Bank of America: From “Built to Last” to “Built to Loot”
Bank of America, founded in 1904, had a long, proud history of providing fair and affordable banking services to working families. But in the 1980s, that began to shift.
The bank made risky loans to developing nations that deepened the poverty of the planet’s poorest citizens and lost the bank billions of dollars, driving it for the first time to the brink of collapse.
Greed got the better of Bank of America a second time in 2008, when a decade of risky and reckless mortgage lending and an ill-considered shotgun wedding with leading subprime lender, Countrywide Financial, gutted the company’s assets. It would have failed if not for a $45 billion taxpayer financed bailout.
Modern-day Bank of America has sought to profit by extracting money from working people and their communities. Last year, the company failed in its attempt to charge a $5 monthly fee to customers who used an ATM even once during the month. Still, the company managed to exact $28 billion in service fees in 2011. The amount dropped $1.3 billion from the previous year, because, as the company explained to shareholders, the Federal Reserve adopted rules that limited exorbitant overdraft fees it had been charging it customers.
Bank of America has foreclosed on the homes of hundreds of thousands of American families. State attorneys general alleged that many of these foreclosures were illegally done. Bank of America settled these charges by agreeing to pay almost $12 billion in fines and restitution, including its first serious commitment to provide relief for customers who have continued to pay their monthly mortgages even though they now owe more than their homes are worth. The bank has begun contacting more than 200,000 homeowners who may be eligible for partial loan forgiveness under the settlement.
Despite these settlements, new abuses continue to arise. Those seeking to buy foreclosed homes from Bank of America are finding themselves steered to Bank of America financing of their purchases, a violation of a 1974 federal law prohibiting such behavior.
The bank’s founder, Amadeo P. Giannini, had little interest in amassing great personal wealth and often worked without a salary. Those who have come after him have lined their own pockets even as their customers suffered greatly. Last year, after investors saw their stock price decline 58 percent and 30,000 Bank of America employees lost their jobs to layoffs, CEO Brian Moynihan saw his compensation quadruple to more than $8 million. His predecessor, Ken Lewis, raked in more than $50 million in the two years before the 2008 economic earthquake that Bank of America helped create, unleashed a tidal wave of foreclosures.
Today, Bank of America sits on $128 billion in cash — $18 billion of it is overseas —and much of that is sitting in one of the company’s 115 tax haven subsidiaries, the fourth largest number of tax haven subsidiaries among large U.S. companies. Millions of its customers continue to struggle to pay their mortgages and put food on the table. It’s time for Bank of America to return to its roots and remember the values of service to community that led it to one-time greatness.