April was a busy month for Bank of America Corp. (NYSE: BAC ) . First, the big bank settled up with U.S. regulators to the tune of $772 million for pushing unnecessary credit card add-on products onto consumers. Shortly after that, rumors began that U.S. regulators want at least $13 billion from B of A in yet another crisis-era mortgage-bond mess.
The biggie, though, was the revelation that Bank of America had "incorrectly adjusted" a slew of structured notes taken over when the bank acquired Merrill Lynch in 2009, resulting in a $4 billion reduction in regulatory capital levels. The announcement effectively nixed the bank's plan to increase its dividend, as well as repurchase additional stock.
All is forgiven
With B of A's annual meeting right around the corner, things could have gotten nasty, particularly since the error had gone undetected for so many years. Although some stockholders had a few harsh things to say to CEO Brian Moynihan, things went pretty smoothly, overall.
Shareholders elected all 15 board of director nominees, and approved executive compensation packages by a majority vote of 93%. PricewaterhouseCoopers, the auditing firm that failed to catch the huge accounting error, was also endorsed.
Moynihan even got a tongue-in-cheek marriage proposal from a shareholder who jumped to his defense during the meeting. Protests outside the annual meeting this year were muted, with about a dozen people engaging in a spoof of big bankers.
Is this any way to react to a bank that continually messes up, all the while hemorrhaging money in a constant effort to put paid to all of its missteps?
B of A has developed a Teflon coating
Apparently, yes. Although the stock's price has dipped below $15, chances are slim that it is in danger of falling to its financial-crisis lows. After all, Bank of America has been in and out of hot water for several years now, and its share price has slowly – but inexorably – been on the rise.
Even consumers flock to the bank, despite the fact that so many have expressed hatred toward the company for the role it played in the mortgage meltdown. How else to explain the fact that Bank of America has the greatest share of deposits of any bank?
Although B of A has sustained quite a bit of reputational damage since the financial crisis, I think the big bank has acquired a Teflon coating of sorts, a shield that protects it from any true and lasting damage. People may rail and complain about Bank of America, but they keep coming back for more. Incidents like this may stall the bank's progress for a time, but they eventually blow over.
Part of the reason for this state of affairs is Moynihan himself. Since taking the helm back in 2010, he has labored to reduce the bloat created by his predecessors, as well as buff the bank's tarnished image. He comes across as unpretentious, as well – a character trait somewhat uncommon in CEOs of the largest banks.
Moynihan and his chief financial officer Bruce Thompson said that the bank is investigating how the accounting issue could have gone undetected for so long. Meantime, no doubt, Bank of America will continue to be the bank that Americans love to hate.
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