Inner City Press/FFW: Watchdogging and Taking Action Since 1987

Updated of February 8, 2010 -- For further information, click here to contact

Update of February 8, 2010: Through the first nine months of 2009, about 54% of donations from Bank of America Corp.'s political action committee and employees went to Republicans, according to campaign-finance data compiled by the nonpartisan Center for Responsive Politics. That was a switch from the 2008 campaign, when 56% of the company's donations went to Democrats

Update of February 1, 2010: Bank of America repurchased nearly $4.5 billion of loans during the first nine months of 2009, according to data compiled by Barclays. That was triple the $1.5 billion repurchased in all of 2008. Along with the Countrywide acquisition, the sleaze is growing.

Update of January 25, 2010:

By Matthew R. Lee

NEW YORK, January 21 -- Two hours before President Barack Obama unveiled additions to his financial reform proposals, limiting the mix of banking and proprietary trading and setting a cap on liabilities and not only deposits, several of his senior officials briefed the press.

  They were relentlessly "on message," emphasizing how comprehensive the package is, how they are "working with Senator Dodd" without mentioning that he will not run for re-election.

  They repeatedly referred to the proposed Consumer Financial Protection Agency (or "Consumer Protection Agency," as one of them called it), without address that Dodd himself is said to be moving away from the proposal, eager some say to have his name on a bill, any bill.

  The new proposals would, by barring a company that owns a bank from forms of proprietary trading or owning, investing in or advising a private equity or hedge fund, seem to require Goldman Sachs and Morgan Stanley to de-bank. Two questions directly raised Goldman, but the senior administration officials dodged both of them. One asked if the timing of the announcement is tied to Goldman's release of earnings. This was denied.

  A second proposal, not clearly spelled out in the briefing, would set a cap on liabilities similar to the 10% deposit cap ostensibly in place since 1994. That cap has been evaded. As South Bronx based Fair Finance Watch and Inner City Press have repeatedly shown, Bank of America has been at or over the cap but still allowed to make acquisitions.

  B of A simply reduces the visible level of deposits by pricing, and then picked them up afterwards. The regulators helped evade the cap by including deposits outside of the United States in the denominator calculating the 10%. Why would this be any different?

Update of December 7, 2009: In repurchases from Fannie Mae and Freddie Mac, Bank of America disclosed in the third quarter that it bought back, through Sept. 30, $922 million of mortgages tied to faulty underwriting. It of course doesn't break down the size of its repurchase reserve.

Update of November 30, 2009: No honor among thieves: Deutsche Bank AG and a unit of BNP Paribas SA separately sued Bank of America Corp. on Wednesday, alleging that the bank has failed to repay about $1.7 billion in secured notes issued by a special-purpose entity. The breach-of-contract lawsuits, filed in U.S. District Court in Manhattan, allege that Bank of America has failed to redeem $480.7 million in secured notes held by BNP Paribas and $1.2 billion held by Deutsche Bank. The notes were issued by Ocala Funding LLC, a special-purpose entity that provided short-term liquidity funding to Taylor, Bean & Whitaker Mortgage Corp..."

Update of November 2, 2009: One TARP-er hypes the stock of another, per WSJ: The recent selloff in BofA shares creates a good chance to buy into the bank, say Citigroup analysts. Bank of America shares are down some 17% from their most recent closing peak of $18.59 hit on Oct. 14. "Given the ongoing CEO search, fear of a capital raise only adds to the uncertainty hitting the stock, which creates a very attractive entry point."

Update of October 5, 2009:The belated ouster of Ken Lewis from Bank of America, who will now leave at latest by the end of the year, triggers a successor search by three ex-Fleeters, Charles Gifford, Thomas May and Thomas Ryan -- and former Federal Deposit Insurance Corp. Chairman Donald Powell and DuPont Co. Chairman Charles Holliday. A motley crew...

Update of August 31, 2009: B of A is really suffering, or pretending to -- in its lawsuit against the FDIC about the Colonial Bank failure (and re-sale without any CRA comment period to BB&T), B of A has now accused the FDIC of acting "beyond the scope of its statutory powers" as receiver for "by making disbursements without complying with its statutory and regulatory obligations."

Update of August 10, 2009: Bank of America has been asked for emails and documents dealing with losses and loss projections at Merrill Lynch; records covering negotiations with the federal government on bailout funds received by the bank; and the details of any legal advice received by the bank on disclosure of the losses or government aid. - by August 14....

Update of July 13, 2009:  Bank of America, previously of San Francisco, is refusing to help Californians in their time of need, announcing it will not accept the State's IOUs. As noted by the Associated Press, "clearly, the federal government has leverage over these institutions," said [Inner City Press / Fair Finance Watch]. Hundreds of banks have received aid from the government as part of its $700 billion rescue plan last fall."

Update of June 29, 2009: The June 25 hearings on Capitol Hill about the Federal Reserve's role in Bank of America's acquisition of Merrill Lynch don't auger well for Barack Obama to renominate Ben Bernanke as Fed chairman. Bernanke repeatedly said, I don't recollect that conversation. He was asked about statements by top Fed lawyer Scott Alvarez but dodged the repeated question, doesn't he work for you? He took at least some fire from the left as well as right. Even more shameful was the Fed giving away the store to GMAC, and now to PIMCO. Is this the change to be believed in?

The hearings also recounted how little confidence a Fed government had in Bank of America CFO Joe Price, who'd go on to throw the Community Reinvestment Act under the bus during the bank's April earnings call. His statements have yet to be unpacked. But Ken Lewis, and perhaps Bernanke himself, might want to start packing.

Update of June 15, 2009: So while supposedly recused at the Federal Reserve Bank of New York, Tim Geithner was weighing in on Bank of America, in support of the shotgun marriage with Merrill Lynch, it emerged in Congress last week. He denies it. But didn't he initially denied not paying his taxes?

Update of June 8, 2009: Bank of America will be saved by... ex-regulators? Now on the board of directors are former Federal Reserve Governor Susan Bies and former Federal Deposit Insurance Corp. Chairman Donald Powell. That is to say, regulators who failed to stop predatory lending and the meltdown now benefit from it....

Update of June 1, 2009: The race for governor in Florida pits bad banker against worse pro-bank blowhard. Bill McCollum, who while in Congress promoted every form of deregulation and promoted predatory lending, now faces off against the former CFO of NationsBank now Bank of America, who oversaw the former's purchase of Barnett Banks which set negative fair lending precedents. How to choose between them? We don't envy Floridians on this one...

Update of May 25, 2009: So how did the Federal Reserve explain the lack of public notice on its H2A web site for Bank of America's application for a new bank? We don't know yet: we asked the Fed to response by email, but they have not.... High rate, subprime accounts make up one-third of Bank of America's credit card portfolio...

Update of May 18, 2009:

On May 14, Inner City Press submitted the following to the Federal Reserve:

         On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a
petition, challenge and request under the Freedom of Information Act (5 U.S.C. § 552; "FOIA") and Community Reinvestment Act (CRA) regarding the
application by Bank of America to acquire 100 percent of the voting shares and thereby indirectly acquire Bank of America North Carolina, National
Association, and for the Federal Reserve System's (the "FRS's") communications with Bank of America in 2009 and a demand for public notice and comment, and a protest-in-advance.

  The FRS has virtually repealed banking laws, including the BHC Act and the CRA, by approving mergers and conversion with no public notice or comment.
Now, on an application by the largest and most troubled US bank, the Fed provided no notice until the last day on its H2A web site.  Yesterday, ICP
was asked about a notice seen in the Federal Register. It was not in the H2A. The undersigned called the FRB of Richmond, and noted that it was not in the H2A, requested an extension of the comment period.

  Today May 14, suddenly the proposal is in the updated H2A,http://www.federalreserve.gov/releases/h2a/h2a.cfm?view=week with the comment period ending... tomorrow. This is unreasonable, and unwise given the issues surrounding Bank of America. It is widely reported that B of A would have been required to raise more capital, but that it lobbied the Fed to knock $16 billion off what it should raise. The Fed and its governors, and B of A until recently when its CEO was under fire, have said that CRA did not cause the financial crisis. But on B of A's April 20 earnings conference call by Lewis and his Chief Financial Officer
Joe Price told analysts that the company's "Community Reinvestment Act portfolio is seven percent of the residential book, but 24% of the losses."
Yeah -- blame your bad decisions to invest in high falutin asset-backed securities on the CRA... We'll have more on this.The conference call is archived here
http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-eventDetails&EventId=2134324and CFO Price makes his statement at Minute 26:25
  ICP is requesting an evidentiary hearing to explore this public claim by B of A.

In its (and the) first study of the just-released 2008 mortgage lending data, Inner City Press / Fair Finance Watch has found that Bank of America
NA confined Latinos to higher-cost loans above the rate spread 1.51 times more frequently than whites. Countrywide Bank, which B of A acquired, had a lower disparity, at 1.22. Bank of America NA denied applications by African Americans 1.44 times more frequently than whites, while denying Latinos fully 1.57 times more frequently than whites.

ICP Fair Finance Watch was interviewed on November 7 about the use of funds by Bank of America --

"Bank of America Corp., largely through its political action committees, gave candidates and parties $3.7 million this election cycle, according to
an analysis of Federal Election Commission reports. Bank of America spent $6.5 million lobbying federal officials over the same period; Wachovia spent $2.7 million and Wells Fargo, $3.6 million."

  There is no commitment that the bailout funds will not be put to these uses...

There is more to be said, but first the comment period must be extended.

Update of May 11, 2009: So the Fed even cooked the books on stress tests, and at least $16 billion was knocked off what Bank of America has to raise. Way to regulate...

Update of May 4, 2009: So at Bank of America's shareholders' meeting last week in Charlotte, Ken Lewis was ousted as chairman. This same a week after he and his CFO Joe Price fingered the bank's “Community Reinvestment Act porfolio” as having much higher delinquency rates than other loans. Cynically, Lewis arranged for some community groups to lobby for him to remain as chairman. He's still the CEO -- shareholders couldn't vote on that. Yet.

Update of April 27, 2009: Bank of America calls itself a major supporter of the Community Reinvestment Act. But as Ken Lewis comes ever-closer to his termination date, apparently everything must go. On B of A’s April 20 earnings conference call by Lewis and his Chief Financial Officer Joe Price told analysts that the company’s “Community Reinvestment Act portfolio is seven percent of the residential book, but 24% of the losses.” Yeah -- blame your bad decisions to invest in high falutin asset-backed securities on the CRA... We'll have more on this.

 The conference call is archived here

http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-eventDetails&EventId=2134324

and CFO Price makes his statement at Minute 26:25

Update of April 20, 2009: In the run-up to its annual shareholders' meeting, this time in the Hilton and not Carnegie Hall, Citigroup has been criticized for misleadingly offering $5,000 loans and not disclosing in the advertising the interest rate -- 30%. But CitiFinancial has been doing that for a long time...

Update of April 6, 2009 -- In the first study of the just-released 2008 mortgage lending data, Inner City Press / Fair Finance Watch has found that Bank of America NA confined Latinos to higher-cost loans above the rate spread 1.51 times more frequently than whites. Countrywide Bank, which B of A acquired, had a lower disparity, at 1.22. Note: 2008 is the fifth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of 3 percent over the yield on Treasury securities of comparable duration on first lien loans, 5 percent on subordinate liens.

Bank of America NA denied applications by African Americans 1.44 times more frequently than whites, while denying Latinos fully 1.57 times more frequently than whites.

Update of March 23, 2009: Bank of America's Ken Lewis claims that B of A is "part of the solution for the financial crisis" through its subsidized acquisitions of Countrywide Financial and Merrill Lynch. Most say, part of the problem...

Update of February 16, 2009: So Ken Lewis has claimed he had no authority over Merrill Lynch's final bonuses. We'll see...

Update of Feb. 2, 2009: B of A's "Merrill Lynch failed to disclose certain conflicts of interest to its pension consulting clients, the Securities and Exchange Commission charged on Friday. The SEC said Merrill Lynch, now a unit of Bank of America Corp., will pay a $1 million penalty to settle the charges." Once again, BofA settling on the cheap...

January 26, 2009

Behind Bank of America's Toxic Assets, Subprime Links Obscured But Continued

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, January 21 -- Bank of America is now headed down a Citigroup-like path.  A second serving of TARP bailout funds, government insurance for a widening range of toxic assets, a chief executive on the ropes. While Ken Lewis claimed to have gotten BofA out of the world of subprime, its investment banking arm continued to buy and trade subprime mortgages, and to prop up subprime lenders. Now Lewis implies that the $108 billion in toxic assets being insured by the government came from Merrill Lynch. But a quarter of them come from BofA itself.

    As reported by Inner City Press, Bronx-based Fair Finance Watch documented this to the Federal Reserve in Communiuty Reinvestmeent Act comments filed in opposition to Bank of America's applications for regulatory approval to merge and expand. In its responses to FFW's comments, BofA begrudgingly acknowledged that it did business with, among others:

Ameriquest Mortgage Corporation, since defunct; Saxon, through which Morgan Stanley tells FFW it has stopped lending, Option One, Centex, New Century, bankrupt; Metris (a subprime card lender HSBC later acquired), Delta Financial, First Franklin, WMC (subprime lender owned by GE), Fremont Investment & Loan, rogue subprime lender which told FFW it would only give its Home Mortgage Disclosure Act data if one signed a confidentiality agreement), Capital One, CIT, WFS -- and Ownit, regarding which Bank of America blacked-out a column labeled "ABS/MBS Underwriting," after elsewhere publicly admitting it performs those functions for Ownit’s loans.

 BofA wrote:

"Bank of America indirectly owns 24.9% of the voting common equity of Ownit... In August 2005, Bank of America, N.A. transferred the Ownit residential mortgage loan portfolio purchased during March 2005 to Asset Backed Funding Corporation (‘ABFC’). ABFC is an affiliate of Bank of America Corporation that is a limited purpose corporation that securitizes residential mortgage loans... ABFC securitized these Ownit loans, along with similar loans from another loan originator, in its approximately $1.2 billion ABFC Asset-Backed Certificates, Series 2005-HE2 transaction. Banc of America Securities LLC served as the underwriter in that transaction....

 In two separate transactions on March 9 and March 14, 2005 Bank of America N.A. purchased Ownit residential mortgage loans in an aggregate amount of approximately $265 million. These loans were held for the account of Bank of America, N.A. until they became part of the August 2005 securitization described at Item 2.b above. These loans were purchased in a competitive, arms-length process at fair market terms" -- followed by more than half a page blacked out.

Update of January 19, 2009: BofA is making layoffs, BofA is getting sued. And yet BofA is getting more and more billions of TARP, including the share that would have been Merrill's. For shame.  Bank of America Corp. filed a letter with Charlotte, N.C., Mayor Pat McCrory verifying that it is laying off about 139 employees in the city’s Ballantyne neighborhood. The layoffs are expected to be completed by March 10. The bank is also laying off about 85 workers at a Preferred Services
site in Dallas. Meanwhile, a group of Washington state homeowners filed a lawsuit against Bank of America Corp. unit Countrywide Financial Corp., alleging that the company illegally manipulated the appraisal process in a plan to increase profits at the expense of homeowners and independent appraisers. The lawsuit, filed in the U.S. District Court in Seattle under the Racketeering Influenced and Corrupt Practices Act, claims that the company forced homeowners to use its unit, LandSafe, for appraisals, while subcontracting the work to independent appraisers and charging homeowners as much as 200% of the actual cost of the appraisal.

Update of December 15, 2008: Bank of America was hit with a $141 million verdict for mismanagement of a trust affiliated with defunct furniture retailer Heilig-Meyers Co....

Update of November 10, 2008: How will the bailout funds be used? For opportunistic mergers, as we noted last week. And now we can say, for political contributions and lobbying. ICP Fair Finance Watch was interviewed on November 7 about the use of funds by Bank of America --

"Bank of America Corp., largely through its political action committees, gave candidates and parties $3.7 million this election cycle, according to an analysis of Federal Election Commission reports. Bank of America spent $6.5 million lobbying federal officials over the same period; Wachovia spent $2.7 million and Wells Fargo, $3.6 million."

  There is no commitment that the bailout funds will not be put to these uses...

Update of October 20, 2008: It's telling, in terms of how sloppy the corporate giveaways have been, that neither the Fed nor Treasury thought through how buying warrants in Bank of America would put B of A in the position of reducing book value or recording a loss. Expect the rule changing for the biggest banks to continue...

Update of September 22, 2008: On the rumors of Wachovia looking to buy Morgan Stanley, just as its bigger sibling Bank of America bought Merrill Lynch (click here for Inner City Press' 10% deposit cap analysis), consider that both deals involve Utah-based industrial loans companies, which are covered by the Community Reinvestment Act, but whose acquisition, it is argued, is not subject to CRA scrutiny and public comment. This is something that should be fixed, clearly, in the pending bail-out legislation...

Update of August 4, 2008: Talk about a conflict of interest, and regulatory capture -- last week, the regulators and four big banks issued coordinated press releases. "Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, 'We look forward to being leading issuers as the U.S. covered bond market develops.'" And those they issued the statement with and for are supposed to objectively oversee them...

Update of July 21, 2008: The Wall Street Journal.com reports that the Boston Fed's foreclosure-fest at Foxboro's Gillette Stadium will include Countrywide (now BofA) and... IndyMac. From beyond the grave? Or will the FDIC be (Eli) manning the tables?

Update of July 7, 2008: Profiles in Bank (of America) communications -- "a bank employee in Orange County, Calif., who said he had received no updates from his bank supervisors over the past six months despite daily e-mails from Countrywide's mortgage and investment banking operations. He said the only communication he received on Tuesday [7/1/] was an e-mailed version of B of A's press release. He said that, given the lack of communication from his supervisors and the close proximity of three B of A branches, he was convinced that he and roughly 350 employees in similar roles would lose their jobs, though he had not received a formal notice." (AB 7/7/08).

Update of June 30, 2008: California's lawsuit names Countrywide President David Sambol as well as Angelo Mozilo. The AG of Illinois also filed a lawsuit alleging deceptive practices, Governor Gregoire of Washington said the state will seek to fine the company for predatory lending -- she went easy on Household and then hit the documents, so we'll see -- and Countrywide shareholders approved Bank of America 's pending $3 billion acquisition. But the combination could face legal costs as high as $2 billion, according to a report from CreditSights Inc.. BofA says it will lay off 7,500....

Update of June 16, 2008: Following the Fed's rubber stamp approval, this week Inner City Press / Fair Finance Watch filed comments against the Fed's secret process with banks, in essence a rule-making excluding the public even those the topic, credit derivatives, has come up because of the subprime lending crisis. The financial institutions invited -- and now challenged -- included Bank of America. The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engages in rule-making, it must provide notice to the public, and allow and weigh public comments.  Press accounts make clear that the financial instruments and regulatory issues discussed behind closed doors at the FRBNY on June 9 are related to issues of public interest, which in fact are disproportionately impacting low- and moderate- income people and communities of color -- subprime and predatory mortgages.  Watch this site.

Update of May 5, 2008: From the field, Inner City Press' Tennessee sources tell of fast layoffs with no notice at Countrywide Financial's operations in Knoxville. Maybe they should shut the whole thing down...

Update of April 28, 2008: Today in Los Angeles before the Federal Reserve, Inner City Press / Fair Finance Watch and others opposes the proposal by Bank of America to acquire Countrywide. See, Chicago Tribune of April 23, "Countrywide ripped at hearing; Bank of America  told changes needed," reporting that Jesse "Jackson also called on BofA to respond to Fair Finance Watch data showing that it puts blacks into higher-cost loans nearly twice as frequently than whites."

Meanwhile, in the past week Bank of America has announced a 77 percent drop in earnings, calling into question even the safety and soundness rationale for allowing the second largest U.S. bank to buy a troubled subprime mortgage lender. The impunity factor has risen, with the news that Countrywide's Angelo Mozillo made $121 million in 2007 alone, exercising Countrywide  stock options, while promoting predatory lending and foreclosures all over the country.

While the grounds include not only lending disparities but also predatory credit card practices, enabling of payday lenders, presumptive violation of the 10% deposit cap and money laundering, since this is in California, consider that in the first study of the just-released 2007 mortgage lending data, Inner City Press / Fair Finance Watch has identified worsening disparities by race and ethnicity in the higher-cost lending of Countrywide and Bank of America. Combining these two would only make things worse.

            In the state of California in 2007, Countrywide confined African Americans to higher-cost loans 1.43 times more frequently than whites. If combined with Bank of America, N.A., the disparity for African Americans grows to 1.54.  Watch this site.

Update of April 22, 2008: Click here for ICP Fair Finance Watch testimony, in Word

Update of April 21, 2008: In the run-up to the April 22 public hearing on Bank of America's application to acquire Countrywide, Inner City Press / Fair Finance Watch has identified worsening disparities by race and ethnicity if the higher-cost lending of Countrywide and Bank of America were allowed to be combined.  The large and troubled Countrywide Financial, which Bank of America has applied to buy, confined African Americans to higher-cost loans 1.95 times more frequently than whites, and denied the applications of Latinos 1.53 times more frequently than whites.

            Combining Countrywide and Bank of America would only make things worse. In the state of California in 2007, Countrywide confined African Americans to higher-cost loans 1.43 times more frequently than whites. If combined with Bank of America, N.A., the disparity for African Americans grows to 1.54. 

            Similarly, in the state of Delaware in 2007, Countrywide confined African Americans to higher-cost loans 1.84 times more frequently than whites. If combined with Bank of America, N.A., the disparity for African Americans grows to 1.94.  The disparities for Latinos would also increase, from 1.29 to 1.32.

Update of April 7, 2008: In the first study of the just-released 2007 mortgage lending data, Inner City Press / Fair Finance Watch finds that Bank of America in 2007 confined African Americans to higher-cost loans 1.88 times more frequently than whites, and denied the applications of Latinos 1.62 times more frequently than whites. Meanwhile, the large and troubled Countrywide Financial, which Bank of America has applied to buy, confined African Americans to higher-cost loans 1.95 times more frequently than whites, and denied the applications of Latinos 1.53 times more frequently than whites.

            The U.S. Federal Reserve Board, while still trying to avoid any public comments on or review of the controversial Bear Stearns - JPMorgan Chase bail-out, has agreed to hold public hearings on Bank of America's Countrywide application, in Los Angeles on April 22 and in Chicago on April 29. Inner City Press and Fair Finance Watch had requested the public hearings, and in preparation are submitting to the Federal Reserve that Countrywide in the Los Angeles MSA in 2007 confined 18.91% of its African American borrowers to higher cost loans over the rate spread. Countrywide in the Chicago MSA in 2007 confined African Americans to higher-cost loans 1.93 times more frequently than whites, while confining Latinos to higher-cost loans 1.35 times more frequently than whites.

Update of March 31, 2008: So the Federal Reserve has at least granting public hearings -- really, just "meetings," which no right to cross-examine -- on Bank of America's application to acquire Countrywide, April 22 in Chicago and April 28-29 in Los Angeles. Strange there's no meeting on the East Coast, where B of A's headquarters is. Some say chairman Ben Bernanke should be the one presiding over and having to listen to the hearing, to try to make up for his dubious proposed bail-out Bear Stearns via JPM Chase. And why no public hearing on that? 

Update of March 3, 2008: Now Bank of America must file reports on its mortgage delinquencies and foreclosures with the Office of the Comptroller of the Currency. Information from October 2007 through February is due by March 31. Better late than never.

Update of January 21, 2008: In further chickens-coming-home-to-roost news, Bank of America last week said it will axe 650 jobs and sell its equity prime brokerage....And now Moody's said it will review BofA's "ability and willingness to raise capital to support its balance sheet after a number of sizable acquisitions, including Countrywide."

Update of January 14, 2008:  Bank of America is arguing that the 10% deposit cap will not prevent its proposed acquisition of Countrywide, since Countrywide holds its deposits in a savings & loan. But then the 10% deposit cap means nothing -- an institution could just shift deposits into a savings and loan and keep on buying up other institutions. We'll see. Countrywide's Angelo R. Mozilo has pocketed $410 million in salary, bonuses and stock-option gains since 1999, according to the executive compensation company Equilar. Now he stands to collect an additional $112 million in severance if Bank of America buys Countrywide. Predatory profits..

Update of December 3, 2007: Story of the week, capturing the decade, is the Charlotte Observer's Sunday overview, "Banks fail to escape sting of subprime." The subtitle is "They pulled back from scrutinized loans, but investment arms didn't," and the two main banks covered are the Charlotte twins, Bank of America and Wachovia. Both claimed to have gotten out of subprime, BofA all the way back in 2001. Then this quarter they have announced subprime-related write-downs of $3 billion and $1.1 billion, respectively. Clearly, they were not out of subprime.

Update of November 5, 2007: BizWeek says Troy Norton, 84, a retired prison guard who lives in Bismarck, Ark., claims in a lawsuit filed in June in U.S. Bankruptcy Court in Hot Springs that he was a victim of improper collection attempts by Bank of America Corp. and two collection agencies. He obtained a discharge of certain debts in June, 2006, after medical bills prompted him to seek Chapter 7 protection. Court documents show that he received eight collection letters from the bank on credit-card debt of $4,218 that a judge had canceled...

Update of October 22, 2007: What is the purpose of the Master Liquidity Enhancement Conduit being set up by Bank of America, Citigroup, JPM Chase and a few other banks? Not to help consumers, that's for sure. Rather, it's a way to cook their own books, and avoid reporting losses. That non-banks like PIMCO are not participating, despite the U.S. Treasury Department's Paulson's closed-door claims to the contrary to Italian central banker Mario Draghi, is telling. This is about banks helping themselves.

            And it's hit pop culture, at least on National Public Radio's Prairie Home Companion, on which this week detective Guy Noir traveled to Charlotte to dispute a credit card bill with the "Bank of North America," whose president lives in a 400 mansion with a trophy wife but admits that while  he made subprime loans, he doesn't understand them. Yes, that's Bank of (North?) America...

Update of October 15, 2007: Revolting revolving door: on the American Bankers Association's committee to weaken anti-money laundering laws are a slew of former regulators, including William Fox, former Financial Crimes Enforcement Network (Fincen) director, now at Bank of America, which hired directly from the agencies, and now use Fox to lobby for de-regulation...

Update of October 8, 2007: A deal-enabler tells DJNS that "Bank of America is the obvious suitor. It is interested in beefing up its wholesale and investment banking operations." Not said is that, even with its and the Fed's accounting tricks, BofA is at the 10% deposit cap in the U.S. and must look overseas...

Update of September 10, 2007: As the chickens come up to roost at Countrywide for its disparate lending, Bank of America steps in to buck it up, to the tune of $2 billion. Is this foray back into subprime lending relevant to BofA's proposal to acquire LaSalle? You bet it is...

Update of August 27, 2007: With Bank of America's proposal to invest in Countrywide, consider this, from Fox News of August 23

CAVUTO: Let's step back for a minute. As you know, the press has come up, Angelo, well, you know, when times are good, you were a savior. Now, when times are bad, you're a predatory lender, and you pounced on unsuspecting people. What do you think of that?

MOZILO: I think it's nonsense. I think it's absolute nonsense.

            But Countrywide's high-cost "Full Spectrum" unit was being called a predator even when "times were good." See, e.g., Buffalo News of June 5, 2007, reporting of ICP Fair Finance Watch's study finding that "at Countrywide Financial, even upper-income black borrowers got high-cost loans 1.92 times more frequently than white borrowers." And Countrywide settled charges of its racial disparities, in a case in which the NY Attorney General's office is still trying to withhold and, even if provided, overcharge for documents requested well more than year ago...

Update of August 13, 2007: B of A, so arrogantly pressing forward to swallow up LaSalle, last week saw the payday lender it assists, Advance America, hit by a class action. And what has BofA to say?

Update of August 6, 2007: The Federal Reserve asked Bank of America six questions, in connection with its application to acquire LaSalle Bank. BofA's answers are vague, and in places the arrogance leaks through. The first question was about fair lending; BofA answers that its reviews are conducted "under attorney-client privilege." The remainder of the response is more vague that the Fed has previously accepted from applicants. Even on questions about how BofA would "integrate" LaSalle, and which products it would keep, BofA says "no decisions have been made at this time." Unfair and deceptive credit card practices? We're still waiting to see a credible answer...

Update of July 16, 2007: Bank of America, fast becoming one of the most arrogant financial institutions in the world, last week wrote to the Federal Reserve Board, in response to the comments of Fair Finance Watch, that "at the time of Board approval... the combined company will hold less than 10 percent of nation's deposits." If so, it's by cooking the books. Reportedly, B of A has complained, inaccurately, that "foreign" banks like Royal Bank of Scotland, regarding which we'll soon have more, are exempt from the 10% deposit cap. That's a lie, but for B of A, increasingly, that's nothing new. It no longer even responses to issues raised about its enabling of payday lenders like Advance America Cash Advance. But see a forthcoming alternative weekly story coming out in North Carolina. Maybe B of A will try to sweep this predatory lending issue under the rug by buying (or withholding) advertising in alternative weekly. For shame... Meanwhile, B of A's Frans van der Grint told DJ that Bank of America now wants to complete the transaction as quickly as possible. We'll see.

Update of July 4, 2007 -- in honor of which, opposition has been filed to Bank of America's application to the Federal Reserve to gain control over more than 10% of deposits in the U.S. by acquire LaSalle Bank. Below is a summary of timely comments filed with the Federal Reserve Bank of Richmond and Federal Reserve Board in DC. The comments also raise issues of Bank of Ameica's lending disparities in 2006 and 2005, its enabling of high-cost payday lender(s) and subprime mortgage lenders, settlement of money laundering charges, etc.. Public hearings have also been requested on any application to acquire LaSalle which may be filed by the Royal Bank of Scotland / Santander / Fortis counter-bidders.

July 3, 2007

Federal Reserve Board - DC (by fax)

Federal Reserve Bank of Richmond
Attn: A. Linwood Gill, III, Asst Vice Pres., Gaile Clark
and Wayne P. Cox, Senior Financial Analyst
701 East Byrd Street, Richmond, VA 23261-4528
Re:   TIMELY COMMENT IN OPPOSITION TO BANK OF AMERICA’S  PROPOSAL TO ACQUIRE LASALLE BANK OF ABN AMRO N.A.  INCLUDING REQUEST FOR HEARINGS
Dear Messrs. Gill and Cox, Ms. Clark and others in the FRS: 
  On behalf of the Fair Finance Watch and its affiliates, including Inner City Press (collectively, "FFW"), this is a timely comment opposing and requesting public hearing on, and complete copy of, the applications by Bank of America ("BofA") and affiliates to acquire ABN Amro North America and LaSalle Bank.  Even as the proposal faces legal challenges in Europe, and would violate the 10% deposit cap in the U.S., the Federal Reserve Board's web site lists the initial comment period as running through July 3. This comment is timely. In light not only of the lending disparities set forth below, but also the antitrust and legal issues raised by Bank of America's gaming of the 10% deposit cap, its admission of money laundering and its engagement with predatory lenders, and legal and other questions about the deal, public hearings should be held.

 Bank of America, with the Federal Reserve's complicity, has been making a mockery of the 10% deposit cap which is one of the few consumer protections enacted along with Interstate Banking Act of 1994. It is imperative that the FRB schedule and hold public hearings on this issue.

 Meanwhile, in this case ABN Amro is trying to sell off LaSalle as a way to foil a proposal by RBS, Santander and Fortis to acquire it. FFW understands that litigation and appeals continue in Europe; the FRB should extend the comment period until the reality or hypothetical natures of this proposal is clear. For the record, FFW is also requesting, in advance, public hearings on any application by RBS, Santander and Fortis.

Bank of America continues supporting payday lender Advance America Cash Advance. See, e.g., South Carolina State of June 8, 2007: "In July 2004... Bank of America Corp. arranged a $265 million credit line for Advance America. Documents Advance America filed with the Securities and Exchange Commission indicate Bank of America administered the credit line. Not long after, Advance America announced an IPO that raised $195 million In a 2004 filing to the SEC, Advance America, which is headquartered in Spartanburg and is the nation's largest payday lender, essentially said it wouldn't be as big or as successful at corralling borrowers without banks. 'We depend on loans from banks to operate our business. If banks decide to stop making loans to companies in the payday cash advance services industry, it could have a material adverse affect on our business, results of operations and financial condition,' the company states in the SEC document."

 In the most recent year for which HMDA data is available from the FRS, 2005, Bank of America was strikingly disparate to Latinos, denying their applications 2.38 times more frequently than whites, and denying African Americans 2.27 times more frequently than whites.
            BofA's MBNA unit had a 4.23 disparity between pricing to African Americans and whites on conventional first lien home purchase loans: BofA's MBNA confined African Americans to rate spread loans 4.23 times more frequently than whites. The Federal Reserve has defined higher-cost loans as those loans with annual percentage rates above the rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.
 Bank of America in the New York City MSA in 2005 denied 17.4% of white applicants for conventional home purchase loans, while denying 27.5% of African American applicants, and 26.7% of Latino applicants.
 In the Chicago MSA, Bank of America denied 9.0% of white applicants for conventional home purchase loans, while denying 18.5% of African American applicants, and 17.9% of Latino applicants.
 In the Los Angeles MSA, Bank of America denied 15.7% of white applicants for conventional home purchase loans, while denying 30.1% of African American applicants, and 26.0% of Latino applicants.
 In the Houston MSA, Bank of America denied 15.1% of white applicants for conventional home purchase loans, while denying 22.9% of African American applicants, and 24.7% of Latino applicants.

 According to 2006 data provided by Bank of America, in 2006 BofA made 1655 loans over the rate cap to African Americans, 9748 to whites, and 2221 to Latinos. FFW will present further testimony on this regard at the requested public hearings.
  Bank of America continues not only supporting payday lender Advance America Cash Advance, and underwriting for problematic subprime mortgage lenders. FFW is requesting public hearings on these grounds.
  In late September 2006, Bank of America acknowledged that its lax operations allowed South American money launderers to illegally move $3 billion through a single Midtown Manhattan branch. BofA said that it ''takes seriously its anti-money laundering obligations'' and that it ''never knowingly does business with persons, organizations or businesses engaged in illegal activities and did not in this case.'' Most of the funds came from Brazil via a licensed money transmitter in Uruguay and then to the Bank of America branch, which allowed funds to reach unlicensed money transfer firms in the area.

  Bank of America is being sued for its role in the bankruptcy of Parmalat. FFW is requesting public hearings on these grounds as well as on Bank of America's student loans policies.

Very Truly Yours,

Matthew Lee, Esq., Executive Director
Fair Finance Watch and affiliates

Update of June 11, 2007 -- we've said it for three years, and now from the South Carolina State of June 8, 2007: "In July 2004... Bank of America Corp. arranged a $265 million credit line for Advance America. Documents Advance America filed with the Securities and Exchange Commission indicate Bank of America administered the credit line. Not long after, Advance America announced an IPO that raised $195 million In a 2004 filing to the SEC, Advance America, which is headquartered in Spartanburg and is the nation's largest payday lender, essentially said it wouldn't be as big or as successful at corralling borrowers without banks. 'We depend on loans from banks to operate our business. If banks decide to stop making loans to companies in the payday cash advance services industry, it could have a material adverse affect on our business, results of operations and financial condition,' the company states in the SEC document." That's what we've been calling the "enabling" of predatory lending...

Update of May 7, 2007: Story of the week was a Dutch court blocking ABN Amro's cynical poison-pill attempted sale of LaSalle to Bank of America, and BofA responding by suing ABN Amro.

Update of April 23, 2007: Why are we not surprised that Bank of America is buying into Sallie Mae, which alongside its controversial student lending is a subprime lender? Sleazy is as sleazy does...

Update of April 9, 2007: In a study of the just-obtained 2006 mortgage lending data, ICP & Fair Finance Watch have identified disparities by race and ethnicity in the higher-cost lending of some of the nation's largest banks. Bank of America, however, despite fax and email, has so far not provided its data.

Update of March 5, 2007: From FinancialWire: "Bank of America Corp.'s $3.3 billion acquisition of Charles Schwab Corp.'s wealth management subsidiary U.S. Trust will take about three months longer to complete than originally estimated.  Charles Schwab expects to close the all-cash sale early in the third quarter instead of the early second-quarter target established late last year when the stock brokerage announced the deal with Bank of America."

Update of February 19, 2007: The arrogance of Bank of America never ceases to amaze. While evading Congress' 10% deposit cap, BofA claims that any questioning of its number-game are unsubstantiated, and shouldn't even be considered by regulators. Money laundering and muni-bond scams, too -- none of it, BofA says, should be taken seriously. We'll see.

Update of February 12, 2007: Sleazy is as sleazy does. BofA last week announced it's paying a $14 million fine to the IRS, and cutting a lenient side deal with the Department of Justice on bid-rigging in the municipal bond market. So will the Federal Reserve inquire into this adverse managerial issue, as it considers BofA expanding its practices to US Trust? We'll see.

  This week from the mailbag we particularly recommend this "anecdote for your BofA/MBNA Watch," whose author at Emory University helpfully provides the following synopsis: "I got Universal-defaulted largely because of errors by the finance companies, and my account was never restored to its previous standing when I complained -- instead the company lied about the cause of the change in my account, blaming macroeconomic factors." More here.

Update of February 5, 2007: Bank of America's offshore tax shelter scheme has led to a too-small $3 million fine for money-laundering. The National Association of Securities Dealers found that Banc of America Investment Services failed to obtain customer information about 34 accounts involving trust and private investment corporations based in the Isle of Man. BofA "fundamentally failed to meet its obligations with these high risk accounts by failing to adequately investigate and pursue red flags," James Shorris, the NASD's head of enforcement, said-in-a-statement. The Senate's Permanent Subcommittee on Investigations said it thought the accounts were controlled by two billionaire Texas brothers, Sam and Charles Wyly. As part of a 375-page report on offshore tax havens, the committee said the brothers, who helped build craft retailer Michael Stores Inc., used the accounts to shield stock option gains from taxes. Sen. Carl Levin, D-Mich, the chairman of the subcommittee, said that the fine "sends a strong message to U.S. securities firms that when they open accounts for offshore entities and transfer offshore dollars across U.S. lines, they have a legal obligation to know who is behind those accounts or risk millions of dollars in fines and other enforcement action." And now BofA wants to buy another secretive private bank? See, "Protest filed against BofA's deal for U.S. Trust," by Rick Rothacker, Charlotte Observer, Jan. 27, 2007.

  Highway robbery or lies? Last week, Bank of America's CEO Lewis said that while BofA bought its 9% stake in China Construction for $3 billion in 2007, that investment is now worth almost $9 billion. Hmm.

Update of January 29, 2007: Inner City Press / Fair Finance Watch has filed a timely challenge to  Bank of America's application to acquire U.S. Trust, click here for Charlotte Observer article. Meanwhile rumors circulate of BofA trying to acquire Countrywide Mortgage, and getting further back into subprime. We'll see.

Update of November 27, 2006: In the hoopla about Fed chairman Bernanke agreeing to ride shotgun with Hank Paulson on his trip to pressure Beijing, something missed was the Federal Reserve's duty to scrutinize the China moves of U.S.-based holding companies like BofA. For these, the Fed is home country supervisor. And yet there's no public scrutiny, and little at the Fed, of the deals BofA has made in China. On U.S. Trust, that may well change....

Update of October 2, 2006: Bank of America admitted last week that its lax operations allowed South American money launderers to illegally move $3 billion through a single Midtown Manhattan branch. BofA said that it ''takes seriously its anti-money laundering obligations'' and that it ''never knowingly does business with persons, organizations or businesses engaged in illegal activities and did not in this case.'' Most of the funds came from Brazil via a licensed money transmitter in Uruguay and then to the Bank of America branch, which allowed funds to reach unlicensed money transfer firms in the area...

Update of August 7, 2006: As presented by the Sarasota Herald-Tribune in a July 31 report on Fair Finance Watch's filings with the Federal Reserve, "the group also notes the bank will wind up with an 'anti-competitive' market share in Charlotte. As of Dec. 31, Wachovia's 11 branches held $763.8 million in deposits in Charlotte, a 22.17 percent market share. Adding World's single  office and $184 million in deposits in Punta Gorda would boost its market share to 27.51 percent.... Wachovia isn't even the largest bank in Charlotte County right now. Bank of America's seven branches held $775.9 million in deposits, a 22.52 percent market share, as of Dec. 31." BofA, too, should divest -- and there should be no change to the 10% deposit cap nationwide, quite the opposite...

Update of July 31, 2006:  From the Charlotte Observer last week:

"For all the loopholes in the deposit cap law, a new study says it works too well: It limits the nation's largest banks in ways that are bad for customers.  Banks planning mergers may try to squeeze under the cap by shedding customers through higher prices or lower interest rates on deposits...When Bank of America announced it would buy MBNA Corp. last summer, the two companies held 10.2 percent of the nation's deposits. So the Charlotte bank went on a diet. AUNC professor found Bank of America paid a weighted average of 1.21 percent on its interest-bearing accounts in fall 2005. The rates at rival Wachovia Corp. were 37 percent higher. Predictably, the bank lost the deposits it needed to lose.  Customers temporarily lost a competitor for their money. Bank of America also has embarked on a series of major investments in foreign banks, another prediction of the Brookings study. Most recently, it paid $3 billion for a 9 percent stake in China Construction Bank."

   But what of BofA's funding to UNC?

Update of July 24, 2006: Bank of America last week reported higher earnings for the April-June period because of its acquisition of credit card company MBNA propped up results.  CFO Alvaro de Molina ordained a pause in the Federal Reserve's two-year campaign to raise interest rates -- not because it will make things easier for consumers but because of concern that too much tightening will push the U.S. economy into recession.  'A pause is something that should happen, and I embrace it,' de Molina said. 'But (I) embrace it not so much from a Bank of America short-term earnings perspective. I embrace it because overdoing could cause value destruction.'"  How very big-minded...

Update of July 10, 2006:  Spinning wildly, BofA spokesman Terry Francisco says Ken Lewis' comment during an investor call were "taken out of context" and were only a response to a reporter's question about Morgan Stanley analyst Betsy Graseck's report that the bank could save more than $70 million annually by building its own network. "We don't have any firm plans to pursue it, so it's not something that we can really expand upon." We'll see...

Update of June 26, 2006: The New York Times (June 24) asked BofA's CEO

"Bank of America has made some investments internationally -- mainly partnerships or joint ventures. Why?"

"A. We certainly need to build our global capital markets and investment banking capabilities on a worldwide basis. We have essentially built out our capital markets capabilities in the U.S. We are still adding to our investment banking capabilities. And we are now embarking on a more global solution by building out our capital market investment banking activities in Europe and Asia. The first phase will be more emphasis in Europe because we are already bigger there. The second phase will be Asia. And that is probably a two- to three-year journey."

  Uh, how about, Bank of America is barred by the ten percent deposit cap from making bank acquisitions in the U.S., and so looks overseas, where it is far from expert?

Update of June 19, 2006:  In computer glitch news, Inner City Press received a call on the afternoon of June 17 from a BofA customer, that her deposits weren't being credited and that BofA told her there was a computer glitch, that supposedly only impacted customers in Maryland and DC. But the caller was (and is) in Florida...

Update of June 5, 2006: Just another compliance violation -- last week the Cox-softened SEC filed Bank of America for violations in auction-rate securities which favored certain customers over others, and tilted the auctions in favor of issuers over customers...

Update of May 15, 2006: One of the many MBNA workplaces closed by BofA, in Maine, may now become a school, "Founders College of North Carolina," by a current Duke professor... In Delaware, after having cut 760 jobs on April 10, BofA made much last week of a donation to a low income housing group. For those who lost their jobs?

Update of May 8, 2006: Bank of America likes to hide behind others. On May 2, BofA announced a proposal to acquire a $2.2 billion stake in Banco Itau through an asset-swap, which would involve Itau taking control of BofA's BankBoston unit in Brazil, which has about 140 offices and $9 billion of assets under management. Itau has also been given exclusive rights to buy subsidiaries of BankBoston in Chile and Uruguay. BofA's strategy is hard to fathom...

Update of May 1, 2006:  Now it's war. Amid the rancor at Bank of America's annual shareholders meeting, elected to the board of directors was Generalismo Tommy Franks. Somewhere, Hugh McColl's glass hand grenade is popping its pin...

Update of April 24, 2006: BofA continues to withheld specific numbers on job cuts. They haven't said "how many jobs were shed last month when the bank merged what had been two separate departments involved with evaluating the creditworthiness of prospective cardholders," as noted even by the press in Delaware. But here's a score card: 630 Dover credit card call center; 128 Former MBNA mortgage operation near Newark; 1,270 Call centers in Horsham, Pa. and Colorado Springs, CO; and 350 At four Maine call centers 

Update of April 17, 2006: Another boot is dropping. Bank of America is closing three card-services call centers and laying off 900 workers in Colorado Springs, Horsham, PA, and Dover, Delaware. The Dover plant employs 630. BofA also reported that it is planning to sell MBNA's headquarters in downtown Wilmington, Delaware. Great merger...

Update of April 10, 2006: The 2005 Home Mortgage Disclosure Act data, which Inner City Press / Fair Finance Watch received in late March from Bank of America, reveal that Bank of America in 2005 was more disparate to Latinos, denying their applications 2.38 times more frequently than whites, and denying African Americans 2.27 times more frequently than whites.

            BofA's MBNA unit had a 4.23 disparity between pricing to African Americans and whites on conventional first lien home purchase loans: BofA's MBNA confined African Americans to rate spread loans 4.23 times more frequently than whites. The Federal Reserve has defined higher-cost loans as those loans with annual percentage rates above the rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.

    Bank of America's cover letters to Inner City Press state that BofA no longer controls the subprime lender OwnIt, and to ask for OwnIt's data directly from the company. BofA declined to provide an address, or to state what it's percentage of ownership in OwnIt is. Developing...

Update of April 3, 2006:  From Colorado Springs, more BofA threats. "We should know something within a week or two," said Mike Kazmierski, president of the Greater Colorado Springs Economic Development Corp, referring to the BofA call center at 301 S. Rockrimmon Blvd. BofA would neither confirm nor deny plans for its closure. "We are still finalizing our site strategy, and if we have anything to communicate, we'll communicate to our associates first," said spokeswoman Alex Liftman. The bank plans to eliminate 6,000 jobs nationwide as part of the consolidation cutbacks, Liftman said... Meanwhile, BofA's chief of "global marketing," Cathy Bessant, was quoted regarding distancing the bank from Barry Bonds that "There is no reason to stand up for controversy. A company like ours is always going to choose the untainted opportunity." Oh really? Then why does BofA underwrite for pools of subprime mortgages by, for example, Ameriquest, which settled charges of predatory lending for $325 million?

Update of March 27, 2006: BofA's post-MBNA layoffs continue. Last week, Delaware: "Bank of America is planning a new round of job cuts in Delaware as it combines one of its credit card departments with operations acquired in the buyout of MBNA Corp. The reductions, disclosed Wednesday... will come early next month in 'credit acquisition' departments, Bank of America spokesman Ernesto C. Anguilla said. He wouldn't say how many employees will be laid off or how many people work in the departments. A total of about 500 people are believed to work in credit acquisition in the bank's Delaware operations." This follows the job-slashing in Maine and elsewhere...

Update of March 20, 2006:  More law-breaking: Bank of America last week said the Internal Revenue Service has determined that several of its pension fund transfers violated tax law.  The IRS discovered the violation during an audit of tax returns for Bank of America's pension plan and 401(k) plan. B of A said it is continuing to participate in administrative proceedings with the IRS.  How magnanimous of BofA...

Update of March 13, 2006: Investigators of collapse of Parmalat SpA named three former Bank of America executives as suspects that may be tried for contributing to fraudulent bankruptcy and other alleged crimes, according to DJNS last week. The prosecutors have named Luca Sala, Luis Alfonso Moncada and Antonio Luzi as suspected of having provided loans to the Italian dairy firm at above-market costs, while being aware the company's balance sheets were "blatantly false," and without informing the market. According to Parma's prosecutors, Sala, Moncada and Luzi, "with many ctions linked to a single criminal plan," provided Parmalat with huge loans, while covering Bank of America's risks on such exposure. The executives' transactions were allegedly aimed at helping Parmalat out of liquidity problems and at obtaining reimbursement for older Bank of America loans. Flipping, anyone?

Update of March 6, 2006: No jobs too small -- last week it was announced that Banc of America Securities will give strategic advice to Applica Inc. a "Miramar, Fla., provider of small electric consumer goods"…

Update of February 27, 2006: On March 10 BofA will shut down call centers in Maine, at Portland and Farmington, Fort Kent and Presque Isle.  Grandstanding governor went to visit, but reporters were not allowed to accompany him inside the Fort Kent call center on Feb. 22. One reporter was stopped from going inside, and another was asked to leave the grounds. Higher standards – for entry, it appears, but not on money laundering.  Manhattan District Attorney Robert Morgenthau has said that BofA is close to settling the investigation into the laundering of money from South America.  BofA moved about $2 billion through New York branches from clients in South America, Mr. Morgenthau said. Most of the transfers were made for a Uruguayan company that operates near the borders of Paraguay, Argentina, and Brazil…

Update of February 20, 2006:  Oops, they did it again. On Feb. 10, Bank of America Corp. acknowledged reissuing debit cards to customers because of a security breach at a third-party company that handles cardholder information.  BofA’s Betty Reiss refused to say how many cards had been reissued or how many may have been affected. Nor would she say the type of company where the breach occurred. How transparent…  On Feb. 9, B of A had denied knowledge of such a breach.

  In further MBNA slash-and-burn, Bank of America Corp. will shut down four Maine call centers. Maine MBNA facilities set to be closed on March 10 are in Farmington,
Fort Kent, Portland, and Presque Isle. AP estimated that 350 employees will lose their jobs when the centers close...

Updated February 13, 2006: Bank of America, fresh from strong-arming a new law in Delaware, tells Arizona that moving its charter to Delaware won’t have any impact. "Location of the charter does not impact our corporate tax obligations to Arizona or any other state," BofA’s Alex Liftman spun. "The decision to select Delaware has no bearing on decisions regarding jobs or facility locations." We’ll see…

Update of February 6, 2006: In the run-up to Super Bowl XL in Detroit, Inner City Press / Fair Finance Watch has analyzed mortgage lending patterns in the Detroit Metropolitan Statistical Area in the most recent year for which data is available, 2004. At Bank of America, N.A., American Americans were over 26 times more likely to be confined to higher cost loans than whites…

  Amid the news stories about FinCEN’s Bill Fox cashing out with a money laundering job at Bank of America, there’s not been questioning of how or if this is different from the Office of the Comptroller of the  Currency’s examiner of Riggs Bank going to work for the bank. The OCC – Riggs move resulted in anti-revolving door provisions applicable to bank regulators. But why shouldn’t they cover FinCEN officials? In an interview on January 30, Fox said that “an attractive job offer from Bank of America… contributed to his decision to leave government service for the private sector.” This means that while Fox was head of FinCEN, charged with enforcing money laundering laws at BofA and elsewhere, BofA made him “an attractive offer.”  And thus the regulatory process is corrupted by Bank of America…

Update of January 30, 2006: In another show of BofA’s role in the political process and race to the bottom, its threats have resulted in the passage of (even) more bank-friendly laws in Delaware.  “State lawmakers… voted to make the change, which will offer banks chartered in Delaware a choice of tax structures, in less than an hour. And in a little more than an hour, the governor had signed it onto the books. With only Sen. Karen Peterson, D-Stanton, abstaining, the Senate approved Senate Bill 249 in a 20-0 vote after about 40 minutes of debate. It took the House only five minutes to approve the bill on a 40-0 vote…. Alexandra Liftman, a Bank of America spokeswoman, said the bank "applauded" the state's fast action, but said no final decisions on where to charter MBNA's operations had yet been reached.” News-Journal, Jan. 25. Pressuring for yet more goodies? 

Update of January 17, 2006:  While BofA has finagled OCC approval to build a Ritz-Carlton hotel in Charlotte, questions are being asked how its high-cost administration of DoD Community Bank, for U.S. military personnel. More on this in coming weeks.

Update of January 9, 2006:  While in the U.S., with its WARN Act, Bank of America is still being coy about lay-offs, they have already started in Europe, specifically UK. In Chester they plan to cut 400 jobs, with 150 staff being asked to leave by
April. A spokesman told the Liverpool Daily Post: "We are going through a process of consultation with our staff at the moment.” And in the U.S.? Where will the 6000 job cuts be imposed? Developing…

 Meanwhile, the subprime lending of the BofA-enabled OwnIt fka Oakmont  grew by leaps and bounds in 2005, moving up from $950 million in the first quarter of 2004 to over $2 billion in the first quarter of 2005, according to the most recent figures reported by Origination News / Mortgage Line…

Update of December 26, 2005: B of A’s Liam E. McGee said in a conference
call last week that the bank has largely completed its plan for how to mesh the two businesses. But he refused to say how many jobs will be lost at specific locations. Meanwhile, BofA is selling BankBoston Argentina to a group that includes Standard Bank Group Lts. of Johannesburg and two Argentine families. BofA’s Jeff Hershberger bragged that no approval is needed from U.S. regulators.

Update of December 19, 2005:  Having cooked the books for optics (supposedly 9.7%, under the 10% cap), the Fed last week hauled off and approved the BofA-MBNA application. This despite, for example, having sent a letter to Inner City Press extending its time under the Freedom of Information Act, stating that “we are extending the period of our response until December 21, 2005, in order to consult with another agency or with two or more components of the Board having a substantial interest in the determination of the request.” How can the Fed legitimately extend its time to respond past that required in FOIA, and then approve the application during the extension?

            Meanwhile, on the Servicemembers’ Civil Relief Act issues, the OCC has written to ICP predicting that it will provide, by January 4, the requested information about complaint against BofA’s and MBNA’s lack of compliance with SCRA. We’ll see.

Update of December 5, 2005: Military personnel on active duty are being overcharged on high interest loans by Bank of America and MBNA, a new investigation of compliance with the Servicemembers’ Civil Relief Act (SCRA) by Inner City Press / Fair Finance Watch has uncovered.  Through documents just obtained under the Freedom of Information Act, ICP had documented widespread violations of the SCRA, defrauding and overcharging of those in active military service, and regulatory inertia in dealing with the abuses. ICP has immediately written to the Federal Reserve, demanding inquiry into and action on these newly unearthed documents, prior to any ruling but denial on BofA’s application to acquire MBNA. We’ll see…

Update of November 14, 2005:  While its MBNA application pends, and the Federal Reserve has extended its time to respond to ICP’s FOIA request, Bank of America Corp. has received regulatory inquiries, including subpoenas, as part of investigations into the collapse of Refco Inc., the bank disclosed on November 9. Bank of America was one of three lead underwriters of Refco's $583 million initial public offering in August. Refco filed for bankruptcy Oct. 17 after its former chief executive was indicted on securities fraud...

Update of November 7, 2005:Better late than never? It took the Federal Reserve five weeks to ask Bank of America to retract or justify its September 8 demand that basic fair lending information be withheld. Then BofA took a full two weeks to answer the Fed’s questions. Finally the following disclosures:

“Bank of America indirectly owns 24.9% of the voting common equity of Ownit... In August 2005, Bank of America, N.A. transferred the Ownit residential mortgage loan portfolio purchased during March 2005 to Asset Backed Funding Corporation (‘ABFC’). ABFC is an affiliate of Bank of America Corporation that is a limited purpose corporation that securitizes residential mortgage loans... ABFC securitized these Ownit loans, along with similar loans from another loan originator, in its approximately $1.2 billion ABFC Asset-Backed Certificates, Series 2005-HE2 transaction. Banc of America Securities LLC served as the underwriter in that transaction.... In two separate transactions on March 9 and March 14, 2005 Bank of America N.A. purchased Ownit residential mortgage loans in an aggregate amount of approximately $265 million. These loans were held for the account of Bank of America, N.A. until they became part of the August 2005 securitization described at Item 2.b above. These loans were purchased in a competitive, arms-length process at fair market terms” -- followed by more than half a page blacked out.

            Bank of America’s attempt to hide its argument may be understandable -- it is simply not credible that BofA bought “in an arms-length process” subprime loans from a subprime lender of which it owns 24.9% (to fall just below 25%). Similarly, Bank of America still blacks-out its answer about servicing for subprime lenders, and the terms of its dealings with the subprime lenders it now publicly admits it does business with, including: Ameriquest Mortgage Corporation (including “whole loan trading”); Option One, Centex, New Century, Saxon, Metris (the subprime card lender HSBC is trying to acquire), Delta Financial, First Franklin, WMC (subprime lender now owned by GE), Fremont Investment & Loan (rogue subprime lender which claimed it would only give its HMDA data if one signed a confidentiality agreement), Capital One, CIT, WFS -- and Ownit, regarding which BofA blacks-out the column labeled “ABS/MBS Underwriting,” after elsewhere publicly admitting it performs those functions for Ownit’s loans.  ICP is challenging these continued withholdings, and raising the deposit-reduction scam described in the American Banker newspaper of November 3. Developing...

Update of October 31, 2005: Despite two recent rulings by the Federal District Court for the Southern District of NY, the Fed has yet to release any of Bank of America’s answers about its funding of other subprime lenders (including for example the payday lender Advance America Cash Advance). Of course, BofA’s decision to try to withhold such information is at odds with its claims to be transparent, at least as to environmental issues, made last week at the UN including by ex-Fleet spokesman James Mahoney. BofA paid for the UNEP FI conference, so perhaps that’s what earned the spot at the closed-door press conference.

Update of October 24, 2005: Bank of America’s insanely redacted and withheld responses to the Federal Reserve’s questions about CRA and fair lending have yet to be released. Meanwhile, Standard Bank Group says it is in talks to buy Bank of America's BankBoston Argentina unit...

Update of October 17, 2005: While BofA bragged about its approval in Delaware, Commissioner Glenn there explicitly deferred to the Federal Reserve on CRA and fair lending matters. And a recent FRB loss in ICP’s ongoing FOIA case (reported in this week’s Fed Watch Report) applies directly to BofA’s ongoing withholding of information about its engagements with subprime lenders - developing..

Update of October 10, 2005: Inner City Press has now challenge with the FRB BofA’s withholdings under the Freedom of Information Act:

         Bank of America’s September 8 submission to the FRB answers each of the first three questions, all of which concern CRA and/or fair lending, by referring to “Confidential” exhibits. ICP contests the withholding of these exhibits. ICP expected to receive some or all of this information, pursuant to the FRB’s duty / practice of reviewing requests for confidential treatment, particularly in connection with submissions subject to the FRB’s rules against ex parte communications. But since September 8, ICP has not received any of the withheld information. If the FRB has review the broad withholdings and upheld them, this should be considered an appeal. In any event, ICP is contesting Bank of America’s requests for confidential treatment, and requests to receive all information not fully exempt under FOIA BEFORE the Board rules on BofA’s application to acquire MBNA.

         The withheld portions of BofA’s September 8 submission include, for example, information that must be made public, in SEC filings and elsewhere. Question 3 asked about BofA’s engagement with subprime lenders as underwriter, custodian, servicers, etc.. These roles must be and are disclosed in SEC filings -- as simply one example, ICP’s timely comments noted BofA securitizing for Ameriquest, as reflected by public SEC documents. This matter was addressed in Judge Cote’s recent decision in ICP’s FOIA case regarding the Wachovia - Southtrust proceeding. BofA’s request for confidential treatment, and the FRB’s failure to provide this information in the past month, militate for an extension of the comment period after all improperly withheld information is released.

            As Bank of America proposes to acquire MBNA, it recently wrote to customers of its debit card unit warning that they may have had sensitive information compromised following the theft of an unencrypted laptop computer. Customers may have had their bank account numbers, routing transit numbers, names and credit card numbers compromised by the theft. Visa Buxx is a prepaid credit card for teenagers that the Bank of America (BofA) stopped selling in January. How edgy. The laptop, which belonged to an unnamed Bank of America "service provider" was stolen on Aug. 29, said Diane Wagner, a BofA spokeswoman. The bank was notified of the theft on Sept. 9, and began sending out the letters after a two-week investigation, she said. Wagner would not name the service provider, say how many BofA customers had been affected or even confirm that the theft had occurred within the U.S. This is not the first time BofA has had to notify account holders of identity theft. In March, it confirmed that information on about 60,000 of its customers had been stolen by an identity-theft ring. The March disclosure came just a month after BofA revealed that it had lost digital tapes containing the credit card account records of 1.2 million U.S. federal employees (IDG).

Update of October 3, 2005: Mailed to Inner City Press on September 22 was a memo from September 12 from Fed staffer Michael J. Di Gennaro, cursorily summarizing a September 7 meeting between the Fed and Bank of America:

“On September 7, 2005, staff from the Board and the Federal Reserve Bank of Richmond (collectively, “System Staff”) met with John H. Huffstutler (Associate General Counsel), Phillip A. Wertz (Assistant General Counsel) and Chandler J. Martin (Treasurer), all of Bank of America... The sole topic of the meeting was a discussion of the business steps that BOA was taking and planned to take to meet the nationwide deposit concentration limits of Section 3 of the Bank Holding Company Act (the “Deposit Cap”) given BOA’s prospective merger with MBNA Corporation. The discussion lasted approximately 45 minutes. The meeting involved descriptions of business strategies and operations that are proprietary and confidential. [REDACTED].”

            The purpose of the Fed’s rules is to make sure that challengers have a right to participate in, or at the very least know the contents of, communications between the Fed and applications about the issues raised by the challengers. The terse and late-provided description above evades the rules entirely. The above was followed by a short September 21 letter from BofA’s Phillip Wertz: “By our calculations, as of June 30, 2005, Bank of America held $579.632 billion in domestic deposits and MBNA held $29.345 billion in domestic deposits, for a combined pro forma total giving effect to the merger of $608.977.” Developing...

Update of September 26, 2005: Last week, Inner City Press / Fair Finance Watch filed the following with the Federal Reserve, on B of A / MBNA --

...ICP has submitted comments on July 11 and August 27, 2005; BofA’s responses have been curt and boilerplate. While the FRB has asked BofA for, among other things, fair lending related information, BofA has arrogantly withheld all portions of its answers (which ICP hereby challenges).  The FRB extended the comment period through September 23; this comment is timely.

         Continuing, without explanation, underwriting for Ameriquest (which since ICP’s last comment has entered yet another settlement, this time with authorities in Georgia), and lending to the payday lender Advance America Cash Advance, are two examples, that particularly injure low and moderate income communities.  When asked about it, in this case by the FRB, BofA tries to withholding all of its answers. BofA’s applications should be denied.

         ICP received a partial copy of BofA’s September 8, 2005, submission.  ICP is hereby contesting the withholding of BofA’s “Confidential Exhibits,” which virtually all of BofA’s responses to the FRB’s fair lending and CRA questions refer to. FRB Question 1 was explicitly about fair lending (no portion of the response has been provided). Question 2 concerns an issue ICP has raised, BofA’s role with the subprime lender OwnIt. Amazingly, the entire response is withheld (“Confidential” Exhibit 2). Question 3 was about subprime lenders; BofA cynically withholds the entire answer (despite the fact that many of the relationships are of public record, in SEC filings, UCC filings and otherwise). On this very issue, the FRB has recently been instructed by Judge Cote of the USDC for the Southern District of New York. ICP has now submitted a formal FOIA request / appeal. The comment period cannot be allowed to expire while ICP does not have and cannot comment on this information, which ICP should have received with the September 8 letter, prior to the September 23 expiration of comment period.

         ICP also contests the withholdings in BofA’s August 30, 2005, submission, withholding in full all information about due diligence, and antitrust. ICP contests “Confidential” Exhibits 1 and 5, and portions of 2-4, including in the FOIA request / appeal filed today.

         While the FRB has referred to the second quarter FDIC data, ICP has been informed by more than one source that BofA’s “spin” to these individuals is that the third quarter FDIC data will, according to BofA, show the proposed combined entity below the 10% deposit cap. On this ground as well, the comment period must be extended.

   We’ll see...

Update of September 19, 2005: While Bank of America tries to withhold even the most basic answers about its fair lending programs and involvements with subprime lenders, and plays sleight of hand with the 10% deposit cap, the Federal Reserve wrote to ICP in a September 13 letter: “This concerns your request dated August 27, 2005, for an extension of the public comment period [which] closed on August 30, 2005. Based on all the facts of record, including the fact that deposit data as of June 30, 2005, were not publicly available from the [FDIC] until August 29, 2005, the Secretary of the Board... has determined to extend the period for receiving your comments on the Application to the close of business on Friday, September 23, 2005.”   So, there’ll be more comments forthcoming.

Update of September 12, 2005: In Delaware, the official public hearing on BofA - MBNA, required by state law, is now scheduled for September 27 in Wilmington. These are usually pro-applicant, with no cross examination allowed...

Update of September 5, 2005:  From last week’s Charlotte Observer:

Bank of America in 2003 acquired a stake in a California-based high-rate lender now known as OwnIt Mortgage. The bank is an investor in a private equity fund that bought out the company, previously known as Oakmont Mortgage. In 2004, OwnIt made about 56 percent of its 1,640 loans to African Americans at a high rate, according to an analysis by New York-based consumer advocate group Inner City Press/Fair Finance Watch. Bank spokeswoman Julie Davis said the company has an investment in OwnIt, but doesn't run the business. Bank of America packages high-rate loans for sale to investors. In the first quarter, the company was No. 18 among issuers of these securities, according to Inside Mortgage Finance. "We do feel there is a place for subprime lenders," Davis, the bank spokeswoman, said. "They help provide credit to those who otherwise would not have access to credit." Bank of America, however, does not condone "discriminatory, predatory or illegal practices" by mortgage lenders and has procedures to ensure mortgage loans with these characteristics are not securitized, she said.

    Then why does BofA continue to securitize for Ameriquest, which has stated its under investigation by over 30 states’ attorneys general for predatory lending?

Update of August 29, 2005:  ICP/Fair Finance Watch has filed a timely supplemental comment on B of A - MBNA, expressing support for other protests filed requesting an extension of the comment period, and putting into the record further adverse issues:

Re:        TIMELY SUPPLEMENTAL COMMENT IN OPPOSITION TO BANK OF           AMERICA’S PROPOSAL TO ACQUIRE MBNA INCLUDING REQUEST       FOR HEARINGS, BY INNER CITY PRESS/FAIR FINANCE WATCH

            On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, “ICP”), this is a timely supplemental comment opposing, requesting public hearings on and copies of all applications related to the proposal, announced by Bank of America on June 30, 2005, to acquire MBNA and its affiliates ("MBNA").  ICP submitted its first comment on July 11, 2005, and three and a half weeks later on August 5, Bank of America submitted a purported response (the “Resp.”). Since then, ICP has awaited both the Delaware-focused CRA plan that BofA said it would be releasing, and the clearly-necessary details on how BofA would comply with the 10% deposit cap. Neither has been forthcoming, and ICP is writing to demand that the comment period be extended, and, on this record, that BofA’s application be dismissed or denied.

            BofA’s treatment of the 10% deposit cap in its application is essentially one of “trust us.”  It is an arrogant and absurd position. The comment period must be extended to that time, to allow public comment.

            BofA’s vague claim to have standards are not credible.  As shown, BofA is the main lender to payday lender Advance America Cash Advance, which is being sued by the North Carolina Banking Commissioner, and B of A's role as securitizer of subprime mortgage backed securities including those of Ameriquest, under investigation by its own admission in 30 states for predatory lending. Even since ICP’s first comment, BofA has been named as a lead underwriter on yet another Ameriquest issuance (under the name “Park Place,” see Reuters of August 18, 2005). BofA is clearly on notice, and must explain how this is consistent with its claims of standards, and with necessary due diligence and safeguards.

            BofA’s arrogant Response claims, at 4-5, that BofA “does not condone... predatory... practices” and has written guidelines (not provided) to this effect. But how then can BofA be continuing to underwrite for Ameriquest, right after Ameriquest said it is setting aside $325 million to settle predatory lending investigations by at least 30 state attorneys general?

            The insufficiency of BofA’s response is exemplified also by the treatment of 100 branch closings.  Beyond generalities, BofA says “with respect to Washington state closings, the data cited by ICP is incorrect: only two of the banking centers will be closing, and these closings were made only after taking into consideration the community impact as required by our branch closing policy.”  While BofA calls ICP’s “data” incorrect, here is what ICP said, of Washington State:

   While Bank of America claims its closing cause no consumer harm, see for the record the Seattle Times of June 17, 2005, “Bad news from ‘down below’: Town's only bank will close” --

“Bank of America plans to shut low-volume branches in several Washington towns. Darrington wonders how its business will go on if the nearest bank is 30 miles away.   Can a community exist without a bank? That's what the residents of Darrington, an old logging and mill community of roughly 3,000, are wondering in light of the news that their only bank, a Bank of America branch, is closing Sept. 9. The next-closest bank of any kind is in Arlington, a 30-mile drive...Though a Bank of America spokeswoman wouldn't say how many accounts there were at the local branch, business owners, from looking at the checks they receive, estimate about half the community's residents have personal accounts in town... The Washington towns of Okanogan, Republic, Sumas and Sultan will also lose their Bank of America branches, said Diane Wagner, a company spokeswoman based in Chicago... Republic also will be hit hard - the next-closest branch is nearly 40 miles away in Colville, Stevens County... "I think they're very concerned with how they're going to bank with us," Wagner said, suggesting that Darrington residents could bank over the Internet or by mail. "People choose how they want to bank with us." But residents say that after the branch is gone, most won't want to use Bank of America at all. "We didn't hear much of anything until they announced they were leaving," said Jones, who is upset with the lack of warning given by the bank (letters to customers dated June 10 were sent out over the past week).”

            So -- is BofA saying that this newspaper article was wrong? Did BofA write to this newspaper to correct the public record? And regardless, of what significance of BofA’s branch closing policy and “consideration” if the above, publicly reported, is the result?  It is not enough, just to allude to standards.

            For now, on BofA’s 2004 mortgage lending record, ICP has now analyzed BofA’s first lien loans.  Since BofA has publicly claimed not to understand the methodology, it’s simple: ICP has cumulated the three LARs that BofA provided in response to ICP’s request for BofA’s 2004 LARS: BofA, NA, Fleet and OwnIt, the subprime lender that BofA controlled in 2004 (notwithstanding BofA’s obtuse footnote 3 in its purported Response).  For first liens in 2004, within this BofA, African Americans were 2.27 times more likely than whites to be confined to higher cost, rate spread loans. African Americans were denied by BofA 1.91 times more frequently than whites. Latinos were 1.93 times more likely than whites to be confined to higher cost, rate spread loans. Latinos were denied by BofA 1.87 times more frequently than whites.

            BofA’s lack of standards is pervasive. Also, the US Senate’s report in March 2005 on Pinochet’s funds, http://levin.senate.gov/newsroom/supporting/2005/pinochetreport.pdf, identifies accounts at among others Bank of America.  The report states that

“from 1993 until 2004, Bank of America maintained 3 U.S. accounts and as many as 6 CDs at a time for Mr. Pinochet’s daughter, Ines Lucia Pinochet. At least three of these CDs, in the amount of $100,000 or more, were purchased in 2002; the other CDs, which ranged in value from $10,000 to $125,000, were purchased between 1996 and 2002, and some were held in trust for one or more of her sons. The maximum amount of funds in Ms. Pinochet’s Bank of America accounts at one time totaled about $420,000, in December 2002. One source for the funds in the accounts was a $300,000 Riggs cashiers check issued in September 2002, which withdrew funds from Ms. Pinochet’s account at Riggs in London. The cashiers check was deposited into Ms. Pinochet’s Bank of America account on September 30, 2002. Nine days later, on October 9, Ms. Pinochet purchased three $35,000 Bank of America cashiers checks and later deposited two of them into an account she held at PineBank in Miami.... On January 3, 2001, BankBoston cashed a Riggs cashiers check dated August 18, 2000, for $50,000, made payable to ‘Augusto Pinochet.’”  

            So much for “know your customer.” What sets BofA apart from most other of the banks exposed in the Pinochet reports is BofA’s arrogance. The cavalier approach to the 10% deposit cap is only one example. Continuing, without explanation, underwriting for Ameriquest, and lending to the payday lender Advance America Cash Advance, are two examples, that particularly injure low and moderate income communities.  BofA’s applications should be denied.

Update of August 15, 2005:  Who knew? MBNA, in an SEC filing on August 9, disclosed tersely that it acquired the British home equity lender Marlin House Holdings Ltd. on August 1. MBNA did not disclose the price but said that as a result of the purchase it recorded goodwill and other intangible assets of around $200 million. It said the acquisition would not significantly affect its results and "reflects the continuing efforts of the corporation to diversify." Yeah -- diversify into predatory lending... On that, a fit with Bank of America, which lends to Advance America Cash Advance, and securitizes for Ameriquest...

Update of August 8, 2005:  BofA in Italy, running from the law -- Italian police arrested Luca Sala, the former managing director of Bank of America Corp.'s Milan branch, on August 3. He’s alleged to have siphoned money from Parmalat accounts. The court ordered him arrested to prevent him from tampering with evidence...

Update of August 1, 2005: While it’s not yet on the Federal Reserve’s web site, Bank of America has submitted its application to acquire MBNA.  Inner City Press received a portion of the application (some is being withheld.)  In it, Bank of America makes this argument:

“Section 3(d) provides that an interstate acquisition may not be approved if the applicant controls or, upon consummation would control, ‘more than 10 percent of the total amount of deposits of insured depository institutions in the United States.’ 12 USC 1842(d)(2)(A).  As of March 31, 2005, Bank of America controlled approximately $595,716 billion in U.S. deposits, representing approximately 9.995% of nationwide deposits. [Footnote in original: Adjusted consistent with the methodology set forth in Bank of America Corporation, 90 Federal Reserve Bulletin 217 (2004.) [ICP note: If BofA controls over five hundred thousand BILLION in deposits, as it states, then this application cannot be approved. Sure, maybe it’s a typo. But the cynical footnoting of the Federal Reserve’s already BofA-friendly methodology is telling.]

         “As of March 31, 2005, MBNA controlled approximately $29,584 billion in U.S. deposits, representing approximately 0.496% of nationwide deposits. Based on March 31, 2005 pro forma numbers, post-Merger Bank of America would hold approximately 10.491% of nationwide deposits.”

            After admitting that, BofA argues that the calculation will be different, when (and if) it “consummates” the deal.  It cites to “Board precedent” that “the appropriate time to test compliance for the combined company with the nationwide deposit cap is ‘upon consummation’ of the transactions, not at the time of application.”  But the Fed cannot legal APPROVE a merger than goes over 10%.  Essentially, BofA is saying “trust us,” telling the Board that it “believes it is appropriate for the Board to proceed with consideration of this Application based on the above information.”

            Not, it is not appropriate. In fact, the Fed should dismiss BofA’s application...

Update of July 25, 2005:  So Bank of America is out of subprime? Well, it controls OwnIt Mortgage Solutions, which last week priced a $687 million subprime mortgage-backed securities deal. The one-year senior notes priced at 12 basis points over one-month Libor, with the 5.89-year triple-As pricing at 50 basis points over one-month LIBOR...

Update of July 18, 2005:  Bank of America on July 13 settled charges that its customers, particularly the elderly, were hard-sold inappropriate annuities.  Bank of America claims it will now change its annuity sales, training and management policies throughout the U.S.  As reported by the Wall Street Journal, “as part of the agreement, Bank of America will allow customers who were at least 78 years old in 2003 and 2004 and purchased variable annuities during that period to liquidate their investments without surrender charges that can be several percentage points of the annuity's value. In almost all cases, customers would still face hefty tax penalties. The settlement covers about 800 people in Massachusetts and several thousand in the rest of U.S., although the bank wouldn't specify exactly how many.”  How’s that for transparent?  More light should be shed on the issue in the BofA-MBNA proceeding.

Update of June 11, 2005: Inner City Press / Fair Finance Watch (ICP) has just filed a 30-page challenge to the application by Bank of America to acquire MBNA, for $35 billion, and form the largest credit card issuer in the United States. ICP's comments, filed under the Community Reinvestment Act with the Federal Reserve Board in Washington, demand public hearings on the proposals potential to raise prices and undermine consumer privacy, and on striking lending disparities in B of A’s just-released mortgage data. A summary is below.

                                                                                          July 11, 2005

Board of Governors of the Federal Reserve System

Attn:  Chairman Greenspan, Governors & Jennifer J. Johnson, Secretary

20th St. and Constitution Ave, N.W.Washington, DC 20551

Re:        OPPOSITION TO BANK OF AMERICA’S PROPOSAL TO ACQUIRE    MBNA, INCLUDING REQUEST FOR PUBLIC HEARINGS, SUBMITTED     AT THE EARLIEST POSSIBLE TIME BY INNER CITY PRESS / FAIR FINANCE WATCH

Dear Chairman Greenspan and others in the FRS:

            On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, “ICP”), this is a comment at the earliest possible time opposing, requesting public hearings on and copies of all applications related to the proposal, announced by Bank of America on June 30, 2005, to acquire MBNA and its affiliates ("MBNA").

            This proposal is anti-competitive. Bank of America, already one of the troika of controllers of the American banking system, seeks to acquire another major credit card lender. BofA's credit card division would become the largest in the nation, with 40 million active cardholders and $143.2 billion in outstanding balances -- a market share over 20% (N.Y. Times, July 2, 2005). If these proposal were approved, the top ten issuers would control over 80% of the market.  Credit card pricing is already only questionably competitive: as presented to the Senate last month, while the prime rate fell by 4.5 percentage points from 8.75 percent in February 2000 to 4.25 percent in  November 2002, meanwhile, average credit card interest rates fell by  1.52 percent during the same period, from 14.3 percent to 12.78 percent. A hearing is also needed on issues related to Bank of America’s, and this proposal’s, compliance with the letter and spirit of the 10% deposit cap, given MBNA’s deposits of (at least) $31.2 billion in deposits. See, e.g., the Boston Globe of April 4, 2004, quoting ICP on this issue and noting that “With the Fleet merger, Bank of America holds 9.9 percent of the nation's approximately $5.3 trillion in deposits. In determining that the banks fit under the 10 percent cap, the Federal Reserve Board included deposits from territories outside  the 50 states, including Puerto Rico and Guam. Even so, the banks  barely squeaked under the wire.”

            Beyond conventional antitrust  (but within Jeffersonian antitrust grounds), note that "the combined companies and their employees have given federal candidates and parties nearly $ 22 million over the past 15 years -- making the combined  company America's top corporate contributor." (Charlotte Observer, July   7, 2005). Such concentrations of power need to be scrutinized,  including at the public hearings ICP is requesting, on grounds including not only antitrust but CRA and the other issues raised below. Also, given the Bank of America has “lost” the private information of consumers, including even members of Congress (see Roll Call of March 2, 2005) granting it access to MBNA’s roster of customer information (which includes information MBNA has purchased, for example from universities like Ohio State) militates for hearings on other negative impacts on consumers that would flow from this proposed combination.  ICP is requesting a hearing on these grounds, and on the fair lending and CRA issues below.

            In this initial submission, in support of these requests and under the Community Reinvestment Act ("CRA"), ICP sets forth troubling disparities in Bank of America’s mortgage lending in 2004, and shows that Bank of America lends to and enables, apparently without standards, high-cost fringe financial institutions such as payday lenders, pawnshops and rent-to-own stores, for example Advance America Cash Advance. Bank of America also enables, by securitizations from BofA’s Asset Backed Funding Corporation unit, such troubling subprime lenders as Ameriquest - including by purchasing loans from Ameriquest, which is under investigation for predatory lending by the attorneys general of at least 25 states. Bank of America aided Chile’s dictator Pinochet to gain access to the American banking system, as documented in the Senate’s report on March 16, 2005 (and see Knight Ridder News of March 16, 2005: “The report says Bank of America had three U.S. accounts for Pinochet  and six certificates of deposit between 1993 and 2004.”) BofA is under investigation for its questionable activities in connection with the Parmalat scandal; domestically, it has just announced it plans to close at least 100 branches. As set forth below in this comment, some of the closures would leave the nearest branch 30 or more miles away. Further anticompetitive consolidation by Bank of America should not be approved, as it is contrary to the public interest and the interest of consumers.

            First,  Bank of America’s own disparate lending record. ICP requested from Bank of America the 2004 Home Mortgage Disclosure Act (“HDMA”) data of all of its affiliates. BofA provided three files: Bank of America, NA; Fleet; and OwnIt Mortgage, a subprime lender which Bank of America controls. ICP has analyzed each separately, and cumulated, and has found systemic disparities which much be addressed, including at the public hearings ICP is requesting.

Bank of America, N.A. - 2004 Mortgage Lending Disparities

            ICP has analyzed Bank of America, N.A. (“BANA’s”) 2004 mortgage lending nationwide, in a half-dozen representative states and in cities such as Washington DC.  Nationwide, for home purchase loans, Bank of America, N.A. in 2004 denied applications from Hispanics 2.104 times more frequently than from whites, and denied applications from non-Hispanic Blacks 2.063 times more frequently than non-Hispanic whites.  For all types of loans, Bank of America NA denied the applications of African Americans and Hispanics over 1.9 times more frequently than whites. While most of Bank of America’s subprime loans -- those over the federally-defined rate spread of three percentage points over comparable Treasury securities on a first lien, and five percent on a subordinate lien -- were through OwnIt (see below), at Bank of America, N.A. for home purchase loans Hispanics were 1.39 times more likely to receive higher cost “rate spread” loans than non-Hispanic whites; non-Hispanic Blacks were 2.20 times more likely to receive rate spread loans than non-Hispanics whites. For all types of loans at Bank of America, NA in 2004, Hispanics were 2.55 times more likely than whites to receive higher cost loans.

            ICP has also reviewed Bank of America NA’s lending in representative states. In Delaware, which would be negatively impacted by this proposed merger, Bank of America NA in 2004 denied the applications of African Americans 2.99 times more frequently than whites, and denied the applications of Hispanics 3.31 times more frequently than whites. In its home state of North Carolina, Bank of America NA in 2004 denied the applications of African Americans 2.11 times more frequently than whites, while being 3.19 times more likely to confine African Americans to higher cost / rate spread loans than whites.

            In South Carolina, Bank of America NA in 2004 denied the applications of African Americans 2.68 times more frequently than whites, while being 3.80 times more likely to confine African Americans to higher cost / rate spread loans than whites.   In Tennessee, Bank of America NA in 2004 denied the applications of African Americans 1.96 times more frequently than whites, and denied those of Hispanics 2.06 times more frequently than whites. In New York State, Bank of America NA in 2004 denied the applications of African Americans two times more frequently than whites, and denied those of Hispanics 1.84 times more frequently than whites. In Illinois, Bank of America NA in 2004 denied the applications of African Americans 2.64 times more frequently than whites. In California, Bank of America NA in 2004 denied the applications of Hispanics 1.91 times more frequently than whites, while being 2.58 times more likely to confine Hispanics to higher cost / rate spread loans than whites. 

            ICP has analyzed Bank of America in a number of cities. See, e.g., Buffalo News of May 9, 2005 and Memphis Commercial Appeal of May 13, 2005 (in which, unlike in this proceeding, BofA refused to respond about the disparities in its lending, claiming that “Without knowing ICP's methods, Bank of America can't validate the  figures.” These figures are directly from the 2004 Loan Application Registers that BofA provided.  In the Washington DC MSA, Bank of America NA in 2004 denied the applications of African Americans 1.99 times more frequently than whites, and denied those of Hispanics 2.05 times more frequently than whites.

            Fleet, on which Bank of America “closed” last year, made only 3024 mortgage loans of any kind to African Americans in 2004. Fleet’s low level of lending, particularly to protected classes, is incongruous in light of the commitments Fleet made in connection with acquisitions include of Bank of Boston. In Connecticut in 2004, BofA combined with Fleet denied the applications of Hispanics 2.74 times more frequently than whites, while being 2.12 times more likely to confine Hispanics to higher cost / rate spread loans than whites. 

            Bank of America-controlled subprime lender OwnIt Mortgage in 2004 made 56.77% of its 1640 loans to African Americans at higher costs. MBNA, beyond credit cards, is a not-insubstantial mortgage lender. In 2004, over 48% of its loans to African Americans were higher cost loans over the rate spread.

            Bank of America, despite its sale of Equicredit and reported shuttering of NationsCredit, is still extensively involved in controversial subprime lending. It controls a majority stake in the subprime lender OwnIt Mortgage (f/k/a Oakmont Mortgage), on which ICP will be commenting to the Federal Reserve.  Bank of America securitizes high interest rate loans through · Banc of America Securities, LLC, Banc of America Mortgage Capital Corporation and its 100%-owned (but generically-named) subsidiary Asset Backed Funding Corporation; perhaps most tellingly, Bank of America, now purchases loans of subprime lenders, for example from Ameriquest.  See, e.g., Fitch's June 9, 2005, press release on Business Wire concerning ABFC Asset-Backed Certificates 2005-AQ1stating that the underlying loans were “by Ameriquest Mortgage Company, they were subsequently purchased at closing by the depositor, Asset Backed Funding Corporation.” Fitch has also specified, April 8, 2005, that “Asset Backed Funding Corporation will deposit the mortgage loans into the trust. The depositor is a Delaware corporation and a wholly owned, indirect subsidiary of Bank of America Corporation. The depositor is an affiliate of Banc of America Securities LLC.” The SEC filing references a “ Pooling and Servicing Agreement, dated as of June 1, 2005, by and among Asset Backed Funding Corporation, Ameriquest Mortgage Company” and specifies that “On the closing date, the mortgage loans will be sold to the depositor by Bank of America, National Association, an affiliate of the depositor and the underwriter, which acquired the mortgage loans from the originator.”  Bank of America NA, which is subject to the Community Reinvestment Act, buys subprime mortgage loans from Ameriquest, a subprime lender that is by its own admission under investigation by the attorneys generals of at least 25 states. See, e.g., the Los Angeles Times of March 15, 2004, in which ICP “called Ameriquest a ‘serial settler’ whose ‘best practices,’ adopted over the last five years, have not changed the way it does business... Fair-lending advocates will be watching what happens to ensure this isn't a case of ‘sweeping the Ameriquest problem under the rug and allowing them to harm more people.’”

        ICP also wishes to emphasize Bank of America’s documentable support of fringe finance: for example, as the major lender to the major payday lender Advance America Cash Advance. See sample UCC filings attached. ICP's ongoing review of Uniform Commercial Code (UCC) filings has found that Bank of America enables payday lenders, including with multiple loans the payday lender Advance America Cash Advance, regarding which see, as simply one example, the Palm Beach Post of August 31, 2002, at Pg. 1A: "Advance America is under investigation for its practice of ‘rolling over’ short-term payday loans, which use a post-dated personal check as collateral against an expected paycheck. Assistant Attorney General Roger Handberg said rollovers had the effect of creating loans that exceeded the state's 18 percent limit in its usury laws. Interest rates above 25 percent can result in criminal penalties, he said. The investigation was opened in May 2000 and Advance America immediately went to court to avoid the subpoenas. An appeals court ruled only recently that Advance America had to comply with the subpoenas, Handberg said."

            Bank of America is the main funder of Advance America. For example, in an April 16, 2004 response to ICP comments to the Federal Reserve, National City Bank stated:  “National City is also a [REDACTED] senior secured Bank of America agented credit facility for Advance America (HQ in Spartanburg, SC).”

Given Bank of America’s demonstrable (through the most recent HMDA data) disproportionate exclusion of communities of color and lower income neighborhoods from its offers of normal interest rate credit, its funding of payday lenders and other providers of high-cost fringe finance is particularly troubling, and predatory.

            Sample consumers’ complaints against Bank of America, including its credit card operations, are attached and incorporated by reference into this request for public hearings.

            On privacy issues, “an amended complaint was filed last Thursday against Bank of America in Mercer County (Jones v. Bank of America, MER-L-1455-05)   -- New Jersey Law Journal of June 13, 2005.   For the record, Roll Call of March 2, 2005, “Staff Data Lost by Bank of America,” reported that

“Along with personal information on more than two-dozen Senators, computer data tapes lost by Bank of America Corp. in late 2004 contained sensitive details about nearly 100 charge card accounts used by Capitol Hill staff. According to the Senate Rules and Administration Committee, approximately 120 charge card accounts used by Senators and their aides are profiled on the missing computer data tapes, which Bank of America officials have said contain information on more than 1.2 million accounts used by federal employees. Bank of America publicly acknowledged late last week that it lost the tapes, which contain personal data such as Social Security numbers and addresses. A spokeswoman for the Rules panel said the tapes included accounts used by 28 Senators and 92 staff members. In addition, the missing data may also include accounts used by the Senate Sergeant-at-Arms office. Bank of America spokeswoman Alexandra Trower declined to comment on specific accounts.”

            Even more recently, the San Francisco Chronicle of June 29, 2005, reported that “the names, addresses and Social Security numbers of about 18,000 Bank of America customers throughout California went missing last month when a laptop containing the confidential data was stolen from a car in Walnut Creek.”

            As to the types of information BofA would be gaining access to via this proposed merger, see, e.g., the Columbus (Ohio) Dispatch of March 21, 2004, “DEAL COULD LET MBNA CALL ALUMNI” --

Ohio State says it was shielding students from an onslaught of  credit-card solicitors by granting MBNA exclusive marketing rights on   campus in exchange for $1.3 million a year. But the deal opened the marketing floodgates to OSU's alumni -- a group 358,000 strong and growing -- whose names, home phone numbers and addresses were given to the credit-card company. Before the MBNA deal, OSU had never given the alumni information en masse to a company, according to officials in OSU's alumni office. In the age of do-not-call lists, that information is increasingly valuable, says a privacy expert. Some alumni aren't happy and say they had no idea their information was distributed... The Federal Trade Commission, which oversees the do-not-call list, said  the MBNA-OSU arrangement could constitute a business relationship. Ohio State can claim a business relationship with students because they pay tuition, said Katie Harrington-McBride, FTC spokeswoman. Whether that transfers to MBNA would depend on the contract, parts of  which OSU is not making public.”

            ICP’s public hearing request is also on these issues. As set forth above, there are other adverse managerial issues at Bank of America. Bank of America aided Chile’s dictator Pinochet to gain access to the American banking system, as documented in the Senate’s report on March 16, 2005. See, e.g., International Enforcement Law Reporter of May 2005, and Knight Ridder News of March 16, 2005: “The report says Bank of America had three U.S. accounts for Pinochet  and six certificates of deposit between 1993 and 2004. Shirley Norton, a spokeswoman for Bank of America, said her institution was ‘not going to comment much’ on the report.”  But compliance with anti-money laundering laws must be considered in connection with mergers - particularly a proposed mega-merger of this size.

            Additionally, BofA is under investigation for its questionable activities in connection with the Parmalat scandal. See, e.g., BANK OF AMERICA MANAGERS MIRED EVEN DEEPER IN PARMALAT SCANDAL (BANK OF AMERICA, L'ACCUSA DI PRICE),” Il Sole 24 Ore of January 29, 2005

”Prosecutors in Milan investigating the collapse of Italian food group Parmalat have placed four former Bank of America (BofA) managers under official investigation for collusion in money laundering, along with a manager from Swiss bank Graubundner Kantonal Bank. Bank of America has already been indicted as a corporate defendant for aiding market rigging by Parmalat in a trial currently underway in Milan. Prosecutors have now based their additional allegations on a series of off-balance sheet swap contracts, reportedly used by Parmalat to pay insurance premiums covering loans and private bond placements organized by BofA. Parmalat allegedly made the payments through the Swiss bank to hide any direct paper trail to BofA, but several numbered accounts which received the funds had reportedly been opened by Luca
Sala, a BofA manager in Italy. The contracts were discovered by auditing firm PriceWaterhouse Coopers, which has been hired by Parmalat's special administrator, Enrico Bondi, to reconstruct the bankrupt group's accounts.”

            Domestically, “federal and state authorities are probing whether Bank of America violated securities and anti-money laundering laws in helping Sam and Charles Wyly shelter more than $100 million in stock-option gains from U.S. taxes. The paper indicated the probes could expand to include other wealthy clients of the Charlotte, N.C.-based bank.”  CNN Money of June 3, 2005, reporting on a Wall Street Journal report of that date.

            See also, for the record, eFinancialNews of March 29, 2005, “Bank of America's Lewis paid $ 19.3m amid scandals”-

Last year, Bank of America was the first bank to settle a class-action suit alleging that it and other financial institutions participated in a scheme with Enron, the bankrupt energy company, to deceive shareholders. Earlier this month, the bank agreed to pay $ 460.5m to settle a suit brought by investors in bonds of WorldCom, the bankrupt telecoms company. Last month, it agreed to pay $ 375m to settle charges of improper trading of mutual funds laid against it by the SEC.”

            In this proposed merger, the unprecedented level of payouts / inducements to MBNA insiders in  this case raise other issues: MBNA's CEO, who negotiated the sell-out, stands under its terms to receive an estimated $126 million; the COO stands to get $140.5 million, and a vice chairman, $69.5 million. (Wilmington News Journal, July 6, 2005). Bank of America would cut at least 6,000 jobs, affecting a number of local economies. MBNA is the largest private employer in Delaware, a major player in Maine and elsewhere. 

            Bank of America’s lack of standards is also reflecting in its role as underwriting for and lender to Correctional Properties Trust, of which S&P’s Corporate Description of July 2, 2005, states:

 “Correctional Properties Trust is a Maryland REIT that acquires correctional and detention facilities from both private prison operators and governmental entities, and leases such facilities to experienced correctional and detention facility operators that operate the facilities under management or operating agreements with various federal, state and local government authorities. The company believes that it is the only publicly-traded REIT which focuses exclusively on the acquisition and ownership of correctional and detention facilities... The company believes that the demand for additional prison beds to accommodate the increase in inmate population and the lack of capital available to finance new facilities will continue to create growth opportunities for the privatized corrections industry in the United States...

through “Banc of America Securities LLC, offered 3,250,000 Common shares at $25.50 per share; comm., $1.33875 per share.”

           Bank of America has just announced it plans to close at least 100 branches. While Bank of America claims its closings cause no consumer harm, see for the record the Seattle Times of June 17, 2005, “Bad news from ‘down below’: Town's only bank will close” --

“Bank of America plans to shut low-volume branches in several Washington towns. Darrington wonders how its business will go on if the nearest bank is 30 miles away.   Can a community exist without a bank? That's what the residents of Darrington, an old logging and mill community of roughly 3,000, are wondering in light of the news that their only bank, a Bank of America branch, is closing Sept. 9. The next-closest bank of any kind is in Arlington, a 30-mile drive...Though a Bank of America spokeswoman wouldn't say how many accounts there were at the local branch, business owners, from looking at the checks they receive, estimate about half the community's residents have personal accounts in town... The Washington towns of Okanogan, Republic, Sumas and Sultan will also lose their Bank of America branches, said Diane Wagner, a company spokeswoman based in Chicago... Republic also will be hit hard - the next-closest branch is nearly 40 miles away in Colville, Stevens County... "I think they're very concerned with how they're going to bank with us," Wagner said, suggesting that Darrington residents could bank over the Internet or by mail. "People choose how they want to bank with us." But residents say that after the branch is gone, most won't want to use Bank of America at all. "We didn't hear much of anything until they announced they were leaving," said Jones, who is upset with the lack of warning given by the bank (letters to customers dated June 10 were sent out over the past week).”

More needs to be (and will be) said, but ICP will await the applications (as soon as they are filed), along with copies of the FRB's correspondence with and about Bank of America and/or MBNA, and the banks' responses. Specifically, based on prior FRS precedents, at a minimum the following question(s) should be asked, and publicly answered:

"For any business relationship (e.g. commercial lender, warehouse lender, purchaser, custodian, etc.) that Bank of America or MBNA or any of their affiliates have with any subprime lenders (including providers of non-traditional banking products, such as check cashers, title lenders, pawn shops, or rent-to-own businesses): (i) identify the relevant business parties and (ii) describe the nature of the business relationships... Additionally, to the extent not otherwise covered in your responses to the comments of the Inner City Press Community on the Move & Fair Finance Watch, describe any due diligence that Bank of America or MBNA typically conducts concerning any such subprime lender's compliance with applicable fair lending and consumer protection laws prior to Bank of America or MBNA entering into these business relationships, including... (c ) any monitoring or other ongoing procedures Bank of America or MBNA has adopted to access compliance with these laws. Provide a copy of such procedures that are used to determine whether third party originators are engaged in, or facilitating, abusive and/or predatory lending practices."

            These questions must be asked, and the responses should be made public, as argued in the FOIA case between ICP and the FRB still pending in the Southern District of New York.

            For the reasons set forth in the attached, the FRB should schedule the requested evidentiary hearings. On the current record, the FRB should deny this proposal.

If you have any questions, please immediately telephone the undersigned, at (718) 716-3540.

Very Truly Yours,

Matthew Lee, Esq.

Executive Director

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