Bank of America
The Bank of America Corporation is an American multinational bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina, with investment banking and auxiliary headquarters in Manhattan. It was formed by the merger of NationsBank and the legacy Bank of America corporation in 1998.
| Bank of America Corporation | |
|---|---|
| Type | Public |
| Traded as | NYSE: BAC |
| Industry | Banking, financial services |
| Founded | 17 October 1904 (as Bank of Italy); present corporation 1998 |
| Founder | Amadeo Pietro Giannini |
| Headquarters | Charlotte, North Carolina, United States |
| Area served | United States and more than 40 other countries |
| Key people | Brian Moynihan (chair and CEO) |
| Products | Retail banking, credit cards, mortgages |
| Services | Commercial banking, wealth management, investment banking |
| Subsidiaries | Merrill, BofA Securities |
| Website | bankofamerica.com |
It is the second largest banking institution in the United States by consolidated assets and the second largest bank in the world by market capitalisation, in both cases after JPMorgan Chase. It is one of the Big Four American banks and one of eight institutions designated systemically important in the United States, competing with JPMorgan Chase, Citigroup and Wells Fargo.
History
Origins
The bank's franchise incorporates several distinct histories. Its eastern branch traces to 1784, when the Massachusetts Bank was chartered, the first federally chartered joint-stock bank in the United States and only the second bank chartered in the country. That institution became FleetBoston, which merged with Bank of America in 2004.
The Charlotte line began in 1874 with the founding of Commercial National Bank, which merged with American Trust Company in 1958 to form American Commercial Bank, became North Carolina National Bank on merging with Security National Bank of Greensboro in 1960, and in 1991 merged with C&S/Sovran Corporation of Atlanta and Norfolk to form NationsBank.
The central portion dates to 1910, when Commercial National Bank and Continental National Bank of Chicago merged to form what evolved into Continental Illinois National Bank and Trust.
Bank of Italy
The name derives from the Bank of Italy, founded in San Francisco on 17 October 1904 by Amadeo Pietro Giannini to provide banking services to Italian immigrants who faced discrimination from established institutions. Giannini's insight was that ordinary working people were creditworthy and profitable customers, a proposition the banking industry of the period largely rejected.
Bank of America, Los Angeles was established in 1922 with Giannini as a minority investor, and Giannini acquired Banca d'America e d'Italia the same year. The two banks merged in 1928, and the New York investment bank Blair and Company merged with Bank of America the following year. The Bank of Italy was renamed Bank of America National Trust and Savings Association on 3 November 1930. By 1929 it had 453 offices in California with aggregate resources above 1.4 billion dollars.
Giannini sought to build a national bank, expanding across the western states and into insurance through his holding company Transamerica Corporation. In 1953 regulators succeeded in forcing the separation of Transamerica and Bank of America under the Clayton Antitrust Act.
The passage of federal banking legislation in the 1950s facilitated rapid growth. In 1958 the bank introduced the BankAmericard, the first successful general purpose credit card, which was renamed Visa in 1977.
Between February 1970 and September 1971 there were 66 attacks on Bank of America branches in California, including 53 bombings or fire-bombings and 13 arson fires, part of the period's political violence. Injuries were few and property damage totalled about 500,000 dollars, 80 per cent of it from the burning of the Isla Vista branch during a riot in February 1970.
The NationsBank merger
After significant losses in the 1998 Russian financial crisis, BankAmerica was acquired by the Charlotte-based NationsBank for 62 billion dollars, at the time the largest bank acquisition in history. The combined institution took the Bank of America name but NationsBank's management, and Charlotte rather than San Francisco became its headquarters.
Financial crisis acquisitions
In 2008 Bank of America acquired the mortgage lender Countrywide Financial, and in a transaction agreed over the weekend of Lehman Brothers' collapse it agreed to buy Merrill Lynch, completing in January 2009. These established Bank of America Merrill Lynch for investment banking and Merrill for wealth management, since renamed BofA Securities.
Both purchases proved extraordinarily costly. Countrywide brought with it the liabilities of one of the most aggressive subprime originators in the United States, and the losses, settlements and legal costs arising from it have been estimated in excess of 50 billion dollars, far more than the price paid.
As of 2018 the investment bank was considered part of the bulge bracket and the third largest in the world, and the wealth management unit managed 1.08 trillion dollars, the second largest wealth manager after UBS.
Controversies
Merrill Lynch disclosure
The Merrill Lynch acquisition produced sustained legal difficulty. Bank of America did not disclose to shareholders before their vote the scale of Merrill's fourth-quarter losses or that it had authorised Merrill to pay billions in bonuses before completion. The U.S. Securities and Exchange Commission brought proceedings, and a settlement of 33 million dollars was rejected as inadequate by Judge Jed Rakoff, who criticised it as a transaction in which the bank's own shareholders would pay a penalty for having been misled. A revised settlement of 150 million dollars was approved in 2010. A separate class action was settled for 2.43 billion dollars in 2012.
Questions were also raised about whether federal officials had pressed the bank's chief executive Kenneth Lewis not to invoke the material adverse change clause that might have allowed it to withdraw from the transaction.
Countrywide and mortgage practices
The Countrywide acquisition led to a decade of litigation over mortgage origination and servicing. In August 2014 Bank of America agreed to pay approximately 16.65 billion dollars to settle federal and state claims relating to the sale of mortgage-backed securities, the largest civil settlement with a single company in United States history at the time. Earlier settlements included 11.6 billion dollars with Fannie Mae in 2013 and participation in the 25 billion dollar national mortgage servicing settlement of 2012.
The bank was also found liable in 2013 in a case concerning the Countrywide programme internally nicknamed the Hustle, which prosecutors said prioritised loan volume over quality, though the verdict was later overturned on appeal on the ground that breach of contract alone did not establish fraud.
Foreclosure practices
Bank of America was among the servicers found to have used improperly executed foreclosure documentation, the practice known as robo-signing, in which affidavits were signed without verification of the underlying files. The resulting settlements required substantial changes to servicing standards and payments to affected borrowers.
Overdraft and fee practices
In 2023 the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency fined the bank a combined 250 million dollars, including consumer redress, over repeated overdraft fees charged on the same transaction, the withholding of promised credit card reward bonuses, and the opening of credit card accounts without customer authorisation.
Unemployment benefit cards
During the COVID-19 pandemic Bank of America administered unemployment benefit payments for California and other states. It was criticised, and subsequently ordered by the CFPB in 2022 to pay 100 million dollars in redress and a 125 million dollar penalty, over the automated freezing of accounts following fraud flags, which left legitimate claimants without access to benefits and without an effective route to resolve disputes.
Financing and climate
The bank has been criticised by environmental organisations as among the largest financiers of fossil fuel extraction. It has made net zero commitments for its financed emissions by 2050, and in 2024 withdrew from the Net-Zero Banking Alliance along with other large American banks, a decision criticised by climate groups and welcomed by some state officials who had objected to coordinated climate commitments on antitrust and fiduciary grounds.
See also
References