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Bank of America: Inside America's Most-Hated Bank

Bank of America's management team wants to put all of the litigation relating to the financial crisis behind it, so they can pivot toward growing the overall business for shareholders. This strategy won't be easy. The company's reputation with its customers is the lowest of any bank in America right now. Will Bank of America be able to pursue a growth strategy without alienating its customers even further? In this special report, we consider that question by taking a closer look at the company's business model and culture.

Part I: Why is Bank of America's reputation so poor?
This should be a celebratory moment for Bank of America (NYSE: BAC  ) .

Profits are up. Its share price has risen dramatically since late 2011. And all signs suggest that America's second-largest bank is firmly on the path to recovery under the leadership of CEO Brian Moynihan. To top things off, legendary investor Warren Buffett, who has a paper profit of more than $5 billion on his investment in Bank of America, recently thanked Moynihan over dinner.

Despite all the good news, however, troubling allegations about the company's past operations continue to surface.

Earlier this year, former employees alleged in federal court that Bank of America frequently lied to homeowners who were trying to modify their mortgages under the government's Home Affordable Mortgage Modification Program (HAMP). Simone Gordon, who was employed by Bank of America from 2007 to 2012, stated,

We were told to lie to customers and claim that Bank of America had not received documents it had requested, and that it had not received trial payments (when in fact it had).

The former employees also claimed that bank employees were rewarded for increasing the number of foreclosures, and were punished for challenging the ethics of the bank.

Unsurprisingly, Bank of America vigorously disputes the claims of the former employees in this case, arguing that,

In sum, the declarants could not have witnessed what they claim to have witnessed because they were not in a position to do so – and would not have witnessed such things in any event because Bank of America's actual practices are diametrically opposite.

More recently, we learned of similar allegations against the bank in a suit filed by the Department of Justice. In a filing accusing the bank of defrauding investors, an employee involved in the origination of mortgages "admitted that the emphasis at BOA-Bank was quantity not quality and that he was pressured to increase the number of applications per week." Another employee admitted that "her superiors pressured her to process applications as quickly as possible but to keep her opinions to herself."

In response to the Justice Department lawsuit, a spokesman defended the bank's practices saying, "These were prime mortgages sold to sophisticated investors who had ample access to the underlying data and we will demonstrate that."

The two lawsuits mentioned above are ongoing, and we have no idea how they will eventually be decided. We do know, however, that legal battles are not uncommon for Bank of America, which has been involved in a dizzying array of lawsuits, settlements, and judgments over the past several years.

Earlier this week, in fact, a jury determined that Countrywide Financial, now a unit of Bank of America, defrauded Fannie Mae and Freddie Mac by selling them tens of thousands of defective mortgages. The ruling marked the first time a bank has been held liable by a U.S. court for misleading the government about activities relating to the financial crisis.

Here is just a small sampling from 2013 alone:

  • In January, Bank of America was one of 10 mortgage servicing companies that agreed with the Office of the Comptroller of the Currency (OCC) to pay more than $8.5 billion in cash payments and other assistance to help borrowers.
  • Also, in January, Bank of America agreed to pay $10.3 billion to Fannie Mae to settle a lawsuit concerning the sale of faulty mortgages.
  • And in May, Bank of America reached a $1.7 billion agreement with MBIA to settle a legal dispute over mortgage-backed securities.

Overall, Bank of America has one of the longest corporate rap sheets among the big Wall Street banks over the past several years. That's a pretty remarkable accomplishment when you consider the other banks in that select group. From 2010 through 2012 alone, the bank agreed to pay almost $42 billion to settle numerous legal disputes, according to SNL Financial. Wells Fargo (NYSE: WFC  ) came in a distant second by agreeing to pay out just over $8 billion during the same period.

Whether it's all the lawsuits or the actual behavior that resulted in the lawsuits (or both), Bank of America's reputation has plummeted in recent years. Among the 30 major brands studied in American Banker's 2013 Survey of bank reputations, Bank of America came in dead last. In addition to having the worst reputation among its own customers, it scored the lowest among non-customers as well.

Bank of America's customers appear to be extremely dissatisfied at the moment in comparison with consumers at comparable big banks. Earlier this year, we learned the bank had the largest number of customer complaints filed with the Consumer Financial Protection Bureau over the past 16 months. Bank of America accounted for approximately 23% of all complaints compared with 14% for Wells Fargo and 11% for JPMorgan (NYSE: JPM  ) .

When looking at all of the lawsuits and then considering its plummeting reputation, it really makes us wonder about the sustainability of Bank of America's current business model. How has this business managed to last so long? Will its current practices ultimately fuel disruption in the banking industry?

Bank of America's management team argues that most of its problems stem from the Countrywide acquisition and issues relating to the financial crisis. As those problems continue to get resolved, the bank says it will be able to focus on more profitable activities, thereby creating more value for shareholders.

We're highly skeptical of that assessment, which appears simplistic and overly optimistic. We've recently taken a closer look at the bank, and now believe Bank of America's current business model is unsustainable. As a result, we find it hard to believe its stock will outperform the market over the long term.

Part II: How Bank of America makes its money
The fact that Bank of America is no longer among the most esteemed companies in the United States hasn't gone unnoticed by the executives in the megabank's corner offices.

A recent ad campaign provides a case in point. Designed to humble the bank in the eyes of consumers, one of its commercials depicts a time lapse of multiple generations of a single family. The patriarch gets married, buys a house, and has children and grandchildren. Indeed, the only constant is Bank of America, lurking omnisciently in the background. "We know we're not the center of your life," the spot concludes, "but we'll do our best to help you connect to what is."

The problem is that the image of a small, personable lender that cares about each and every one of its customers is simply at odds with reality. Bank of America isn't just any old bank. It's a behemoth, one of only four lenders that today make up an oligopoly in the banking industry.

When expressed in dollars, the magnitude and breadth of Bank of America's reach is almost unfathomable. It exercises direct control over $2.1 trillion in assets on its balance sheet. Its wealth management arm oversees an additional $1.9 trillion in customer assets. It's entrusted with $1.1 trillion in deposits, equating to more than one of every 10 dollars on deposit in the United States. And at its peak four years ago, it serviced $2.2 trillion in residential mortgages.

Altogether, it oversees upward of $5 trillion in assets, more than the annual gross domestic product of every country in the world except Japan, China, and the United States.

This is not to say that Bank of America is simply a carbon copy of its too-big-to-fail brethren. Unlike a Citigroup (NYSE: C  ) or Goldman Sachs (NYSE: GS  ) , both of which cater to ostensibly sophisticated institutional investors and corporations, Bank of America looks to the average consumer to fill its coffers. It has a staggering 48 million households as customers, equating to 45%, or nearly half, of all American households with bank accounts. A purported 8 million are designated as "preferred," meaning that they generate more money for the bank via higher deposit balances and product usage, while the remaining 40 million customers are classified as "retail."

A strategy like this, which exposes Bank of America to the masses, has both its benefits and detriments. The primary benefit is its ability to acquire vast sums of deposits from savers across the country. According to data from the FDIC, the North Carolina-based bank currently controls 11.4% of the nation's deposits; that's 1.4 percentage points higher than the 10% cap set by federal law in 1994. And the best part is that these funds, once acquired, are effectively free. In the third quarter of this year, for instance, it paid all of 0.15% on domestic deposits -- and that's excluding the $364 billion in noninterest-bearing deposits.

The value of this franchise becomes clear once you consider that these very same funds are then loaned to borrowers at significantly higher interest rates. In the third quarter, Bank of America charged borrowers an average rate of 4.74%. Known as interest rate arbitrage, this is the very essence of a traditional bank's business model. And in Bank of America's case, it earned $10.3 billion, or nearly half of its total revenue last quarter, in net interest income from this activity alone.

But if this sounds too good to be true, then you're onto something. In short, the process of acquiring (as opposed to holding) deposits is expensive. It requires a sprawling branch network, colossal call centers, sophisticated mobile and online banking platforms, and thousands of ATMs spread across the continent. It's so expensive, in fact, that most large banks actually lose money on the typical customer account. According to research firm Moebs Services, the average checking account cost a bank $349 in 2011. Meanwhile, the average revenue per account was just $268, implying a loss of $81. In Bank of America's case, if you multiply that out by 40 million, you get $3.24 billion.

The trick, in turn, is to recoup these losses.

What's the best way to grow the business?
One way to do so is to charge upfront account fees. But Bank of America tried this in 2011 with the introduction of a $5-per-month debit card fee, and was forced to abandon the attempt months later after uproar among its customers and consumer advocates contributed to, among other things, Bank Transfer Day. Indeed, since Washington Mutual, the former savings and loan colossus acquired by JPMorgan in 2008, introduced free checking in the mid-1990s, this approach has been a nonstarter.

The banking industry has thus been forced to become more creative in its attempt to offset these losses. Much like the fees that spawned in the wake of Southwest Airlines' and other discounters' disruption of the airline industry, Bank of America has gravitated toward less transparent means to recoup the deficit. Instead of baggage fees, it charges overdraft and non-sufficient funds fees. As opposed to charging you for a can of soda, it takes a tiny proportion of every debit or credit card transaction that it processes for customers. In the third quarter of this year alone, it generated $2.5 billion from various noninterest charges in its consumer banking division.

But far from solving Bank of America's problems, this strategy has merely fueled a new class of headaches.

Over the last few years, the bank, along with the industry in general, has found itself in the regulatory and legal crosshairs over the litany of fees it charges customers and the way in which it does so. It's been sued for its overdraft policy of reordering customer transactions in order to maximize overdrafts and forced by regulators to change it, prompting the bank most recently to consider offering a new type of account which prohibits overdrafts altogether. Debit card interchange fees are now capped by the Federal Reserve. And it's been admonished for its treatment of mortgage and credit card holders.

All told, Bank of America has rung up tens of billions of dollars in legal and regulatory expenses for various fee-based transgressions.

The result has been to refocus Bank of America and its peers on the traditional method of revenue growth, which, not unlike your local McDonald's ("Would you like fries with that?"), involves up-selling.

The initial priority of any bank is to acquire new customers, which is typically accomplished by offering free checking accounts. On Wells Fargo's second-quarter conference call, its CEO said that he "dreams about checking accounts." These are "formational accounts," he explained. It's how banks get their foot in your door, after which the objective becomes to get you hooked on additional, and many times fee-based, products.

Moynihan touched on this in a presentation he gave in 2009. Discussing Bank of America's colossal deposit base, he noted,

We are going to maximize this franchise in everything we do, including, importantly, maximizing the value of the Merrill Lynch transaction, and sending every customer we can into [our] team of 15,000 financial advisors.

This also includes getting Bank of America customers signed up for credit cards, mortgages, and car loans. As he mapped out two years later,

...for a consumer, that's a core transaction account through the financial investment advice from Merrill Lynch and U.S. Trust, helping them borrow on a short-term basis using their card or on long-term basis for their home or their car.

If you're a current Bank of America customer, then you're well aware of this push. Hardly a week goes by that a BankAmericard application isn't in your mailbox or you aren't contacted by a Merrill Edge representative seeking to advise you on one thing or another.

Beyond this, the cost of maintaining its massive footprint obliged Bank of America to double down on cutting expenses. At present, it has three "distinct workstreams of expense initiatives" underway. First, it's seeking to reduce costs in its consumer real estate division primarily through the sale of third-party mortgage-servicing rights -- an intangible asset that mortgage originators retain after selling the underlying mortgages to institutional investors. Second, it remains focused on reducing litigation expenses. And third, an institutionwide program is aimed at cutting overall headcount by 30,000 and expenses by a purported $8 billion a year when all is said and done.

Thus, the experience on the customer level is likely to be less personal interaction.

With respect to its 40 million retail customers, while Bank of America pays lip service to improving the customer experience, the reality is that its priority is to reduce how much it costs to service them. Its euphemism for this is to "optimize the delivery network," which consists of migrating customers "from direct contact to self-service channels" -- that is, mobile and online services.

This is reflected in some of the more prominent metrics that Bank of America cites to investors nowadays, including the number of active mobile customers (currently 14 million) and, specifically, how many checks are deposited each quarter via its mobile platform (11.7 million in the three months ended June 30).

It's tempting at this point to conclude that Bank of America has learned its lesson. And, in fact, at least in the short run, there's a strong argument that the bank has gotten away from aggressive means to generate bottom-line growth, the majority of which is likely to come instead from cutting costs.

But net income can only grow for so long via expense reductions. At some point, the top line needs to contribute as well. And that's where Bank of America will likely come up against the same issues that it's fought to extinguish since 2008.

Bank of America's leaders have spoken clearly about where the company will look for growth going forward. As its chairman Charles Holliday said at this year's meeting (emphasis added): "Our management team led by our Chief Executive Officer created a strategy 3.5 years ago to simplify this institution and focus on growing our business with existing customers." How will it do so without raising fees or aggressively putting customers into products that might not be suitable?

It won't.

Part III: Root causes
Unfortunately, Bank of America is unlikely to grow profits without further undermining its reputation for two reasons: It probably can't, and it doesn't intend to. The company is locked into a business model that alienates its customers by deep-rooted industry dynamics and its own culture.

Basic financial products are commodities. Similar in appearance across banks, FDIC-insured deposits, home loans, checking accounts, or debit and credit cards, are a lot more like airline tickets or salt than one-of-a-kind drug discoveries or branded tech gadgets. That's because when a bank hits on a successful product, there's little to stop competitors from copying its idea.

So in the decades leading up to the financial crisis, major banks hit on two interesting ways to compete. First, provide the lowest sticker price possible with offers like "free" checking accounts, but make up the difference by cutting corners and charging hidden or bogus fees.

And second, get really big. Since customers didn't have many other ways to distinguish the apparently identical "free" banks, they tended to pick ones that offered the most branches and ATMs.

But the pre-crisis rush to get larger by building more branches and acquiring smaller competitors didn't end up making banks more efficient. Instead, the extra physical locations and megabank overhead also meant more expenses to recoup by charging still more hidden fees. Big banks are significantly more likely to charge hidden fees than smaller regional and community banks and credit unions.

"I think our mission is to produce massive amounts of profit."
The dual get-big-and-make-money strategy calcified into a business culture that you see neatly summarized in former Bank of America CEO Ken Lewis' 2008 reflection: "I think our mission is to produce massive amounts of profit."

The reason Bank of America won't consider reforming how it treats its customers is that it's not particularly focused on how it treats its customers in the first place. Moynihan practically conceded this back in late 2009: "We had such a sales culture that it could overwhelm the service culture."

Consider its strategic response to the financial crisis. Although the specific practices have changed since Moynihan's elevation to CEO, cultural continuities include a fixation on near-and-medium-term profits and insensitivity to customer concerns.

For example, Bank of America achieved poster child status in a national mortgage servicing scandal that has resulted in allegations of lying to homeowners that has so far cost tens of billions of dollars and spectacularly bad press. Yet the bank's words and actions suggest that it's actually pleased with its mortgage servicing practices.

In analyst and investor conferences, Bank of America executives explain that the mortgage servicing group has had two primary goals: cutting costs and pushing down the number of troubled loans as quickly as possible (in large part through foreclosure).

Executives don't emphasize the challenges of creative loan modifications and forbearance plans to help customers stay in their homes, or even streamlining the paperwork nightmare to improve the accuracy of its court filings and reduce the number of illegal foreclosures.

By August 2011, a full year after the foreclosure robo-signing scandal first attracted national attention, Bank of America actually took Terry Laughlin, the executive running that division, and promoted him to Chief Risk Officer, responsible for overseeing the entire company's governance and strategy for handling legal, operational, and reputational risks. That doesn't make sense if your main goal is compliance.

During the next quarterly earnings call, Moynihan summarized how successful the unit had been: "We continue to push through the process of cleaning up the delays and foreclosures. We continue to make good progress there."

In 2012, "An area where we continue to focus is our Legacy Assets and Servicing business.... we continue to see progress here. The number of delinquent loans, those are 60-plus past due, are down 24% from a year ago to 936,000 at the end of September.... We expect to see further reductions....we're reducing costs."

This summer, CFO Bruce Thompson updated, "as we look out and as we look at getting through and new Legacy Assets and Servicing being the last big piece of the expense reductions, clearly that efficiency ratio needs to get in the mid- to high 50s as we get through the Legacy Assets and Servicing [sic]. And I think if you look at that type of efficiency ratio, you tend to get to the types of returns that you'd expect us to earn on tangible common equity."

Last week, Moynihan crowed, "We continue to make progress on our expense initiatives, remaining on track to deliver the cost savings that we told you about 2 years ago in New BAC and also reducing the cost in our Legacy Assets and Servicing area."

One way to understand the institution's behavior would be to look at the work of Hannah Arendt. The German-American political theorist, whose analysis of bureaucracy is second-to-none, observed in The Banality of Evil that most damage isn't committed by sadists, but rather by ordinary people acting through bureaucratic institutions that normalize and systematize bad behavior. "Most evil is done by people who never make up their minds to be good or evil." Various psychology experiments -- most famously Stanley Milgram's Obedience to Authority -- have since confirmed that ordinary people will do awful things if you put them in the right situation.

This is the environment that produces Bank of America's most high-profile customer complaints: a newfound laser-like focus on streamlining operational processes and smarter customer relationship-management, combined with apparently institutional indifference to the effects of its behavior on the lives of its customers.

In retail banking, "we've moved from a product focus... to a customer relationship focus," the bank explains in its most recent annual letter to shareholders. Of course, this hasn't been a shift from valuing bigness and profits to focusing on what's best for customers, but rather to more carefully managing customer relationships.

In late 2011 Moynihan shared the mentality behind the new strategy: "We have 42 million [now 40 million] retail customers and many of those, don't contribute the cost of service, overcome their cost of serve [sic]. On the other hand, our preferred business, you can see is much more profitable and represents 8 million customers."

The old, clumsier Bank of America might have indiscriminately underserved all 48 million, but no longer under the new "relationship" strategy. "We're going from a one-size-fits-all service model to a differentiated model to help protect the customers who are very -- who provide a great return for us, and make sure that we have no attrition of those customers who aspire to get there."

The new Bank of America's stated goal is to become a two-track bank. In our opinion, it seems to want to protect 8 million of its customers from its most aggressive practices so that the bank can more effectively "connect" them to its more profitable products. In the meantime, it will try to collect enough money from the remaining 40 million people to cover its massive overhead without "attritioning" them too badly.

This would be a strategically smarter, more customer-relationship-savvy bank, but not necessarily a bank with reformed values. Any improvements in how Bank of America treats the bulk of its customers will be marginal, incidental to its strategic goals, dependent on the success of its cost-cutting efforts, and subject to withdrawal as it discovers new revenue and cost-cutting "opportunities."

No customer revolt -- yet
A variety of reasons exist for why Bank of America and some of its peers have been able to survive for so long despite antagonizing their customers. Not all are factors banks will be able to rely on in the future.

Many of the abuses, like hidden or bogus fees, are, well, hidden. Customers oftentimes don't discover that they've been paying such fees until years later, if ever. And it wasn't until the financial crisis that we began to see such widespread media awareness of the problem, though that seems to be changing.

Second, banks know that customers think it's a logistical and financial hassle to switch to another bank. Customers who feel locked into a relationship are less likely to leave when a bank treats them poorly. And high switching costs partially remove the business incentive to focus on customer satisfaction and retention, freeing banks to emphasize initiatives more meaningful to the bottom line like acquiring customers, upselling customers, charging fees, and cutting costs and services.

Source: wratings.

Switching costs is the same reason some cable companies, whose customers have to pay fees and jump through hoops when they want to cancel service, feel emboldened to provide customer service that's consistently ranked near the bottom of all industries.

And as with the cable industry, high market share concentration means that bank customers feel somewhat trapped. The biggest four banks -- Bank of America, JPMorgan, Citigroup, and Wells Fargo -- control almost half of the market, and none perform especially well in customer surveys about quality or trust.

What's more, financial products went largely unpoliced for decades. There hadn't been any federal regulator dedicated to policing consumer financial abuses until the Consumer Financial Protection Bureau was created in 2010.

Finally, Bank of America arguably did manage to fail under the weight of all the toxic products it sold to customers, but, being perceived as too big to be allowed to collapse without wreaking even greater havoc on the economy, it was bailed out by the government. It's unclear what would happen next time. The 2010 Dodd-Frank Act doesn't end the problem of "too big to fail", but it did ban bailouts and attempted to set up a more orderly process for allowing banks to fail without quite so much havoc. It's possible a future Congress and President would rescue the company again, though a thoroughly fed up public might demand much more punitive bailout terms.

IV: Conclusion
It's difficult to see how Bank of America outperforms over the long term.

We see a company saddled with the worst customer reputation in its industry, if not the country. Management will need to find new ways to boost profits in order to earn their bonuses. Yet Bank of America's history, business model, industry dynamics, and business culture strongly suggest that the company isn't going to grow without indulging in practices that remind customers why they dislike the bank so much in the first place.

Bank of America appears both unwilling and unable to address the causes of its reputational risks through improved practices and serving customers. Without sound practices, multibillion-dollar legal costs are lurking behind every corner. And without customer service, the company is vulnerable to disruption.

Maybe disruption will come from institutions with better reputations like Union Bank, Ally Bank, or Charles Schwab. Or maybe from new tech-savvy banks with a lower cost structure like Bank of Internet USA. Or from a company that doesn't yet exist.

But there's a tremendous opportunity waiting out there for those who can figure out how to serve customers better than Bank of America. And success requires clearing a fairly low bar. You can bet someone will eventually figure out a way.

No Pitch


Read/Post Comments (74) | Recommend This Article (71)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 26, 2013, at 10:26 AM, whawha wrote:

    If BOA partnered with the second worst ranked employer in the country, Express Scripts Inc, they could rule the world...

  • Report this Comment On October 26, 2013, at 10:37 AM, PEStudent wrote:

    The writer acts as if he knows the prescription to solve BAC's problems better than the bank's officers. One wonder's why he hasn't marched into the headquarters and demanded the CEO's job since he knows so much more.

    The basis of the writer's complaints center on BAC's aggressiveness and whether or not the bank has "learned its lesson" and that the company is saddled with an awful reputation - the last being what should hold the bank back.

    He doesn't seem to realize the average bank customer sees the other banks with similarly bad reputations!

    He also doesn't factor in that BAC has done more to get its fines and court cases behind it than most other big banks. BAC's earnings should grow substantially due to that alone.

  • Report this Comment On October 26, 2013, at 10:59 AM, Rebel wrote:

    There is at least one bank I hate more. The Federal Reserve.

  • Report this Comment On October 26, 2013, at 11:40 AM, floressm wrote:

    How does someone (myself) who was a victim of the unfair practices of BOA regarding a Countrywide mortgage where multiple attempts to modify and/or Short Sale were declined due to breakdown in the process (deadlines missed, papers lost, etc.) resulting in a foreclosure? My credit is ruined and I can't get a decent paying job because credit history is a determining element to getting hired?

  • Report this Comment On October 26, 2013, at 12:03 PM, mythicalmike4 wrote:

    This article reads like it was written 2 years ago in the height of the hate-mongering attacks on FI's. Please focus on actual research and advise instead of presenting one-sided research and commentary. I could easily write an article that presents the opposite of every point in this story which shows its usefulness to MF readers. Come on guys --- you are better than that.

  • Report this Comment On October 26, 2013, at 7:45 PM, louismoore1 wrote:

    In 2007 I loved Bank of America and believed it to be the best bank. By 2011 I had joined the ranks of those who hate the bank and believe it has literally fallen apart at the seams. Nothing happened with our portfolio, net worth, or income. In fact, during that time when the nation was experiencing economic turmoil, our finances were steady and strong. So, why would I despise the bank? It lied about who really owned my mortgage, on which I was paid up years ahead (and unlike many Americans never even remotely underwater). After investigating thoroughly, I figured out that the mortgage had been rolled into one of the bank's packaged products to be "sliced and diced" and sold to investors. Since I was helping prop up the "investment package" of course the bank wanted to keep me from refinancing and learning the truth about who really owned the mortgage. Then the bank's HSA department and its Merrill Lynch departments both messed up tax reporting that caused us an audit, which ended with the IRS acknowledging that we made no mistakes and did not owe Uncle Sam one more single dime and that the bank was at fault. I could go on with other mishaps involving stupid bankers who clearly never learned the basics of addition, subtraction, and honesty. By 2011, I was looking to return to my former credit union and for a new locally owned bank to do business with. Truly amazing how quickly BofA set out to destroy itself.

  • Report this Comment On October 26, 2013, at 11:51 PM, wavotrade wrote:

    Currently working for BAC, I agree completely with the article. IMHO there was something overlooked.

    BAC is a difficult place to work if you are a minority. I have worked at two BAC banking centers. The first one had 23 staff. There were only two of us minorities of the 23. I was told it would be difficult to bridge the culture gap. The one I am at now has 13 staff. Again, only me and one other minority and the other one is leaving. This one was more difficult than the first. I am the only college grad there and white. Who would have thought?

  • Report this Comment On October 27, 2013, at 8:30 AM, countryjoe29 wrote:

    " Another employee admitted that "her superiors pressured her to process applications as quickly as possible but to keep her opinions to herself."

    Wow...imagine a place that insists their employees just shut up and work! Horrible!

  • Report this Comment On October 27, 2013, at 8:48 AM, Rusty56 wrote:

    The authors are fairly clueless, the article stinks. BAC made 1/3 of all commercial loans last year. 50% of Americans still have a banking arrangement here. The number of banks is just under 6000 now and continues to dwindle. That leaves the largest banks in a fantastic position to make more money for us shareholders long term. Ken Lewis was an egotistical idiot. Brian is a good guy who is on the right track. Give him a break he is changing the culture here for the better.

  • Report this Comment On October 27, 2013, at 9:20 AM, Rusty56 wrote:

    Hey Maxfield, how is it that you actually own shares of BAC?? Seriously after writing such an article how can you possibly own any shares here?? How many do you own - 5 or 10? What a joke you fools are? Any anyone who subscribes to your newsletters must be extremely gullible.

  • Report this Comment On October 28, 2013, at 5:18 PM, zgriner wrote:

    There's only one word to describe why BoA has survived: SHEEPLE.

    Sheeple are too lazy to find another bank, savings & loan, or credit union because they believe they are all crooked and out to get as much fee money as possible.

    Sheeple don't believe that free banking can actually be free, as long as you don't do stupid things like try to pull out more money of your account than you have, over and over and over.

    Sheeple don't want to go through the hassle of switching over all their automatic deposits and automatic withdrawals. It requires they make sure the balances between the old and new accounts are timed to pay all their bills.

    Sheeple just love paying huge fees to get at their money from foreign ATMs. They believe it's the cost of doing business with BoA.

  • Report this Comment On October 28, 2013, at 5:46 PM, Geojockey wrote:

    I own no B of A stock; but as a former regular banking customer of theirs, I can attest to the general penny-squeezing. In the short term it works; in the long term, customers grow tired of it and land at credit unions, as I did years ago with our checking accounts. And the communication gap is astounding- In 2011, when we tried to consolidate our first mortgage and our equity line we went directly to B of A who carried the loan, and were told that we could refinance (with substantial fees) and roll the second mortgage into the first, but the interest rate would remain the same (5.75% as I recall). We then went to a mortgage broker and locked in 4.25%. Who carried the refinance loan? B of A! And now they bombard us with equity line offers....

  • Report this Comment On October 28, 2013, at 5:52 PM, sails2 wrote:

    Our local branch in St. Michaels, MD, was closed this summer. There is not even an ATM left. The nearest BofA ATM is over 10 miles away. To get cash I need to go there or pay a fee if I want to use my BofA card. We are stockholders and Preferred customers. When I called Annapolis to encourage BofA to put an ATM in St. Michaels my call was not even returned.

    This is abysmal customer service. We are slowly switching to Schwab Bank where the service has been very good.

  • Report this Comment On October 28, 2013, at 6:01 PM, xetn wrote:

    An interesting article on BofA and banks in general:

  • Report this Comment On October 28, 2013, at 6:02 PM, dsliesse wrote:

    I was only 5 when my family moved from non-BofA territory to a state where it was, in effect, one of two choices of banks. Thus, my story is anecdotal but still told by my parents.

    What it boils down to is that when we moved in 1966, just about everyone warned my parents not to go with BofA but to use the other bank. Experience over the years has done nothing to show that advice was at all faulty. I had an account there for a short time as a teenager, and a credit card account years later that remained open for at least 2 years after I requested it be closed.

    I can't really speak to this bank as an investment, but I do think it will help immensely if they would just admit publicly that they couldn't care less about the little guy and are only interested in humongous accounts. For my personal banking I'll stick to my credit union, and for my business banking to a regional bank that isn't showing a lust for expansion (bigger often is not better).

  • Report this Comment On October 28, 2013, at 7:10 PM, boriswart wrote:

    I became upset with Bank of America when they started calling me on the phone in the middle of my grace period to harass me. Since I had tenants in my home that almost never paid the rent on time I could do nothing to remedy the problem. Each time they called they asked me for the last 4 digits of my social security number. I declined to give out my SSN over the phone they then asked for my home address which I also declined to give over the phone. They continued to all on a daily basis until my mortgage was paid in full for the month.

  • Report this Comment On October 28, 2013, at 7:59 PM, Iggywine wrote:

    Having been a customer since 1967, I quite frankly think this is totally overblown. B of A isn't always the first to offer a service, but it does offer EXCELLENT online banking and I like the almost nationwide extent of their ATM network. Yes, we had a HELOC that was cut from $200K to $100K during a re-fi but that was at the depths of the Great Recession in 2010, so I can't totally blame them. Ken Lewis deserves the lion's share of the blame for the Countrywide acqusition, and I agree that Brian Moynihan has been making yeoman's efforts to turn the operation around - but it's like an oil tanker - it will take some time.

  • Report this Comment On October 28, 2013, at 8:02 PM, Jimbo30452 wrote:

    I had to deal with BoA to settle my sister's estate - they were horrible. I only wanted a single point of contact to keep them updated on progress of selling house.

    Despite untold hours of effort, not one of which was productive, I never did receive one.

    I could tell you of many horror stories, including many statements they made that were never followed up on, but the bottom line is they are the worst.

    I am so glad to be done dealing with them!

  • Report this Comment On October 28, 2013, at 9:42 PM, billr44 wrote:

    I could have sworn that CitiBank has the, er, honor, of being the world's worst. If BofA beat them out, dang, they must be bad!

  • Report this Comment On October 28, 2013, at 10:36 PM, szcz wrote:

    As a lawyer/small businessman, I use four different banks for various banking purposes - BAC, Wells Fargo, PNC and SunTrust. These banks are within a three block radius of my office.

    Without question, BAC provides the poorest service. Most of the employees are arrogant.

    I would never borrow money from or refinance my mortgage with BAC.

  • Report this Comment On October 28, 2013, at 10:47 PM, Dashboard27 wrote:

    People really should get out of the house more, and get into a credit union. The not-for-profit model creates a much more customer-friendly situation.

    Commercial banks like BoA are constantly looking for new fees to pump their bottom line.

  • Report this Comment On October 29, 2013, at 12:50 AM, Pat4Ra wrote:

    I was a premium customer and received abysmal service, they charged me fees as their computers were not linked on my balance, and would remove them, but it just continued and every time I had to go into the bank t get it corrected, and not one of them apologized. There is no ownership as it is huge and the left hand doesn't know what the right hand is doing..In fact they could not even see all my accounts on one screen when I moved 3 times...

  • Report this Comment On October 29, 2013, at 7:19 AM, funfundvierzig wrote:

    And the Chairman of the Board of Directors of Bilk of America Corp, Chad Holliday, just happens to be the ex-Chief of the most unethical and sleazy chemical and seeds conglomerate in the world, the DuPont Company! Imprelis, Tell Us. Toxic, cancer-causing Teflon chemicals, tell us. Criminal price-fixing, tell us, defrauding the U. S. District Court in Missouri and investors, tell us...undsoweiter.


  • Report this Comment On October 29, 2013, at 10:38 AM, LilTrooper wrote:

    I have a morgtage with BA and filed several complaints with the NYS Banking and the Fedreal Gov for solicitation after I demanded they stop callling. I had other problems with BA that were completely against NYS banking laws.

  • Report this Comment On October 29, 2013, at 4:17 PM, Jerry2014 wrote:

    I live in a small community and know several employees at several branches of Bank of America.

    I have been treated with respect and I have spoken to friends that are in the minority community and they tell me they have been treated with respect.

    The folks that work there for many years work hard, treat their customers with respect and I them.

    They are my neighbors, friends, and if I disagree with anyone I sit down and discuss the experience that may have bothered me.

    I do not call on the phone or e-mail them. I walk into the branch and sit down in person the old fashioned way of doing business.

    I have been with the bank for over 30 years and will stay with them for the next 30.

    End of Comment: Banks, Stores, Businesses are made of real people that produce real goods and services.

  • Report this Comment On October 29, 2013, at 5:16 PM, SailPapillon wrote:

    We're in the "preferred" customer league. Got there when we were building our boat and needed a loan. We were told to move all financial business to BOA. This was back when Moynihan was in charge of Banking. Years later, with the loan mostly paid off (never late), we were turned down when we tried to get cash out to cover some improvements on the vessel. Our other assets with BOA more than covered the amount we wanted to borrow: it just made sense to borrow at a lower rate than what we can make (following MF!). We were told NO. NO. NO. While they required total surrender, there was absolutely no loyalty for our business. Our credit union refinanced, paying off the BOA loan and getting cash out. The credit union now has our business, and I can't wait until others wake up and tank the behemoth. (As though they will.)

  • Report this Comment On October 29, 2013, at 7:23 PM, Instrument wrote:

    I left BOA ~15+ years ago because they sued the Boy Scouts of America, a wonderful organization. This information is just another expose of the darkness that drips from the minds of the leaders of this bank.

  • Report this Comment On October 29, 2013, at 11:04 PM, KMhit123 wrote:

    Everyone's looking for a villain. As the article points out...BofA catches most of the heat because they're the most connected with the average consumer. I work for Wells Fargo, but have bank accounts with BofA, and don't really have a problem with their service.

    ....and to the guy who made the comment "the darkness that drips from the minds of the leaders" ....come on man. Of all the CEOs at the major banks, Moynihan is probably the least of those who deserve that comment. I've also never heard of this Boy Scouts lawsuit you speak of, and would be interested to hear the details...if you have them.

  • Report this Comment On October 30, 2013, at 12:14 AM, SkepikI wrote:

    Several weeks ago I nominated BOA for a Darwin Award. This is the first article from MF that I have seen take an honest whack at that position. With good reason.

    What do you think of the long term prospects for a business that trains their employees to scam their customers?

  • Report this Comment On October 30, 2013, at 4:49 AM, secretgreg wrote:

    This writer has nothing better to do then to judge a bank that was there after the great earthquake. I see nothing relating to his rants about how bad this bank is. This bank has turned a page and is getting better. I have a mortgage with them and am completely satisfied when I needed to have it modified because of lost income. I tend to agree with so many statements that someone paid this writer to talk bull crap in efforts to bring this stock down. Maybe he should be looking for new employment in Obamacare. Seems ho can talk negative there. I bet he's even a democrat. I'm a republican and the only time I talk to Obama supporters is when I order fries which is where this guy should be working.

  • Report this Comment On October 30, 2013, at 9:12 AM, TMFBane wrote:


    Thank you for your thoughtful and respectful comment. I couldn’t agree more with your main premise. I’m confident that the overwhelming majority of individuals at Bank of America are fine people who are trying to do their best for their customers, while also delivering on the aggressive goals of the management team.

    Clearly, there’s a problem, however. The bank’s reputation is horrific and seems to be getting worse each day. That’s why we decided to write this special report. We wondered how a major bank could ever grow, while being reviled by its customer base. In the piece above, we did our best to consider that question.

    I recently read where Jeff Bezos’ goal “is to raise the bar across industries and around the world, for what it means to be customer focused.” That might be a great way for Bank of America’s management team to proceed. How can they focus on the customer in a meaningful way?

    Thanks for all of your comments, everyone!


    John Reeves (TMFBane)

  • Report this Comment On October 30, 2013, at 9:44 AM, hallaquila wrote:

    Besides being bailed out by taxpayers who are still suffering as a result of the deregulated banks whose unpunished banking fraud and greed cost Americans $15 trillion in household wealth, 4+ million lost homes, 9 million homes underwater, and 9 million jobs, American Express was one of the winners from the Bush-Cheney-GOP change of the bankruptcy laws that benefitted not consumers but the banks and credit card companies. The GOP claimed that cardholders were abusing their credit when in fact when the law was passed most bankruptcies were due to overwhelming medical and hospital bills.

  • Report this Comment On October 30, 2013, at 11:58 AM, SkepikI wrote:

    ^ The idea that "The Banks" hold "The Banks money" and not yours, your parents, your cousin's.. so if they get stiffed by dead beat debtors its ok should raise some serious soul searching. Similarly the idea that Banks should be bailed out with Other People's Money (OPM) and not their own, as they and their shareholders, bondholders and employees get shielded from ordinary bankruptcy procedures should raise eyebrows and hackles.

    There are no useful reasons the US should make bankruptcy life easy for either big banks OR for "cardholders, consumers, and ordinary folk" when they goof their financial life. Desperate circumstances may create the justification for restructuring the way bankruptcies USED to operate in the US, but non-payment of just debts as a convenience is NOT in our national interest, nor in your individual interest if you are a saver and/or investor.

    I never lived in the Great Depression (I did live through both of the great recessions 80's and recent) but the example of my Great Uncle is legend in our family. He owned one of the early electrical appliance stores in the 20's and was doing well until his business partner absconded with all the money, he had to close and moved 2000 mi to San Francisco to find a job. Cleared by Bankruptcy, he worked until the 50's paying off his creditors one by one till they were all whole. Uncle Mike was never rich, except in character....

  • Report this Comment On October 30, 2013, at 12:03 PM, wishdom wrote:

    This article is full of irrelevant, illogical statistical comparisons. How is asset amount related to GDP of any country worthy of a graph? How are liability payouts compared to other banks in raw numbers unrelated to any percentage comparison relevant? This article is a statistical farce. I have been one of those little customers of B of A for forty years. They have messed up a deposit exactly once. I have a gajillion free ATM's everywhere I go, I never pay an ATM fee. I have free checking. I get the same non-interest as other banks and my credit union give. B of A's reputation is fine with me.

  • Report this Comment On October 31, 2013, at 1:00 AM, mikecart1 wrote:

    Like others have said this article talks mostly of the past. When it comes to investing in BAC, you do so because it is one of the Top 3 banks past, present, and future. It isn't going away and at the very least, it isn't going down in stock price. That alone makes this stock one that can rise significantly over the next decade.

    As for customer service, they are far better than the main credit card companies, half of all restaurants, and the majority of service industry companies. Are they perfect? No. But who is?

    And the section about $5 fees only explains half the story of who gets these fees and why.

  • Report this Comment On November 01, 2013, at 10:15 AM, TMFBane wrote:


    Thanks for your comment! I appreciate your point of view, though I don’t agree with it. Yes, we analyzed the past, but that was so we could create a framework for thinking about the future. As a result of that analysis, we just don’t believe that all of the lawsuits, settlements, and customer complaints are a pre-crisis aberration. No, we think much of it results directly from the company’s business model and culture. To assume everything changed for all time when Moynihan came on board feels like an overly optimistic assumption, in my opinion.

    One question I’d respectfully ask of Bank of America bulls is this: at what point are all of the lawsuits and all of the customer complaints a problem? When you consider the recent track record, it doesn’t seem unreasonable to think that it’s already a problem.

    Foolish best,

    John Reeves (TMFBane)

    PS. Just wanted to respond to the commenter who called us out for juxtaposing the bank’s assets with the GDPs of various countries. They are, of course, not the same things. Our aim there was to help readers get their heads around $2.1 trillion – it’s a big number. Anyway, it was just an illustration.

  • Report this Comment On November 01, 2013, at 10:45 AM, SkepikI wrote:

    ^ <One question I’d respectfully ask of Bank of America bulls is this: at what point are all of the lawsuits and all of the customer complaints a problem? When you consider the recent track record, it doesn’t seem unreasonable to think that it’s already a problem.>

    Far too respectful and far too late. BOA has engaged in behavior contrary to the long term interest of its customers and itself for many years. It is NOT a RECENT nor a aberrant event. One attribute of "Big" that I don't see commenter or the authors including in their analysis is the concept of inertia. Very large institutions like BOA can bumble or maybe even scam their way along with bad basics for many years. The example of ENRON comes to mind. And like Enron, BOA may learn very slowly and at some length along with its shareholders what I consider the lesson of Enron: Bankrupting your CUSTOMERS is not a long term business strategy.

  • Report this Comment On November 01, 2013, at 11:54 AM, dewolfson wrote:

    I have friends who work at BofA, and it's all true.

  • Report this Comment On November 01, 2013, at 12:03 PM, Bosco83 wrote:

    This article is bunk. Bank of America was the best performing stock on the entire Dow Jones last year and just beat on earnings again a few weeks ago. Allot of the bad stuff was created by Countrywide Home Loans and B of A got stuck holking the bag. But the bank is very very profitable again. I bought the stock when it was only $5 a few years ago and it has almost tripled. I am not selling anytime soon.

  • Report this Comment On November 01, 2013, at 12:48 PM, truimage1 wrote:

    I believe you will see further expansion from TD in USA markets. Currently their focus appears in the north east. If they can make further acquisitions and bring their developed customer service from Canada south of the border you will see a new big bank across the USA.( Satisfied Canadian customer).

  • Report this Comment On November 01, 2013, at 1:24 PM, Sandy2013 wrote:

    I own a little BoA stock. I phoned investor relations and eventually got to the "escalation team" at 1-800-252-6000. I told them I am so glad the DoJ fined BoA and I am hoping some of the CEOs get major jail time for their part in causing the financial and foreclosure meltdown that our country is still dealing with. I think as stockholders we need to start speaking up in many regards to many companies about issues such as paying a living wage, downsizing those horrible CEO salaries, etc.

  • Report this Comment On November 01, 2013, at 1:55 PM, businessguy wrote:

    The real reason that many BofA customers haven't revolted is because most are probably credit card customers that BofA private labels to other companies. These companies get the best pricing from BofA and the retail customer doesn't care because they want the rewards offered by the retail store, airline, or whatever that the company offers in return for using their card that BofA comps them on. I had one of these cards for a while and then when I called about an issue and was sent over to BofA for service that's when the wheels came loose. Not only were they not helpful in disputing a charge issue - 6 months later they tried to jack my intro rate up from 6-8% to 21%. Was never so angry with a bank before. Thankfully, I was able to refinance the card with Chase and gave up the rewards for a different program that was underwritten by Chase instead. Never happier! Things may have changed under Moynihan's leadership but Ken Lewis is nothing short of a crook - I'm surprised he never ended up in jail...

  • Report this Comment On November 01, 2013, at 2:03 PM, skyisfalling wrote:

    One way that I could have benefitted from a discourse like this if the writer would have separated case that happne( d) because of Countrywide and Merryl Lynch. Everything else is only bellyaching.

  • Report this Comment On November 01, 2013, at 2:03 PM, BofAsucks wrote:

    This Bank is a horrible place to work and and do business with. I was with the Original and True Bank of America in California for 32 years. It was a great place to work. We were all involved in the community and were a team. We made a ton of money and it was a fun place to work with spirit and a true caring for its customers. Once Nations bought us out we quickly sank. Nations has no clue on how to grow a bank . They just buy things and say that is growth. They dont know how to organically grow a bank. They have no clue on cross selling to existing customers. The Charlotte Bank people have no culture. No connection to the community. They can run all the commercials they want but they just dont care about its people or the depositors. They have chased off so many great strong bankers to the competition. Nations Bank is horrible. When I retired the stock was at $49. Its now $13. I saw this coming and sold everything weeks after leaving. They had been cooking the books for years and just fee'd people to death. I was once a person who would wear a T shirt with the logo on it around town. People looked up to me and my fellow staff that worked at the old BofA. Not anymore. Now you are called out in public for working for this huge uncaring beast. So many community banking centers have been closed leaving community's with nothing. They dont care. Long Live The Old B of A. Commercial's dont make a bank. Actions do. This bank was done.........YEARS AGO.

  • Report this Comment On November 01, 2013, at 2:07 PM, Oenous wrote:

    Most of the foregoing comments speak to BofA as an investment. My comments are that of a more than 10-year customer, soon to depart for good.

    For the typical retail customer needing only deposit facilities, it's likely they're fine.

    However, as one of their "Platinum Privileges" accounts for the past two years (after being kicked out of Private Banking because, I was told, I had no Merrill Lynch account and didn't want or need one), everything you say about lousy customer service only understates reality. After one particularly frustrating experience, I commented to the so-called manager at the other end of the phone "BofA is not run by its managment any longer but by lawyers and computers". There was a pause and then the reply: "You're right."

    Two other local banks I deal with, one in Florida and the other in Maine, tell the same story: a constant inflow of new business from former BofA customers, both business and personal, who simply say they can't take it anymore. BofA's business model is flawed and the likelihood they can obtain any significant operating leverage off the 8 million preferred customers without substantially changing the model is dim.

    Brian Moynihan, whom I knew slightly years ago, is a decent and capable guy. But your point about the culture overwhelms that, and the layers of complexity and level of competence we've seen decline steadily at the local level does not bode well for what's needed to meet the personal service needs of their upmarket client base. Until these problems are fixed, folks like me will continue to go elsewhere, and your prediction will become fact.

  • Report this Comment On November 01, 2013, at 2:13 PM, BilboBaggins wrote:

    I planned on going into bank of america today and closing my checking account. I had a really bad summer and my balance was below $1500 for the last 4 months. Now I am back on my feet and got the BOA credit card paid off. But when I was struggling BOA charged me $12 per month in fees for my checking account. F-them. They bumped up my fees at the worst possible time.

    I opened an account with USAA this week. There is no minimum and no fees. I will have a bank that doesn't kick me when I am down.

  • Report this Comment On November 01, 2013, at 2:31 PM, Mwn560 wrote:

    Ok, during the late 80's I had a checking and savings account with BofA. I had 462 dollars in a savings account. When I moved I changed my Checking account address, but did not change my savings account address. They sent a letter to my old address saying that I had to hold a minimum of 500 dollars in my savings account or they would charge me 25 dollars a month to service the savings account. As it all turned out they just stole 462 dollars from me. So I switched to a bank called Security Pacific. They bought the bank and they were my bank again, so I switched to Crocket bank?, and they bought them, so they were my bank again, My countrywide home loan sucked me in again. I recently (1-2 years ago) refinanced my house, and had to make it very very clear to the lender that I won't pay if my loan is turned over to BofA. The loan was sold to a different company that will probable sell it to BofA at some time in the future. It's tough to get rid of them. I myself will do all it takes to avoid doing any business with BofA. If the rest of you got no problems with them, good for you. I'm not going to try to start a movement against them. I'm just going to try to avoid any business or contact with them myself. Go to your bank to draw on your emergency fund and they stole it. Sorry guy, it's gone. A great company that blantly steals, good for the shareholders?

  • Report this Comment On November 01, 2013, at 3:10 PM, jumpngeorge wrote:

    I frankly don't trust any bankers to have anything but the bank's interest in mind. I walked into chase with money from the sale of our Brooklyn apartment. Doors opened, guys with titles came in...I was promised the astounding interest rate of 3.5%. Now the account wasn't insured. The bank was going to invest the money and give me 3.5%. So they get the rewards and I assume all of the risks. My skin crawled. I took all of my money out of Chase within 3 months.

  • Report this Comment On November 01, 2013, at 3:49 PM, scol409 wrote:

    I had all of my accounts at Bank of America and trusted them. I was buying a new house and decided to use BOA for a mortgage. Got immediately approved and thought things were moving along but I was not pleased because no one told me I would have to deal with 3 different offices in 3 different states, each office giving me different information and deadlines. I faxed countless statements, documents, pieces of information over and over to all of the respective 'loan officers'. We had several deals stacked just waiting to close .... the people who bought my house had buyers for their house, etc. etc. After getting close to my 'closing date' with no actual closing set --- I told my loan officer to just forget about the mortgage -- that I would pay cash for my house instead. Two weeks later .... sitting at the kitchen table in my new house that I paid cash for --- I opened a letter from BOA saying they were sorry... they couldn't approve my loan because of INSUFFICIENT FUNDS. I marched to the bank and closed all of my accounts. Moved to another bank where I am happily investing all of my 'insufficient funds'. Did BOA even care that I left? NO. Not one person even asked why or showed concern. I will never do business with them again and I will warn all of my friends, relatives and anyone who will listen.

  • Report this Comment On November 01, 2013, at 3:51 PM, Tiingall wrote:

    I agree that the behaviour of BofA towards it's customers - the people who must trust the bank with their savings - is disgusting.

    But I unfortunately see similar behaviour in many banks. I stick with my bank - despite it's fines for corporate criminality and corruption - because they have services that match my needs which I can't get elsewhere. I'm sure there are many people in a similar situation.

    And despite my many complaints to my bank that I do not agree with the bank's criminal behaviour, and that I refuse to pay certain fees, and my loud complaints about such behaviour in the middle of the banking chamber, the bank takes no notice and continues with it's unethical, immoral and illegal business practices.

    My bank - HSBC - clearly has an established business model which includes an ongoing commitment to criminal and unethical practices, because - despite being found guilty and fined heavily in 2012 - they subsequently set aside a huge contingency to pay for expected future government fines.

    To the bank executives being rewarded with massive salaries and giant bonuses for creating big profits from the institution's (sanctioned) involvement in criminal activities - such as money laundering for Mexican drug cartels, financing terrorist organisations and funding illegal arms sales (as reported in a previous MF article on 2012 bank fines) - this is just doing business.

    It's all about money into their personal pockets without any personal risk of prison, fines or public exposure. The banking and finance system presently gives them the ability to be a criminal without the risks. The individual bank executives can get away with earning a living from drug running, arms sales, ripping off customers, unethical financial practices and other unethical or criminal activity because they do not go to prison and they do not pay the fines. The fines and sanctions are levied at the institutions.

    And who actually pays those fines? We do - the customers - in the form of lower interest on deposits, more fees and less service.

    The banking executives have successfully separated power and responsibility. They have the power to decide to involve the institution, and use our deposited funds, in criminal activities - for which they earn big personal financial benefits - without the risk of the regular criminal on the street.

    Just like they have the power to use our deposited savings, pension money etc to create financial scams that they know will go bad and our money will be lost.

    Via the bankers, our savings and pension funds are funding death, suffering, wars, drug businesses, unemployment and financial exploitation.

    How many bank executives lost their homes, money, yachts etc as a result of the legal cases against the banks over the sub-prime loan scam? How many have gone to jail over money laundering for Mexican drug cartels, illegally funding wars etc for which the Senate fined the banks? None?

    This personal impunity encourages the banking and finance executives to make decisions which cost many lives, along with our jobs and our money, and also generates immense suffering for many people; for example, unemployment in the USA is not expected to return to pre 2008 levels until 2020.

    Until there are personal consequences for the banking and finance execs who make the decisions - or are happy to turn a blind eye to the organisations' unethical and illegal activities - along with the accountants and auditors who conspire with them to hide or obscure such activity, then we will continue to have banks exploiting customers, creating recessions and making billions from criminal activity.

    Bankers and other finance executives - along with the supposed "professional" accountants and auditors - need to be made personally accountable for their institutions' criminal and financial behaviour.

  • Report this Comment On November 01, 2013, at 3:56 PM, pecan47 wrote:

    I just got served for a law suit from Bank Of America. over 4 years ago my husband became disabled and while he was waiting for a settlement on his disability, BOA wanted to settle their bill for less than 1/2 of the amt due, but we did not have it and could not say when we would. A week or so later he got his disability settlement, we tried to settle with BOA and they said it was too late and even with his lump sum from disability, it was not enough to pay the full bill. For a while collections agencies called us, but for the past year or 2 we got nothing, then all of a sudden we are being sued for the full amt. which we still can't pay in one lump. Of course the last months charges on the bill were humungous fees and late charges.

    We had continued to pay them for some time after he became disabled, but eventually got where we could not continue a few months before they refused our payment and turned us over to collections. At the very least they were incompetent due to all their internal regulations.

  • Report this Comment On November 01, 2013, at 4:26 PM, cdharris wrote:

    I hate BoA because of the abysmal customer service. They closed my account and bounced my checks when I had $17,000 in the bank. I had never been overdrawn at B o A. No one at my local branch would tell me anything. I was given a toll free # to call where I got a recorded message that said "If we closed your account, we don't have to tell you why." After dozens of phone calls, I finally talked to a lady who said they "might have closed my account if they thought I was in the firearms business". I have never been in the firearms business. A week later I got a check in the mail for my balance. No explanation, no apology. Later, I found out that BoA had done this to hundreds of customers who they thought were in the firearms business. They are the worst corporation in America.

  • Report this Comment On November 01, 2013, at 5:54 PM, rambotrader wrote:

    It is wrong of governments to not let big banks fail. Bad management should result in the end of a company and the emergence of a well run opponent.

    Bank of America was saved from bankruptcy and closure by taxpayer money pumped in to prop it up. Too big to fail was the slogan used I recall. But is you think that was bad enough watch out for next time around because all of the G20 nations are in the process of introducing BAIL IN ARRANGEMENTS as were used to bail out banks in Cyprus: this means that they YOUR MONEY if you are a depositor in the bank. This outrageous fraud has never before been allowed but apparently banks now control governments in the western world. Don't know about this? Of course not.....they haven't bothered to tell you have they. Funny that but we'll all find out the next time we have a GFC event or bank failure.

  • Report this Comment On November 01, 2013, at 9:55 PM, Templar wrote:

    Now why should ANY of this be a surprise to anyone?? SKAN*of America should have fallen years ago. They are categorically the most criminal organization on this planet, with a management team that would put any tin-pot third world dictatorship to shame in the length and breadth of the depravity of their stupidity and greed. Why is this Government not prosecuting this pack of thieves and crooks?? Break this criminal organization up into pieces and sell them off the the Chinese...NO ONE will miss this despicable organization.

  • Report this Comment On November 01, 2013, at 10:01 PM, linmarman wrote:

    As I read the article, all I could think of was how the experiences described and practices mentioned mirrored AT&T. Twins from different mothers, perhaps?

  • Report this Comment On November 01, 2013, at 10:30 PM, Hibiscusanole wrote:

    It does discourage its credit card holders from using their cards. It feels odd to be told that by your customer service representative. I don't use it, so we have a sort of relationship. I can believe they may have encouraged foreclosures, as they want to avoid holding debt.

  • Report this Comment On November 01, 2013, at 11:52 PM, cdharris wrote:

    They don't hold the debt. The loans were sold to suckers (investors) years ago. B of A is the "servicer" and makes fees for handling the loan and dealing with the borrower. They actually make more when loans go into default because they get to charge for all the calls and correspondence. They make the most when they foreclose. The investor doesn't lose either, usually, because most of the loans are guaranteed by Fannie Mae, etc. You, the taxpayer, are who really loses because of the bad loans B of A made.

  • Report this Comment On November 02, 2013, at 5:48 PM, cynicalskeptic wrote:


  • Report this Comment On November 02, 2013, at 6:17 PM, cynicalskeptic wrote:

    Sorry about those disrepectfull x's. They were inadvertant, but were in fact quite an appropriate expression of my own feelings. I have had my own "unpleasant" experience with BoA similar to that of cdharris (summarily and unjustifiably closed accounts), which I will recount after you publish equally enlightened comments on the practices of Chase and Citibank.

    Thanks for your responses to responses---They are the first indication I have seen of ANYONE on ANY SITE ever reading them.

  • Report this Comment On November 02, 2013, at 7:49 PM, TMFDiogenes wrote:


    We have written a bit about Chase from a similar perspective here:


  • Report this Comment On November 03, 2013, at 10:23 AM, TMFHurricane wrote:

    Here's a Foolish writer's bullish case for B of A:

    Fool on!

  • Report this Comment On November 03, 2013, at 4:08 PM, patrickj1962 wrote:

    I left BOA because of the Banks stance on gun rights and those companies that make them.

  • Report this Comment On November 04, 2013, at 11:14 AM, hmarto wrote:

    I agree with cdharris regarding the "abysmal" customer service. We had a mortgage loan through BoA and had nothing but trouble with them.

    They were showing that we had made late payments, but our payments had been made on time and had been cashed. Trying to get a person to talk to that could acutally help us was impossible. We just kept getting passed on to other people with no resolution in sight. We finally refinanced, just to get away from BoA and also challenged the negative items on our credit report which ended up being removed.

    We have since refinanced several times as rates drop, but my first question to the bank is always, "Do you sell your mortgage loans?" and "Do you sell them to BoA?" If they do, I am out the door!

  • Report this Comment On November 04, 2013, at 8:56 PM, pdhc2565 wrote:

    BAC should be Bankrupt of America!!!!! because that's what should have an ex-employee that served 25 years of service for Merrill Lynch...they ripped me of over a million in benefits and retirement to pay their lawsuits...that is what they do folks!!!! they are BANKSTERS...They rob from the rich and steal from the poor!!!!! Run don't walk if you have anything to do with this disgusting organization!!!

    History will repeat itself...BAC WILL GO DOWN for good next time!!!!

  • Report this Comment On November 06, 2013, at 1:13 AM, billmichael wrote:

    I must agree with those comments that feel this article is "old" as it speaks about Bank of America as it was some years ago. One example I find is the twice mentioned reference to the "unsustainable business model" of Bank of America that describes the bank's previous business practices as if they are current practice. At present, Bank of America clearly has no choice but to clean up its act or at the very least its image. One day when the spotlight is off of Bank of America it might backslide but for now, to survive it must deal above board.

  • Report this Comment On November 06, 2013, at 2:49 AM, aandyclaark wrote:

    When we talk about the customers of BOA customers never feels satisfied from the services whether it be credit card services or any other, few years back it wasnt like that but now this bank is not worth it.Just becasuse of poor service I had to shut down my account from there

  • Report this Comment On November 10, 2013, at 9:52 AM, jeffreychood wrote:

    One glaring thing this article fails to do is to discuss price relative to value. In other words, the article totally fails to consider price as a factor in a potential investment in BAC. Sure, BAC has some issues it is dealing with and may face some largely temporary headwinds. But even a bad asset can be a great investment at the right price. How can someone write an article essentially saying a company is a bad investment without considering the price at which you are being offered the business . . .

  • Report this Comment On November 12, 2013, at 5:28 PM, whyaduck1128 wrote:

    I'll buy stock in almost any company if I think it will yield above-average returns for me in the short- and/or long-term. Alcohol, tobacco, gambling, defense, firearms, you name it. I'd buy stock in a porno company if I thought it would accomplish my goals (I don't have to USE a company's products).

    However, I draw the line at the big banks, especially BAC, JPM, GS, C, and WFC. They are all vile beyond even the lowest standards, and I would probably feel slimy and disgusting owning even minor amounts of their stock. And if I had to choose between working for such a company and committing suicide, I'd say, "Give me a loaded 9mm and a couple of minutes, OK?"

  • Report this Comment On November 12, 2013, at 8:11 PM, kmacattack wrote:

    Whya duck, you should do stand up comedy !

    I try very hard not to buy stocks in companies which are abusive to customers and employees alike, like BOA. I have never owned and will never own tobaccco stock, partly because my dad died at age 46 of lung cancer.

    I owned Wal Mart Stock off and on until 2009 and I decided that I didn't want to subsidize the Walton Trust fund any more, since the 4 Walton "Children" are all now in the top 20 Billionaires in the US, yet as America's largest employer, they refuse to pay the overwhelming majority of their employees more than $7.50 per hour.

    They won't let most employees work more than 32 hours per week, so they are only able to make about $12,000 per year at a job which has no benefits and if they are injured on the job, Wal Mart will soon find a way to fire them.

    It REALLY upsets me that Wal Mart conducts seminars for their slave laborers, instructing them how to apply for food stamps and public housing. About half the "47% who don't pay income tax" are the working poor who are doing well if they have enough money to buy cat food for dinner. Costco WHOLESSALE, which is Sam's Club's prime competitor, starts employees above $13 per hour plus benefits. Costco sells everything at a 15% markup. Wal mart and Sam's mark products at the absolute maximum they can get away with, especially in markets where they have bankrupted all the competition. Wal Mart was forced to remove the slogan "Always the low price" BECAUSE THEY NEVER WERE, and Sam's was forced to drop the "WHOLESALE" from their name for the same reason. Yet since 2009, Costco is far more profitable than Sam's. Wal Mart Stock has gone from $57 to $75, a paltry performance compared with even the broad Dow average. Costco stock has moved from $30 per share to about $115. I wish I had bought Costco 5 years ago when I sold Wal Mart. My long time broker was unfamiliar with Costco and talked me out of it.

    I bought 1,000 shares of Wal Mart in 2001 at $56 per share and sold it in 2009 at $57. So, even including their paltry dividend, I lost about 30 percent to inflation.

    I bought Citibank stock in 2009 and it's up only about 20%, and I've felt guilty every day since I bought it, because I think they are just as bad as BOA, Goldman's, Wells Fargo, etc.

    Many people have no idea that when Greece, Spain, Ireland, Portugal, etc were tanking, that OUR US banks, primarily Goldman and Chase, had gone to Europe and marketed "derivitives" at the beginning of the recession in 2007. The same "Investments" that Goldman and Chase were selling as Blue Chip to one set of customers, and then betting against them and shorting them with another set of hedge investors 30 minutes later were the same piles of sh.t that they were selling in the U.S. and laughing all the way to their own banks.

    Rather than risk a depression, I supported bailing the crooks out in 2008 and 2009. The good news is that they have paid back the overwhelming amount of the loans, and the citizens of the United States have made a very high rate of return on those loans in most cases.

    However, as a condition of the bailout, I think that EVERY ONE of these TOO BIG TO FAIL Crooks needed to be forced to break up. If they want to be banks, fine. If they want to be securities brokers, fine, BUT NOT BOTH. None of these A Hole Banks SHOULD EVER BE IN A POSITION THAT THEY ARE "TOO BIG TO FAIL" Ever again. When Obama even SUGESTED that they be broken up, he was called a SOCIALIST. When Elizabeth Warren was nominated to head a cabinet level agency which could oversee the banks, they blocked her nomination.

    The 4 Walton heirs are worth as much as the combined wealth of 115 MILLION Americans-42% of America's population. The top 10% now control 82% of ALL Assets in this country, up from about 45% under Reagan. The last time this happened, the Great Depression followed, largely as a result of 9 people who were able to manipulate the New York Stock Exchange thanks to Deregulated "Laissez Faire, Free Market, Buyer Beware" government allowed business practices..

    I'd love to see just ONE of these Big Banks adopt a WRITTTEN Code of Ethics and sacrifice a little short term "Ill Gotten Gains" for the good of the entire country. Banks could operate in an ethical and honest manner and STILL make a fortune. There are groups of investor funds who seek out honest companies to partner with. And actually, when you or I buy stock in a company, no matter whether it is 1 share or 1 million shares, the company should consider every one of us a business partner. They should also treat customers in such a manner that their customers become walking , talking advertisements. It sounds like a lot of BOA's FORMER customers don't mind advertising how they were treated. I didn't read every post, but I don't recall seeing ANY which defended BOA, not because they made money on BOA's crooked dealings, but because they were treated fairly and honestly as a customer.

  • Report this Comment On November 12, 2013, at 9:00 PM, kmacattack wrote:

    I just read Tingall's comments about HSBC aka Household Bank, household finance, etc. This bank has been corrupt from the days before people had hair. My step dad was a senior bank examiner for the State Of Oklahoma. I remember him warning me to NEVER do business with Household finance, which was the only business they operated in Oklahoma at the time. My step dad was VEHEMENTLY OPPOSED TO "Branch banking" ever becoming legalized in this state, but enough money changed hands between the mega bank lobbies and the legislature that it happened. I do have an account with Bank Of Oklahoma, which has probably 100 branches counting mini banks in supermarkets, etc. BOK's CEO is George Kaiser, worth about $10 BIllion. Goerge, who has probably given away at least $10 BILLION more lives in town in a pretty modest home and has done more than anybody in the state to promote health care for children. George Kaiser is about #30 on Forbes Billionaires list, but he is the 3rd most generous giver in the United States behind Bill Gates and Warren Buffet. Before he bought the troubled BOK financial a few years back, George was a very successful oilman, and he still is. He went to the state legislature about 3 years ago and BEGGED the legislature NOT to give away billions of dollars in welfare payments to oil companies, but to at least earmark a substantial amount of the money for Childrens' health. He said "what I am asking you to do will cost me and my company a lot of money, but we DON"T NEED THE MONEY. The children of Oklahoma need and deserve it." Unfortunately, in 2010, the Koch brothers bought the Governor, Attorney General, Insurance Commissioner, Labor commissioner and EVERY elected office outside the legislature in this state. The Koch Brothers are the sons of John Birch Society co-founder Fred Koch. The Birchers were viewed as Nuts and Fruitcakes in the 1960's, held in the same high esteem as the American Nazi Party, which shared many common beliefs In the 1970's, TRUE CONSERVATIVE William F Buckley called the Birchers "Radical and Dangerous." and warned that they should NEVER be allowed to gain a foothold in our political system.

    So they called themselves Libertarians, and now are called the "Tea Party." But make no mistake, the Tea Party is a propaganda machine to further the goals of Charles and David Koch. They are the :"Men behind the curtain" who pull the Tea Party strings. Two weeks ago, the Kochs tea Bag Taliban group decided that shutting down the government was so much fun, they would refuse to pay the nation's bills in a couple of weeks. Even the Kochs said "Enough is Enough." When they "Dear Senator" (with no name following, a subtle message that the senator was not important enough to deserve the respect of being addressed by his or her name), the message was heard loud and clear. "If You default on the US debt, you could cost US BILLIONS of DOLLARS and you had BETTER NOT DO IT." Two days later, the senate voted about 83 to 17 to avoid default. When was the last time you saw 75% of republicans vote with 100% of democrats to agree that they liked apple pie?

    In 2010, when the Kochs and their allies bought about 80 congressional seats, They also bought about 3/4 of the legislature in this state, and did the same in over 20 other states. Earlier this year, Gov Fallan told the President that Oklahoma "could not afford to spend" the $750 Million or so expanding Medicaid to insure 170,000 uninsured Oklahomans over a 12 year period. The state budget office calculated that expanding Medicaid would SAVE the taxpayers hundreds of millions of dollars, and not cost a cent, but Gov Fallen wanted to stand with the "If Obama is for it, I'm against it." Tea Party. Now, she has proposed spending 3 times that amount by lowering the top Income tax rate from 5 1/4% to 5%, which will cost over $ 2 BILLION in lost revenue in 10 years, and over 90% of the tax cut will go to the richest 18,000 people in this state.

    These 18,000 also happen to be who also happen to be the same people who donate 90% of the money to fund republican campaigns. When exactly did we stop calling this BRIBERY?

  • Report this Comment On November 17, 2013, at 10:43 AM, Mad4jes wrote:

    I didn't have to read the article to know it was about BOA. The writer failed to include the billions BOA scammed people out of by excessive overdraft fees caused by intentionally holding deposits (even cash and automatic deposits), drafting big purchases before smaller ones regardless of the date and time, and even charging overdraft fees on overdraft fees. I recently received a check from BOA as part of an overdraft fee settlement and went to my bank to make sure it was real before depositing it. People make mistakes while banking, BOA takes advantage of that fact.

  • Report this Comment On November 23, 2013, at 1:23 AM, mankind5 wrote:

    I`m sic and pissed off at BOA I know people who have mortgages and thy get harassed all the time and there never late on there payments .I live on a fixed income and thy where charging me a lot for a bank account . thy said it was because the way I was using my account .I wonder how Meany other people with disabilities are getting ripped off .

  • Report this Comment On January 15, 2014, at 8:16 PM, thidmark wrote:

    kmacattack must be investing in tin foil ...

  • Report this Comment On March 11, 2014, at 1:32 PM, meadowgate wrote:

    Bank of America is in my opinion "The Mafia without

    a Gun"! They are ruthless and have no scruples when they deal with customers. They deal on the bait and switch rule. Put nothing on paper and keep switching the person who is your point person that way nobody "said that"!!!

    They caused a Burglary in my home and double talked their way out of it until they sold the mortgage and switched me to so many people it was pointless.

    I have files miles long. Anyone who sticks up for them SHAME ON YOU!!!!!

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