitted pertinent information. The unfair billing practices involved billing customers for privacy-related products without having the authorization necessary to perform the credit monitoring and credit report retrieval services. As a result, the company billed customers for services they did not receive, unfairly charged consumers for interest and fees, illegally charged approximately 1.9 million accounts, and failed to provide the product benefit. In May 2022, CFPB ordered Bank of America to pay $10 million in penalties for illegal garnishments.
Discrimination
In 2018, former senior executive Omeed Malik filed a $100 million arbitration case through
FINRA
The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associat ...
against Bank of America after the company investigated him for alleged
sexual misconduct
Sexual misconduct is misconduct of a sexual nature which exists on a spectrum that may include a broad range of sexual behaviors considered unwelcome. This includes conduct considered inappropriate on an individual or societal basis of morality, se ...
retaliation
Revenge is committing a harmful action against a person or group in response to a grievance, be it real or perceived. Francis Bacon described revenge as a kind of "wild justice" that "does... offend the law ndputteth the law out of office." Pr ...
settlement
Settlement may refer to:
*Human settlement, a community where people live
*Settlement (structural), the distortion or disruption of parts of a building
* Closing (real estate), the final step in executing a real estate transaction
*Settlement (fin ...
in July of the same year.
Controversies
Parmalat controversy
Parmalat SpA is a multinational Italian dairy and food corporation. Following Parmalat's 2003 bankruptcy, the company sued Bank of America for $10 billion, alleging the bank profited from its knowledge of Parmalat's financial difficulties. The parties announced a settlement in July 2009, resulting in Bank of America paying Parmalat $98.5 million in October 2009. In a related case, on April 18, 2011, an Italian court acquitted Bank of America and three other large banks, along with their employees, of charges they assisted Parmalat in concealing its fraud, and of lacking sufficient internal controls to prevent such frauds. Prosecutors did not immediately say whether they would appeal the rulings. In
Parma
Parma (; egl, Pärma, ) is a city in the northern Italian region of Emilia-Romagna known for its architecture, music, art, prosciutto (ham), cheese and surrounding countryside. With a population of 198,292 inhabitants, Parma is the second mos ...
, the banks were still charged with covering up the fraud.
Consumer credit controversies
In January 2008, Bank of America began notifying some customers without payment problems that their interest rates were more than doubled, up to 28%. The bank was criticized for raising rates on customers in good standing, and for declining to explain why it had done so. In September 2009, a Bank of America credit card customer, Ann Minch, posted a video on YouTube criticizing the bank for raising her interest rate. After the video went viral, she was contacted by a Bank of America representative who lowered her rate. The story attracted national attention from television and internet commentators. In 2010, the bank was criticized for allegedly seizing three properties that were not under their ownership, apparently due to incorrect addresses on their legal documents.
Purchasing of 300 Internet domains in apparent preemptive PR campaign
WikiLeaks
WikiLeaks () is an international non-profit organisation that published news leaks and classified media provided by anonymous sources. Julian Assange, an Australian Internet activist, is generally described as its founder and director and ...
claimed that his organization possessed a 5 gigabyte
hard drive
A hard disk drive (HDD), hard disk, hard drive, or fixed disk is an electro-mechanical data storage device that stores and retrieves digital data using magnetic storage with one or more rigid rapidly rotating platters coated with magne ...
formerly used by a Bank of America executive and that Wikileaks intended to publish its contents.
In November 2010, ''
Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also r ...
'' published an interview with Assange in which he stated his intent to publish information which would turn a major U.S. bank "inside out". In response to this announcement, Bank of America stock dropped 3.2%.
In December 2010, Bank of America announced that it would no longer service requests to transfer funds to WikiLeaks, stating that "Bank of America joins in the actions previously announced by MasterCard,
PayPal
PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional paper ...
,
Visa
Visa most commonly refers to:
*Visa Inc., a US multinational financial and payment cards company
** Visa Debit card issued by the above company
** Visa Electron, a debit card
** Visa Plus, an interbank network
*Travel visa, a document that allows ...
Europe, and others and will not process transactions of any type that we have reason to believe are intended for WikiLeaks... This decision is based upon our reasonable belief that WikiLeaks may be engaged in activities that are, among other things, inconsistent with our internal policies for processing payments."
Later in December, it was announced that Bank of America purchased more than 300
Internet domain name
A domain name is a string that identifies a realm of administrative autonomy, authority or control within the Internet. Domain names are often used to identify services provided through the Internet, such as websites, email services and more. As ...
s in an attempt to preempt bad publicity that might be forthcoming in the anticipated WikiLeaks release. The domain names included as ''BrianMoynihanBlows.com'', ''BrianMoynihanSucks.com'' and similar names for other top executives of the bank.
Sometime before August 2011, WikiLeaks claimed that 5 GB of Bank of America leaks was part of the deletion of over 3500 communications by
Daniel Domscheit-Berg
Daniel Domscheit-Berg (; né Berg; born 1978), previously known under the pseudonym Daniel Schmitt, is a German technology activist. He is best known as the former spokesperson for WikiLeaks and the author of ''Inside WikiLeaks: My Time with Jul ...
, a now ex-WikiLeaks volunteer.
Settled $228 million lawsuit claiming involvement in kickbacks and inflating insurance costs forced on homeowners
On March 14, 2011, members of hacker group Anonymous began releasing emails said to be from a former Bank of America employee. According to the group, the emails documented alleged "corruption and fraud". The source, identified publicly as Brian Penny, was a former LPI Specialist from Balboa Insurance, a firm which used to be owned by the bank, but was sold to Australian Reinsurance Company QBE.
On April 7, 2014, Bank of America and QBE settled a class-action lawsuit stemming from the leak for $228 million.
"Repeatedly has deceived" mortgagors, and then "impeding" investigation - said State of Arizona
In 2010 the state of
Arizona
Arizona ( ; nv, Hoozdo Hahoodzo ; ood, Alĭ ṣonak ) is a state in the Southwestern United States. It is the 6th largest and the 14th most populous of the 50 states. Its capital and largest city is Phoenix. Arizona is part of the Fou ...
launched an investigation into Bank of America for misleading homeowners who sought to modify their
mortgage loan
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any ...
s. According to the attorney general of Arizona, the bank "repeatedly has deceived" such mortgagors. In response to the investigation, the bank has given some modifications on the condition that the homeowners remove some information criticizing the bank online.
Investment in coal mining
On May 6, 2015, Bank of America announced it would reduce its financial exposure to coal companies. The announcement came following pressure from universities and environmental groups. The new policy was announced as part of the bank's decision to continue to reduce credit exposure over time to the coal mining sector.
Ryan Coogler incident
In March 2022, the bank was involved in a controversial incident related to the notable filmmaker
Ryan Coogler
Ryan Kyle Coogler (born May 23, 1986) is an American film director, producer and screenwriter. He is a recipient of four NAACP Image Awards, four Black Reel Awards, a Golden Globe Award nomination and an Academy Award nomination for Best Pictu ...
who was wrongly targeted as bank robber and detained by the police in
Atlanta, Georgia
Atlanta ( ) is the capital and most populous city of the U.S. state of Georgia. It is the seat of Fulton County, the most populous county in Georgia, but its territory falls in both Fulton and DeKalb counties. With a population of 498,7 ...
, after Coogler tried to withdraw cash in the local branch of the Bank of America. After his identity was verified with both his California state ID card and his Bank of America card, Coogler was released and the bank released an apology statement. According to a number of sources, the bank's teller hadn't checked Coogler's ID to verify if he was the owner of the bank account before she asked the bank's supervisor to call police.
Competition
Bank of America's major competitors are
Wells Fargo
Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...
,
Santander
Santander may refer to:
Places
* Santander, Spain, a port city and capital of the autonomous community of Cantabria, Spain
* Santander Department, a department of Colombia
* Santander State, former state of Colombia
* Santander de Quilichao, a m ...
Ally Financial
Ally Financial is a bank holding company organized in Delaware and headquartered in Detroit, Michigan. The company provides financial services including car finance, online banking via a direct bank, corporate lending, vehicle insurance, mor ...
,
Capital One
Capital One Financial Corporation is an American bank holding company specializing in credit cards, auto loans, banking, and savings accounts, headquartered in McLean, Virginia with operations primarily in the United States. It is on the li ...
US Bank
U.S. Bancorp (stylized as us bancorp) is an American bank holding company based in Minneapolis, Minnesota, and incorporated in Delaware. It is the parent company of U.S. Bank National Association, and is the fifth largest banking institution ...
,
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Florida, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsyl ...
M&T Bank
M&T Bank Corporation (Manufacturers and Traders Trust Company) is an American bank holding company headquartered in Buffalo, New York. It operates 1680 branches in New York, New Jersey, Connecticut, Pennsylvania, Maine, Maryland, Massachusetts ...
Notable buildings which Bank of America currently occupies include:
* Bank of America Tower in
Phoenix, Arizona
Phoenix ( ; nv, Hoozdo; es, Fénix or , yuf-x-wal, Banyà:nyuwá) is the capital and most populous city of the U.S. state of Arizona, with 1,608,139 residents as of 2020. It is the fifth-most populous city in the United States, and the on ...
*
9454 Wilshire Boulevard
9454 Wilshire Boulevard, also known as The Bank of America Tower, is a 174,490 RSF (rentable square feet), 12-story landmark office building with a three-level underground parking lot located in Beverly Hills, California at the corner of Beverly D ...
Los Angeles, California
Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the largest city in the state of California and the second most populous city in the United States after New York City, as well as one of the world' ...
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Transamerica Pyramid
The Transamerica Pyramid is a 48-story futurist skyscraper in San Francisco, California, United States, and the second tallest building in the San Francisco skyline. Located at 600 Montgomery Street between Clay and Washington Streets in the c ...
, in San Francisco
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555 California Street
555 California Street, formerly Bank of America Center, is a 52-story skyscraper in San Francisco, California. It is the fourth tallest building in the city as of February 2021, and in 2013 was the largest by floor area. Completed in 1969, t ...
, formerly the Bank of America Center and world headquarters, in
San Francisco, California
San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...
Jacksonville, Florida
Jacksonville is a city located on the Atlantic coast of northeast Florida, the most populous city proper in the state and is the List of United States cities by area, largest city by area in the contiguous United States as of 2020. It is the co ...
Brickell
Brickell ( ) is a neighborhood in Miami, Florida located directly east of Interstate 95, south of the historic CBD, and north of Coconut Grove. Brickell is known as the financial district in Miami, as well as South Florida.
Brickell was found ...
Downtown Miami
Downtown Miami is the urban city center of Miami, Florida. The city's greater downtown region consists of the Central Business District, Brickell, the Historic District, Government Center, the Arts & Entertainment District, and Park West. It ...
) in
Miami
Miami ( ), officially the City of Miami, known as "the 305", "The Magic City", and "Gateway to the Americas", is a coastal metropolis and the county seat of Miami-Dade County in South Florida, United States. With a population of 442,241 at ...
,
Florida
Florida is a state located in the Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Bahamas and Atlantic Ocean, and to ...
St. Petersburg, Florida
St. Petersburg is a city in Pinellas County, Florida, United States. As of the 2020 census, the population was 258,308, making it the fifth-most populous city in Florida and the second-largest city in the Tampa Bay Area, after Tampa. It is the ...
Tampa, Florida
Tampa () is a city on the Gulf Coast of the United States, Gulf Coast of the U.S. state of Florida. The city's borders include the north shore of Tampa Bay and the east shore of Old Tampa Bay. Tampa is the largest city in the Tampa Bay area and ...
Atlanta
Atlanta ( ) is the capital and most populous city of the U.S. state of Georgia. It is the seat of Fulton County, the most populous county in Georgia, but its territory falls in both Fulton and DeKalb counties. With a population of 498,715 ...
Chicago, Illinois
(''City in a Garden''); I Will
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* One City Center, often called the Bank of America building due to signage rights, in
Portland, Maine
Portland is the largest city in the U.S. state of Maine and the seat of Cumberland County. Portland's population was 68,408 in April 2020. The Greater Portland metropolitan area is home to over half a million people, the 104th-largest metropo ...
Baltimore
Baltimore ( , locally: or ) is the List of municipalities in Maryland, most populous city in the U.S. state of Maryland, fourth most populous city in the Mid-Atlantic (United States), Mid-Atlantic, and List of United States cities by popula ...
New York City
New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...
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Bank of America Corporate Center
The Bank of America Corporate Center is an 871 ft (265 m) skyscraper in Uptown Charlotte, North Carolina. Designed by Argentine architect César Pelli and HKS Architects, and best known as the headquarters of the namesake Bank of Americ ...
in
Charlotte, North Carolina
Charlotte ( ) is the most populous city in the U.S. state of North Carolina. Located in the Piedmont region, it is the county seat of Mecklenburg County. The population was 874,579 at the 2020 census, making Charlotte the 16th-most populo ...
Dallas
Dallas () is the List of municipalities in Texas, third largest city in Texas and the largest city in the Dallas–Fort Worth metroplex, the List of metropolitan statistical areas, fourth-largest metropolitan area in the United States at 7.5 ...
San Antonio
("Cradle of Freedom")
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, subdivision_type = Country
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, Texas
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Bank of America Fifth Avenue Plaza
800 Fifth Avenue is a skyscraper in Seattle, in the U.S. state of Washington. It was constructed from 1979 to 1981 and has 42 floors. It is the tenth-tallest building in Seattle and was designed by 3D/International. The building has been able t ...
in
Seattle, Washington
Seattle ( ) is a seaport city on the West Coast of the United States. It is the seat of King County, Washington. With a 2020 population of 737,015, it is the largest city in both the state of Washington and the Pacific Northwest region ...
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Columbia Center
The Columbia Center, formerly named the Bank of America Tower and Columbia Seafirst Center, is a skyscraper in downtown Seattle, Washington, United States. The 76-story structure is the tallest building in Seattle and the state of Washington, r ...
in
Seattle, Washington
Seattle ( ) is a seaport city on the West Coast of the United States. It is the seat of King County, Washington. With a 2020 population of 737,015, it is the largest city in both the state of Washington and the Pacific Northwest region ...
Robert B. Atwood Building
The Robert B. Atwood Building is an office building located at 550 West 7th Avenue in Downtown (Anchorage), Downtown Anchorage, Alaska, Anchorage, Alaska. The building houses government offices for the Government of Alaska, State of Alaska. Standin ...
in Anchorage, Alaska, was at one time named the Bank of America Center, renamed in conjunction with the bank's acquisition of building tenant Security Pacific Bank. This particular branch was later acquired by Alaska-based Northrim Bank and moved across the street to the
Linny Pacillo Parking Garage
The Linny Pacillo Parking Garage is a 10-story parking garage in downtown Anchorage, Alaska, United States. The upper nine stories are for parking, with the first story serving as retail space. The structure contains a total of , including the re ...
.
The Bank of America Building (Providence) opened in 1928 as the Industrial Trust Building and remains the tallest building in Rhode Island. Through a number of mergers, it was later known as the Industrial National Bank building and the Fleet Bank building. The building was leased by Bank of America from 2004 to 2012 and has been vacant since March 2013. The building is commonly known as the Superman Building based on a popular belief that it was the model for the
Daily Planet
The ''Daily Planet'' is a fictional newspaper appearing in American comic books published by DC Comics, commonly in association with Superman. The newspaper was first mentioned in ''Action Comics'' #23 (April 1940). The ''Daily Planet'' build ...
Miami Tower
The Miami Tower is a 47-story, landmark office skyscraper in Miami, Florida, United States. It is located in central Downtown. It is currently the 16th tallest building in Miami and Florida. On April 18, 2012, the AIA's Florida Chapter placed ...
iconic in its appearance in ''
Miami Vice
''Miami Vice'' is an American crime drama television series created by Anthony Yerkovich and produced by Michael Mann for NBC. The series stars Don Johnson as James "Sonny" Crockett and Philip Michael Thomas as Ricardo "Rico" Tubbs, two M ...
'' was known as the Bank of America Tower for many years. It is located in
Downtown Miami
Downtown Miami is the urban city center of Miami, Florida. The city's greater downtown region consists of the Central Business District, Brickell, the Historic District, Government Center, the Arts & Entertainment District, and Park West. It ...
. On April 18, 2012, the AIA's Florida Chapter placed it on its list of Florida Architecture: 100 Years. 100 Places as the Bank of America Tower.
TC Energy Center
The TC Energy Center is a highrise that represents one of the first significant examples of postmodern architecture construction in downtown Houston, Texas. The building has been formerly known as the RepublicBank Center, the NCNB Center, the ...
in Houston, Texas, was previously known as Bank of America Center until Bank of America ended its tenancy in the building in June 2019. Designed in the postmodern architecture style by renowned architect
Philip Johnson
Philip Cortelyou Johnson (July 8, 1906 – January 25, 2005) was an American architect best known for his works of modern and postmodern architecture. Among his best-known designs are his modernist Glass House in New Canaan, Connecticut; the po ...
, the building has been one of the most iconic and recognizable landmarks of the downtown Houston skyline since it was completed in 1983.
Bank of America (Asia)
China Construction Bank (Asia) Corporation Limited (Traditional Chinese: 中國建設銀行(亞洲)股份有限公司) is a licensed bank incorporated in Hong Kong.
History
The Bank has over 100 years of history in Hong Kong, when its predecessor ...
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Big Four banks
The Big Four (or Big 4) is the colloquial name given to the four main banks in several countries where the banking industry is dominated by just four institutions and where the phrase has thus gained relevance. Some countries include more or less i ...
List of bank mergers in United States
This is a partial list of major banking company mergers in the United States.
Table
Mergers chart
This 2012 chart shows some of the mergers noted above. Solid arrows point from the acquiring bank to the acquired one. The lines are labeled ...
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List of largest banks in the United States
The following table lists the 100 largest bank holding companies in the United States ranked by total assets of June 30, 2022 per the Federal Financial Institutions Examination Council; their market capitalization is also shown. This list does not ...
References
Further reading
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External links
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Banks established in 1904
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Former components of the Dow Jones Industrial Average
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