In the mid 1990s, Fleet Bank, originally out of Boston, aggressively pursued business in the New York City market. They got mine. In 2003 Fleet was faced with a class action suit involving a bait-and-switch credit card scam where it promised no annual credit card fees then would bill the fees a few months later. An honest bank is hard to find. I should have known better than to sign with a bank named after a bottled enema. Fleet was acquired by Bank of America in 2004.
I filled out the requisite papers; my financials were sent to Rochester NY, my account representative was in Boston, the underwriter in Chicago. I had a business line of credit, like I always had, paid the fees as I always had and so it went. I never actually met anyone in person from Bank of America. I was not too big to fail; I was too small to notice.
Countrywide, the largest U.S. mortgage lender, misrepresented its financial condition and the soundness of its loans in security filings, the officials said Saturday... The company was forced in August to draw down its entire $11.5 billion credit line from a consortium of banks because it could no longer sell or borrow against home loans it had made. It has laid off about 11,000 employees since the summer. (From the New York Times, March 2008)
Countrywide Financial was valued at $24 billion in 2007. It was taken over by Bank of America in 2008 for $4 billion.
At the end of 2009, with the economy going badly and so many businesses doing poorly, my line was reviewed. I was fortunate to have an underwriter assigned to my account that, after several conversations and reviewing my financials, believed in my business. He approved my line, kept the fees reasonable and wished me luck going forward.
The underwriter had recently come to Bank of America as a result of one of the many bank acquisitions made with TARP funds. In the fall of 2008 through the federally funded, taxpayer-backed Troubled Asset Relief Program, Bank of America received $25 billion. Bank of America, along with other banks, who also received federal funding, essentially ceased making money available to small businesses. They did go on a spending spree to diminish their competition through acquisition and increase fees on everything else. We taxpayers not only bailed out the banks, they charged us additional funds through those fees to do it.
"The major credit-card lender [Bank of America] in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase." (BusinessWeek, Feb. 7, 2008)
It was a busy fall for Bank of America; they announced their intent to take over Merrill Lynch & Co., saving them from bankruptcy on the same day that Lehman Bros. announced theirs. The Merrill deal closed on January 1, 2009.
"Bank of America Corp., the largest U.S. bank by assets, received a $138 billion emergency lifeline from the government to support its acquisition of Merrill Lynch & Co. and prevent the global financial crisis from deepening. ($20 billion in TARP funds, $118 billion in government asset guarantees.)" (Bloomberg News, Jan. 16, 2009)
Although Merrill surprised its new owner by suffering a massive $15 billion loss in their fourth quarter, CEO John Thain doled out bonuses of $4 billion to Merrill executives.
"The Securities and Exchange Commission filed charges Monday against Bank of America for misleading investors about billions of dollars in bonuses paid to top executives at Merrill Lynch following its purchase of the brokerage giant." (CNNMoney.com, Aug. 3, 2009)
In August 2009, without either admitting or denying guilt, Bank of America agreed to pay a $33 million fine, to the U.S. Securities and Exchange Commission.
"Bank of America will pay $108 million to settle federal charges that Countrywide Financial Corp., which it acquired nearly two years ago, collected outsized fees from borrowers facing foreclosure. It's the latest evidence of misconduct at Countrywide, once an industry giant that has since fallen. Last year, three top executives, including former CEO Angelo Mozilo, were charged with civil fraud and insider trading by the Securities and Exchange Commission." (Associated Press, June 7, 2010)
By the end of 2010, my business improved substantially. I was proud of the fact that I had not laid off any employees, continued to provide health care and never missed any payments to anyone. Like my parents, who owned their own small business, surviving tough times is an accomplishment to feel good about.
"Bank of America will pay $137.3 million to settle allegations that it defrauded schools, hospitals and dozens of other state and local government organizations, federal officials said Tuesday. The settlement stems from a long-running investigation into misconduct in the municipal bond business that raises money for localities to pay for public services." (Washington Post, Dec. 7, 2010)
Don't worry about those fines hurting Bank of America. Their global banking and markets division made $6.2 billion dollars in 2010.
At the end of 2010 I received a letter from Bank of America informing me that my credit line would not be renewed. I immediately called my representative and discovered I had been assigned a new person.
"How are you today?" He had an upbeat voice, in total opposition to the downbeat news he was giving me.
"When I got your file", he continued, "I couldn't help but to notice your last name, Madoff." He said as if performing a level of detection equal to Sherlock Holmes.
"Don't you always notice the name on your client's file?"
"Well, your name is kind of famous in financial circles."
"I go around in financial circles when I talk to bankers."
"If you don't mind me asking; are you any relation? Not that it makes a difference."
"Then why are you asking?"
"Just curious." He said.
"No, I'm not that Madoff. But I'm curious as to why you are discontinuing my line of credit."
"I'm sorry," He said as if comforting me about someone's death, "but it's not up to me."
He was the messenger and had no authority to do anything other than politely show me the exit. The underwriter I had worked with last year was no longer on the account. I was informed that establishing relationships is what makes bankers susceptible to making bad decisions; the bank was trying to avoid that by constantly switching who works on what account. Maybe they learned something from their acquisitions of Countrywide and Merrill Lynch.
I got on a conference call with my new representative in Boston and underwriter in Chicago. They had never met in person and most likely never will.
"We assessed your metrics and parameters of your KPI, key performance indicators and made our decisions based on that," said the underwriter.
"I don't know what that means, but does the fact that I've been a client for years, never missed a payment, have no debt and have increased my business with new and long term blue-chip clients in a very challenging economy mean anything?"
"How do you know you won't lose those clients?" she asked.
"I don't know. How do you know you won't die in your sleep?"
I realized the significance of the abbreviation for Bank of America: B-o-a, as in boa-constrictor, it squeezes the life out of its victims by applying constant pressure. I was told I'd get their final decision in a week.
During that time I approached two banks, both of which offered me the line of credit I requested at far lower rates than Bank of America. In February of 2011, I signed with a new bank.
I had my last conversation with my Bank of America representative: "We value our relationships with our clients." He said. "If there is anything I can help you with, please don't hesitate to ask."
An honest bank is hard to find.