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Bank of America: More Than A Century of Mergers and Scandals


Bank of America is a banking behemoth, with operations in more than 35 countries throughout Europe, the Middle East, Africa, Asia Pacific, and the Americas. It is the third largest financial institution in the U.S. with $1.66 trillion in assets, more than 148,000 employees, and some 72 million accounts.

Bank of America offers a suite of banking, investing, asset management, and other financial and risk management products and services. The Charlotte, North Carolina-based bank had its beginnings in 1904 when it was founded as the Bank of Italy in San Francisco by Amadeo Petro Giannini. In 1922 he established Bank of America and Italy, and six years later merged his bank with Bank of America, Los Angeles, becoming the largest bank in the U.S. BofA would begin to expand outside of California and gobble competitors. The rest is history. A defining moment for the company came in 1998 when NationsBank acquired it. At the time it was the largest banking acquisition ever.

A defining moment for the company came in 1998 when NationsBank acquired it. At the time it was the largest banking acquisition ever.

Right now the buzz about BofA is that analysts are sweet on it. There is speculation that as interest rates rise, a bank like BofA will be well positioned to earn billions more in revenue per year, which no doubt will raise the valuation of its stock, according to John Maxfield of The Motley Fool. He says BofA is a buy. Maxwell says he has a hefty chunk of BofA stock. His thinking, “the potential reward for investing in Bank of America, the second cheapest large-cap bank stock in the market today, outweighs the risk.”

For sure there are risks. With the Wells Fargo scandal, big banks are on the hot seat. Who knows what inquiring minds will unearth at other banks, including BofA? It’s not like BofA has been without sin. Quite the contrary. In 2014, the Justice Department fined BofA a record $16.65 billion to settle allegations that it knowingly sold toxic mortgages to investors, $7 billion of which was designated to go to consumers who faced financial hardship as a result. That was how the story of BofA’s role in the financial crisis came to a head. BofA was deemed as having helped create the housing bubble that wreaked havoc on the country, and the global economy, in the late 2000’s.

In 2014, the Justice Department fined BofA a record $16.65 billion to settle allegations that it knowingly sold toxic mortgages to investors

Back in 2010, New York Attorney General Andrew Cuomo brought civil charges against senior Bank of America executives and top dog CEO Ken Lewis for their role in the company’s controversial purchase of Merrill Lynch. In addition, the SEC struck a $150 million settlement agreement with the bank over its decision to pay billions in bonuses to former Merrill employees. The lawsuit charged that the bank’s management team understated the losses at Merrill in order to get shareholders to go along with the deal, then subsequently overstated the firm’s willingness to terminate the merger to regulators, in order to get $20 billion in additional aid from the federal government.

The BofA story though, isn’t just about the big bad bank. This year, Euromoney named BofA the World’s Best Bank in financing and diversity. Euromoney touted the bank for its “demonstrated ability to deliver certainty in execution and the right mix of financing, advice, and products to clients, regardless of market conditions.”

Bank of America Merrill Lynch makes many of the top employers and best places to work list. The bank has been recognized as a 2020 Women on Boards Winning “W” Company, for having 20 percent or more of the board seats held by women. The Environmental Finance Green Bond Awards lauded BofA as the biggest green underwriter in 2015. The list of such distinctions that it touts goes on and on.

BofA may no longer be the biggest bank in the U.S., but that’s hardly an indication that its best days are over. It’s not by chance that the bank is still around after all these years. Just like its ferocious appetite to gobble competitors in the past, don’t assume the competitive spirit is dead.

Anonymous | | Comment #1
In 1955 my parents took out a home mortgage from B of A. While in elementary school in the 1950s we had bank books from B of A where we maintained savings accounts in which we deposited small amounts of money once a week. That was when B of A was a California bank run by the Giannini family.
Anonymous | | Comment #2
Reputational Risk Factors, search, "Adam Freschauf" in Google. Bank of America has violated many many broad consumer financial laws.That being said Brian Moynihan should be removed as CEO, along with several key executives. The reasons is that the bank has opened itself up to to many liabilities. Search Gregory La Porta, same thing sent people to his house took pictures, threats, etc.
RJM | | Comment #3
Seems to me that the masses need to move away from the mega banks and their scandals.

The population as a whole has been very slow to move away from brick & motor banks.

The country has at least 2-3 times more banks & credit unions locations than are needed to service the people.
Anonymous | | Comment #4
In order to judge a Bank, you need true and solid data. B of A is known to have at least 3 sets of books and most of the data is phony. Example, they still have on the books mortgages that are no longer collectable, they have "borrowed" against those papers from the FED over a trillion dollars and is hidden inside the phony ledgers and listed as assets. The tarp money were used to pay themselves bonuses and stock options estimated over $100 billions and listed inside the ledgers as income producing investments. All of the above is disclosed on their SEC filings.

One thing you will not find there is the amount of derivatives, which is by now 2 times greater than all of the assets the B of A hold. If anything should ever happen to the global banks a chain reaction will destroy all of the big 5 US banks. SEC requires only to list that you have issued or bought derivatives but not the actual amount in them. And that is what makes the big banks dangerous.

Inside those derivatives are where all the action is, B of A reports income coming out just enough to make the ledgers in balance, but nobody can verify the true amounts. It is like magic box, they can say we hold that much assets and receive that much income but never reported any losses inside the derivatives and that tells you that the whole banking system at the top 5 big banks is rigged.
Anonymous | | Comment #6
Don't use big banks. They are happy to cheat you and have powerful friends in Washington. Break up the big banks
DCGuy | | Comment #7
Bank of America recently replaced Platinum Privileges program with Preferred Rewards. Their deposit rates are the bottom of the barrel and they require a high account balance to qualify to get the "big" reward rates. More smoke and mirrors by fudging the numbers.

DCGuy | | Comment #8
Remember, that VISA was formerly BankAmericard. but that was LONG ago.
Anonymous | | Comment #9
Bank of America Corp, the second-largest U.S. bank by assets, reported its first profit increase in three quarters on Monday, foiling expectations for another drop, as bond trading surged and expenses fell.