Bank of America

Last edited by lenazun on November 25, 2009 - 1:18pm

Company Snapshot:

Bank of America is the biggest bank in America and one of the ten largest banks in the world. BofA has been the target of much recent criticism for its extensive involvement in the subprime lending markets that precipitated the current recession and for a shotgun merger with Merrill Lynch that critics say damaged the bank's share value.

Ownership status:

Publicly traded

Number of employees worldwide:

243,000

Chief executive officer:

Ken Lewis (announced he will step down at end of 2009)

Website:

Bank of America

Global Fortune 500 rank:

Net Income:

$4 billion

Total revenue:

$72,780 million (2008)

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Corporate accountability

Accountability overview:

Merrill Lynch Acquisition: A "Deal from Hell"

Bank of America finalized its purchase of Merrill Lynch on January 1, 2009, for $50 billion. The "deal from hell" precipitated the departure of Merrill's chief executive (John Thain), as well the firm's president and its head of wealth management. The deal forced BofA to seek an additional $20 billion in Treasury support, along with $118 billion worth of "government backstops" that it never used. (WSJ 1/22/09). Meanwhile, between 9/15/08 (the day the deal was announced) and 1/22/09, BofA shares fell 78%. Nevertheless, a BofA internal memo posted by Dealbreaker tried to paint a smooth picture of continuity.

Months before the deal was cut, Thain spent $1.2 million redecorating his office, including a $87,000 area rug and $1,400 trash can. He also arranged for $25 million goodbye packages for his own hires, and handed out billions of dollars in last-minute bonuses.

On August 3, 2009 BofA agreed to pay $33 million to the SEC to settle allegations that it misled shareholders about the billions of dollars in bonuses promised to Merrill Lynch & Co. employees when it bought the troubled firm. However, the BofA/SEC deal was rejected by U.S. District Judge Jed Rakoff, who said the settlement violated "elementary notions of justice and morality." At the time that BofA management tried to settle the lawsuit by having shareholders pay the $33 million fine, the U.S. government was the largest investor in the bank, which would have required taxpayers to pay much of the fine for managerial misdeeds.

Merrill Lynch also shelled out $475 million in January 2009 to settle a class-action lawsuit filed by Ohio’s State Teachers Retirement System, which accused Merrill Lynch executives of artificially boosting the firm's stock price with misleading comments to investors before the market slumped. American Business Journals, 01/19/2009

On August 6, 2009, Rep. Edolphus Towns (D-NY) requested that Bank of America CEO Kenneth Lewis turn over documents related to Bank of America’s purchase of Merrill Lynch, as part of the Committee’s ongoing investigation into Bank of America executives' knowledge of the losses that were subsequently revealed at Merrill Lynch and how they reacted to those losses. According to the New York Times, BofA failed to meet the requested deadline. On June 11, 2009, the committee held a hearing titled, "Bank of America and Merrill Lynch: How Did a Private Deal Turn Into a Federal Bailout?". Taxpayers ended up paying $20 billion to help the company complete the deal.

$100 Billion Bailout

According to author and Wall Street veteran Nomi Prins, BofA's TARP bailout funds and other forms of taxpayer-funded support add up to $101,830,740,000. This figure doesn't include any unknown amounts received from the Federal Reserve's $8 trillion in emergency programs, which have not been publicly disclosed.

On September 21, 2009, BofA announced plans to pay $425 million to the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation to extricate itself from unused federal guarantee programs involving $118 billion (not included in the above $101.8 billion figure). The guarantees were associated with BofA's acquisition of Merrill Lynch, as well as backing for the bank's own debt (under a program run by the FDIC).

According to the Special Inspector General of the TARP program (SIGTARP) (See page 71) BofA has been less forthcoming than other banks about taxpayer-funded support it has received: "In contrast to Citigroup's use of funds report, Bank of America's report does not provide any details of its lending or the amount of lending that has occurred as a result of the increased capital provided by TARP," even though SIGTARP also 2Q09 reported (page 186) that Bank of America's Targeted Investment Program ("TIP") agreement with the Federal government requires specific reporting.

Little of the bailout money has gone to relieve struggling homeowners or increase the flow of credit to small investors. E.g., despite its large portfolio of at-risk mortgages, as of September, 2009 Bank of America had started trial mortgage modifications for only 7% of the 835,680 borrowers in its portfolio who are eligible for the Obama Administration's Making Home Affordable Program. At Wilshire Credit Corporation, which BofA acquired along with Merrill Lynch, just 4% of 19,280 eligible borrowers have had their mortgages modified. (MHAP Service Performance Report, 9/09) Two Cincinnati area homeowners have filed suit against Bank of America for refusing to pursue loan modifications. Meanwhile, BofA's lending to small businesses through the Small Business Administration 7a program dropped by 85.8 percent ($103 million) from 2008 to 2009 after dropping over 90% from 2007 to 2008.

Insider Lending

At the same time that credit markets froze for consumers and small businesses -- loans extended to top executives and directors at Bank of America more than doubled to $624.2 million -- the biggest dollar jump in the country. (Stella M. Hopkins, "As credit markets froze, banks loaned millions to insiders," Charlotte Observer, 3/22/09).

Role in the Subprime Crisis

Bank of America is the ultimate parent company of a number of mortgage originators, including Countrywide Home Loans Servicing LP (the country's #1 subprime lender, acquired in July 2008), Home Loan Services Inc., and Wilshire Credit Corporation. It also purchased and securitized loans from Ameriquest (the #2 subprime lender), financed loan originations by New Century Financial Corp (#3 subprime lender), and partnered with First Franklin (#4 subprime lender -- then owned by Merrill Lynch) to securitize and sell its subprime loans. In total, the top four subprime lenders issued over $320 billion in subprime loans from 2005 to 2007 (See "Who's Behind the Financial Meltdown, Center for Public Integrity)

Countrywide

In July 2008, BofA acquired Countrywide Financial, which at the end of 2007 had $15.1 billion worth of mortgages in its loan servicing portfolio in foreclosure. Following the Countrywide acquisition, BofA became the largest underwriter of mortgage-backed securities in the country. Although BofA itself stopped originating subprime mortgage loans in 2001, it continued to package subprime mortgage-backed securities, which encouraged other banks to keep making subprime loans. BofA continued making money off subprime securitizations long after the securitization of subprime loans was identified as a major source of the financial crisis. E.g., on September 23, 2009, Reuters reported that BofA was underwriting a $239 million subprime securitization backed by loans originated by the CIT Group, the troubled lender that declared bankruptcy just five weeks later.

Countrywide has been investigated by the FBI, the U.S. Justice Department, and multiple state attorney generals for predatory lending and securities fraud. BofA has also settled numerous civil lawsuits resulting from Countrywide's alleged abusive lending and financial practices. Despite the obvious stigma, BofA initially praised Countrywide's business model and offered its president and COO David Sambol a $28 million retention bonus to stay and head BofA's mortgage operations. Although public outcry eventually forced BofA to let him go, Sambol got to keep the $28 million.

Tax issues:

In August 2003 The Wall Street Journal reported that Bank of America and at least nine other US banks moved more than $17 billion into investment funds to shelter hundreds of millions of dollars from state taxes, sparking probes by state tax authorities. The banks created funds that did not publicly sell shares but paid tax-exempt dividends to the banks, according to the report. Securities and Exchange Commission records show Bank of America transferred at least $8 billion into its fund, which sheltered more than $750 million in income. Wall Street Journal, 08/01/2003

U.S. taxpayers and other BofA shareholders are being required to pay the legal fees for former Countrywide Financial executives like Angelo Mozilo and David Sambol, who the SEC has sued for insider trading. Even though they allegedly defrauded shareholders, BofA is making the same shareholders foot at least part of the bill for their legal fees, which Bloomberg reported (6/9/09) could top $20 million.

Labor:

According to the Associated Press, Bank of America is facing an employee class-action lawsuit claiming that the company's cash-balance pension plan was designed to benefit Bank of America without regard for the welfare of employees. Plaintiffs claim that Bank of America asked workers to move $2.7 billion worth of 401(k) assets into the company pension plan, which was then used for investments yeilding a higher return than what the company was willing to offer employees. As of 2007, the case was unresolved. [Charlotte Observer, 03/02/2007]

According to SEIU, the median BofA bank teller wage is $10.73/hour, or $22,328/yr.

Since 2004, Bank of America has cut over 34,000 jobs. After receiving a $45 billion taxpayer bailout, BofA announced plans to eliminate another 30-35,000 jobs overr the next three years in what could be one of the largest rounds of layoffs in the history of the financial services industry.

Since 2001, BofA has had to pay over $41 million to settle lawsuits alleging overtime violations. (SEIU)

In some states, BofA employees and their dependants are among the top users of state-subsidized healthcare programs -- costing taxpayers around $50 million a year.

Just three days after receiving $25 billion in federal bailout funds, Bank of America was caught holding a conference call with clients to organize opposition to the Employee Free Choice Act (a bill that would ensure bank workers would have a voice on the job and allow them to bargain for stronger whistleblower protections so they can speak out about harmful consumer practices).

Human rights:

From Coop America's Responsible Shopper Profile:

Bank of America received a “B” grade on the 2007 National Association for the Advancement of Colored People (NAACP) Economic Reciprocity Initiative report. The grade reflects a measurement of corporate America's commitment to the African American citizenry and other people of color. Companies were surveyed for their activity in employment, vendor development and contracting, advertising and marketing, dealerships and philanthropy. NAACP, 07/15/2007

Bank of America is facing a discrimination lawsuit brought by five African American current and former employees. The lawsuit claims that the bank limited the employees to minority and low net-worth clients because of the bank's belief that clients are more "comfortable" working with members of their own race. Boston Globe, 05/18/2007

According to the Social Investment Research Analyst Network, ten years after the Federal Glass Ceiling Commission recommended disclosure of diversity data as a way to remove barriers and promote women and minority advancement, most US companies still fail to fully disclose EEO data to the public. Bank of America is listed as one of the companies that does not provide full public disclosure. Rather, disclosure of EEO data is made available upon request. Social Investment Research Analyst Network (SIRAN), 12/07/2005

Anti-competitive and consumer protection:

Auction-Rate Securities Settlement

On October 8, 2008, BofA reached an agreement with the SEC to allow 5,500 individual investors, small businesses, and small charities the opportunity to sell back up to $4.7 billion in auction rate securities (ARS) they purchased from BofA before the ARS market collapsed in February 2008. The agreement would settle charges alleging that Bank of America made misrepresentations to thousands of its customers when it told them that ARS were safe and highly liquid cash and money market alternative investments.

The SEC had previously settled with two Bank of America subsidiaries -- Bank of America Securities LLC (which agreed to pay $26.6 million to over 250 investors on June 23, 2008) and Banc of America Capital Management LLC (which agreed to pay $103 million to investors who lost money due to mutual fund timing). In addition, BAS paid $26 million in disgorgement and penalties in March 2007 to settle SEC charges that the firm published false research on three companies and failed to safeguard its nonpublic research information.

Mutual Fund Penalty

In March 2004 Bank of America and FleetBoston Financial agreed to pay a total of $675 million to resolve allegations of improper mutual-fund trading and to reduce the fees investors pay by $160 million. Under the settlement, Bank of America would pay $125 million in civil fines and $250 million in restitution to investors. FleetBoston paid $70 million in civil fines and an additional $70 million in restitution. Additionally, eight members of the board of directors of Nations Funds, Bank of America's group of mutual funds, were required to resign from their positions within a year for their alleged role in allowing the trading violation. The two financial companies, which merged immediately following the settlement, agreed to make certain changes in their mutual fund operations. The settlement also severely restricted Bank of America involvement in the securities clearing sector. Office of the New York State Attorney General, 03/15/2004

Redlining

The Inner City Press-Fair Finance Watch accused Bank of America and Citigroup of charging higher mortgage loan rates for African American and Hispanic borrowers than white borrowers. The ICP reports that blacks were over two times more likely to receive rate spread home purchase loans than whites, and Hispanics were 2.5 times more likely than whites to pay higher rates with all types of Bank of America loans. Associated Press, 04/04/2005

Using Small Business Administration (SBA) data, the Greenlining Institute ranked BofA among the top banks in terms of lending to minority-owned small businesses in its 2008 annual report.

But a recent report by the Center for American Progress examining bank lending practices in 2006 (i.e. at the height of the housing boom) found that Bank of America and its recently acquired subsidiaries were more likely to steer Black and Latino applicants than White applicants into higher priced subprime mortgages: 28.1% of Black borrowers and 21.6% of Latino borrowers compared to 11.4% of White borrowers. The CAP report also found a clear pattern of reverse redlining, a practice prohibited under the federal Fair Housing Act. ( Jakabovics, Andrew and Jeff Chapman, “Unequal Opportunity Lenders? Analyzing Racial Disparities in Big Banks’ Higher-Priced Lending.” Center for American Progress, September 2009)

Predatory and Deceptive Lending, Foreclosures

On July 17, 2008, California AG Jerry Brown filed a complaint against BofA subsidiary Countrywide for deceptive lending practices. Less than a month later, the California Reinvestment Coalition and the Greenlining Institute petitioned the Attorney General to enact a moratorium on Countrywide/BofA foreclosures due to fraud. A year before (5/14/07), the groups wrote to the banks directly, asking them for a six month moratorium on foreclosures, but the bank failed to act.

On October 6, 2008, BofA agreed to provide up to $8.4 billion in loan and foreclosure relief to settle lawsuits inherited from Countrywide, including $3.5 billion to settle with the State of California. Attorney General Jerry Brown claimed the agreement represents the largest predatory lending settlement in history, but Robert Gnaizda, the Greenlining Institute's general counsel said the bank would have performed many of the workouts voluntarily to qualify for federal bailout aid and take advantage of programs created by the Housing Economy Recovery Act of 2008. Gnaizda also criticized BofA for not declaring a moratorium on foreclosures. (James Temple, "BofA OKs foreclosure relief for Californians," San Francisco Chronicle, October 7, 2008).

On October 29, 2009, the Attorney General sent a letter to BofA and other banks to detail their plans to assist homeowners facing dramatic monthly payment increases on Pay Option Adjustable Rate Mortgages.

Predatory Lending: Payday Loans

According to The Consumerist, Bank of America is a major backer of Advance America Cash, which charges several hundred percent interest on cash advances, loan deals that are typically targeted at poor and uneducated consumers.

Skyrocketing Account and Credit Card Fees

In 2008, 66 percent of BofA's non-interest income, including income from fees and credit cards, came from individual consumers and small businesses rather than corporate deals and investments, according to the bank's 2008 Investor Fact Book.

Despite receiving billions in taxpayer-funded bailouts, BofA more than doubled its daily overdraft limit from $160 to $350, and increased the monthly maintenance fee for its MyAccess Checking Accounts by 50%. (Marshall Eckblad, “In Banks’ Profit Push, ‘Era of Low Fees Is Over,’” Wall Street Journal, 31 Jul 2009.)

In 2009, BofA agreed to pay $35 million to settle a class-action lawsuit filed in California which alleged that the bank manipulated customers' bank accounts to increase overdraft fees.

Credit Card Abuse

After taking bailout money, BofA continues to raise credit card interest rates on customers, even if they have made every payment on time. (NY Daily News 3/16/09). The bank has also canceled credit cards, notifying cardholders only after the decision ("Cardholders Get Rude Surprise at the Register," WSJ, 8/12/09). In 2007, the bank arbitrarily hiked interest rates on one million customers whose accounts were current and in good standing. In the months since Congress passed a law targeting "unfair and deceptive" credit card practices, Bank of America and other credit card companies have been busily hiking fees, rates and penalties in anticipation of stricter rules. ("Credit card companies pump up rates, fees", Chicago Tribune, 11/2/09)

Social Security Ripoffs

Between 1993 and 2003, Bank of America collected an estimated $284 million in Social Security funds from the direct deposit accounts of elderly and disabled customers. In 2004, a California jury awarded damages of up to $1 billion or more to the affected customers. (Harriet Chiang, "Jury awards BofA customers $1 billion," SF Chronicle, February 26, 2004)

Targeting Latinos?

Former employees allege that BofA exploited Latino customers recruited at embassies and community events. The former employees say they were "coached" to push multiple products on unwitting customers who lacked knowledge of their hidden costs. (Tom Hamburger, "Bank of America is accused of exploiting Latino immigrant customers," LA Times, 6/30/09)

Political influence (national and international):

From 1989 to May 2006, Bank of America spent a total of $14,065,791 on political campaign contributions. In the 2006 election cycle alone, $2.07 million was given by Bank of America employees to political campaigns. Of that amount, $918,631, or 44 percent went to Democratic candidates and $1.14 million or 55 percent to Republican candidates. Center for Responsive Politics, 02/19/2007

BofA and Merrill Lynch spent $11.0 million on lobbying in 2008 and the first half of 2009, of which $3.6 million was spent since the bank received bailout funds. (data from OpenSecrets.org). Bank of America's lobbyists include Andrew Barbour of the Smith-Free Group. Barbour has also lobbied on behalf of the Financial Services Roundtable against legislation to restrict payday lending to military personnel, which would have capped interest rates on loans extended to soldiers and their families at 36%. (Business Week, "Saving Private Ryan from Greedy Lenders," 1/8/07)

In-House lobbyist John Collingwood helped drive the passage of the Orwellian-named Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which altered bankruptcy laws to heavily favor credit card companies, making credit card debt more difficult to dispel in bankruptcy. At the time, Collingwood was working for MBNA, which is now owned by BofA. (“Top Creditor Lobbyist Tassey Goes For Broke.” American Banker, 5/17/01.)

According to USASpending.gov, Bank of America received $650 million in Ex-Im Bank export guarantees during FY 2009.

History

Before 1998, the Bank of America that exists today was known as NationsBank, based in Charlotte, North Carolina. In 1998, NationsBank acquired San Francisco-based BankAmerica and assumed the Bank of America name. For an interactive map that illustrates how the bank grew, go to the Frontline web site.

Bank of America: Historical Chronology

1874 Commercial National Bank (CNB) is formed in Charlotte, NC.

1887 Citizens Bank of Savannah, GA opens.

1904 Successful Italian-American businessman Amadeo Peter Giannini sets up his own bank, the Bank of Italy, to lend to smaller consumers. After salvaging over $1 million in gold, currency, and notes from the bank's vaults after the great San Francisco earthquake, he became the first to lend money for reconstruction of many of the 25,000 buildings destroyed by the quake and fire.

1906 Citizens Bank merges with Southern Bank to form Citizens and Southern Bank (CSB).

1928 CSB opens branches in South Carolina. The branches are later (1940) spun off to avoid federal laws against multi-state bank ownership.

1931 Giannini steps down from the chairmanship of Bank of Italy (which by then owned Bank of America of Los Angeles) after creating Transamerica Corporation, a holding company. After appointing a Wall Street investment banker named Elisha Walker, within a few years he had to recapture the bank after Walker attempted to dismantle it.

1940 BofA grows exponentially along with the state of California's defense industry.

1945 BofA passes Chase Manhattan to become the biggest bank in the world. Based on its dominant position in California (BofA branches held about 40% of all California deposits by the mid-1980s), the bank boasts more deposits than any other bank, and is positioned as the leading lender to consumers, college students, farmers and small businesses.

1948 At its peak, Transamerica "controlled 645 banking offices in California, Oregon, Nevada, Arizona and Washington. This was 41 percent of all bank deposits and 50 percent of all bank loans. The conglomerate also controlled insurance companies, finance companies, real estate operations and business services. But at the instigation of the Eastern banking aristocracy, a Federal Reserve Board order in 1952 (reinforced by a Special Act of Congress in 1956) thwarted Giannini's old dream of building his branch banking coast-to-coast. Transamerica Corporation and Bank of America were separated, leaving the giant bank to build its future on its California base." (Ramparts). Giannini died in 1949, when his son took control.

1957 CNB merges with the American Trust Co. to form American Commercial Bank (ACB).

1960 ACB merges w/Security National to form North Carolina National Bank. NCNB employs 1,300 at 40 offices throughout the state. After eight years of aggressive acquisitions across the state, NCNB forms NCNB Corp as a holding company to manage its subsidiaries. By 1979 NCNBC is the largest financial institution in North Carolina.

1970 A BofA branch near Univ. of California, Santa Barbara is burned to the ground. A 17-year-old explained, "Well, it was...the biggest capitalist establishment thing around." Shortly afterward, chairman Louis Lundborg came out against the war in testimony before Congress. In the late 1970s, the bank was targeted by human rights activists for its investments in South Africa.

1979 BofA becomes the first bank to make over $600 million one year. BofA's overseas branches increased from 12 to 114 between 1960 and 1979. At the end of 1979 the bank had deposits of $85 billion and $57 billion in outstanding loans to businesses, governments and consumers. By the end of 1979 they had 8.3 Visa and MasterCard cardholders.

1979 BofA changes a long-standing policy that restricted top officials from joining the boards of other companies. The following year, bank president Tom Clausen jined the board of Standard Oil of California.

1980 A California court orders BofA to turn over $20 million in withheld interest and service charges on dormant (abandoned) savings accounts.

1981 NCNBC expands to FL.

1985 NCNBC expands to GA by acquiring Southern National Bankshares Inc. of Atlanta.

1986 NCNBC expands to VA and MD.

1988 FDIC chooses NCNB to manage the restructuring of First Republic Bank Corp., Texas' largest financial institution. NCNB purchases a 20% interest, acquiring complete ownership a year later. Soon after it begins to acquire other banks across the state.

1991 NCNB changes its name to NationsBank Corp (NC). By 1994 NC is the 4th largest bank in the U.S., with 1,800 offices in nine states and the District of Columbia. NC is ruthless in its cost-cutting measures in newly acquired banks, and plans to cut its work force by 6,000 by the end of 1994.

1996 NationsBank enters the midwest by purchasing Boatmen's Bancshares Inc. of Sta. Louis.

1998 BankAmerica announces a $22 million loss on Russian bonds. On September 30, NationsBank and BankAmerica complete a $49 billion merger to become the largest bank in the U.S. The new bank takes on the BankAmerica name. A month later, the bank announces a $372 million loss on its Shaw loan, causing critics to question the merger.

1999 The mortgage units of NationsBank and BankAmerica officially merge into the largest mortgage operation in the U.S. -- BankAmerica Mortgage -- with 2.7 million customers.

1999 BankAmerica changes its name to Bank of America

2000 BofA announces the elimination of 10,000 jobs, representing 6 percent of its workforce.

(Sources: Milton Moskowitz, et al., Everybody's Business, pp. 448 to 452; Bank of America entry in Julie A Mitchell, Notable Corporate Chronologies, Gale Group.).

Financial information

Stock ticker symbol:

BAC

Link to annual report:

Bank of America annual reports page.

Additional descriptive data

Link to full list of subsidiaries:

See 10-K (filed 2/27/09) Exhibit 21

Specialized Information

Major units/subsidiaries/affiliates:

Bank of America describes its operations as broken down into three main business segments: Global Consumer and Small Business Banking (GCSBB), Global Corporate and Investment Banking (GCIB) and Global Wealth and Investment Management (GWIM), with the remaining operations recorded in All Other. Each of these is described and discussed in the company's annual (10-K) report to shareholders.

Shareholder resolutions:

Healthcare Reform Principles

Predatory Credit Card Practices

Responsible Financing/Eurodad Principles

Summary data on executive compensation and director compensation:

In 2008, 172 BofA executives and employees received bonus payments in excess of $1 million, according to the New York Attorney General's Office. According to IPS, CEO Ken Lewis' 2008 compensation totaled over $9 million, while the top five executives combined received $36.47 million. In 2008, 11 Merrill Lynch executives and traders were paid over $10 million each, while nearly 700 received at least $1 million. (Susanne Craig, "Merrill's $10 Million Men: Top Earners Made $209 Million in 2008 While the Firm Foundered," WSJ, 3/4/09; Chad Bray, "Merrill Gave $1 Million Each to 700 of its Staff," WSJ, 2/12/09). With bonus limits coming into force for TARP recipients, BofA intends to increase senior employees' base salaries (FT, 6/22/09).

The year before (2007), Lewis received $20.4 million and the top five received a combined $59.24 million, and the year before that (2006) Lewis received $22.85 million and the top five execs received a combined $59.09 million.

On April 29, 2009 just over half of BofA's shareholders voted to oust Lewis as chairman.

On October 16, 2009, the WSJ reported that the Obama Administration's bailed-out banks pay czar, Kenneth Feinberg, demanded that outgoing Bank of America Corp. Chief Executive Ken Lewis give back the $1 million or so that he received in 2009 and forgo the rest of his $1.5 million salary for 2009. (Deborah Solomon and Dan Fitzpatrick, "Czar Blocks BofA Chief's Pay Lewis to Return $1 Million as U.S. Objects to Retirement Deal; Feinberg Flexes Muscle," WSJ, 10/16/09). Lewis is expected to take a $125 million exit package with him at a time when he and the company are under investigation by Congress, the SEC, and the New York Attorney General. (Dan Fitzpatrick, David Enrich and Joann S. Lublin, "BofA Directors Scramble To Lay a Succession Plan," Wall Street Journal, 10/2/09; "Bank of America's enemies list," The Deal, 9/30/09).

In July 2009, New York Attorney General Andrew Cuomo reported that Merrill employees and executives received $3.6 billion in bonuses in 2008, despite losing $27 billion and after receiving $10 billion in TARP/taxpayer bailout funds. According to investigative reporter Robert Scheer, "One of those handsomely rewarded was Thomas Montag, now with BofA, who received a $39.4 million bonus for his work at Merrill Lynch, a reward for his performance as Merrill's trading and sales chief, a position in which he presided over the billions in mortgage acquisitions that fueled the company's downfall."

BofA employees received $3.3 billion in 2008 -- a year where the company's net earnings barely surpassed that, at $4 billion. The same year, the company received $45 billion of taxpayer-funded bailout money. (See "No Rhyme or Reason: the 'Heads I Win, Tails You Lose' Bank Bonus Culture," published by New York State Attorney General Andrew Cuomo, July 2009)

Shortly after Cuomo's report was issued, Bank of America agreed to pay $33 million in penalties to the Securities and Exchange Commission to settle an SEC complaint that BofA had deceived shareholders about those billions in bonuses. The SEC charged the bank with omitting to mention the bonuses, which it said was “materially false and misleading” because of their size. (SEC v. Bank of America Corp., Case No. 09 civ 6829 (S.D.N.Y. Filed August 3, 2009) The settlement was rejected by judge Jed Rakoff.

In 2006, Ken Lewis earned $27.9m in total compensation according to the Securities and Exchange Commission's calculation. AFL-CIO, 01/01/2007

Death Bets

To help pay for its executives' bloated bonuses, BofA has made itself the beneficiary on $17.24 billion in life insurance policies taken out on its employees and former employees. (Schultz, Ellen E., “Banks Use Life Insurance to Fund Bonuses.” The Wall Street Journal, May 20, 2009.)

Angelo Mozillo

A few days before Rep. Henry Waxman and fellow members of the House Oversight Committee were scheduled to hold a hearing on "CEO Pay and the Mortgage Crisis," Countrywide CEO Angelo Mozillo announced that he was giving up his severance payment, estimated at $36.4 million. Mozilo told the committee that he gave up the money because he "did not want this issue to detract from, or in any way to impede, the important task of completing" Countrywide's sale to Bank of America. He still had $400 million from selling company stock the previous four years. During the hearing Mozilo asserted that there was no "relationship" between a Countrywide stock buyback plan (which helped raise the share price) and his decision to exercise his own stock options.

Bank of America

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