Sixth Avenue & 42nd Street (Part Three)

24 Jun

One final look at how Bank of America got to where they are today.  We left off somewhere in the heady days of 1980s style deregulation, bankruptcy and greed.  My last post was pretty dense, I know, but one thing I wanted to emphasize I guess is that even when these giant corporations fail they don’t really seem to go away.  They declare bankruptcy, they get restructured and then another giant corporation buys them and everyone continues to make shit loads of money – except for all the little folks who got laid off of course.  Even when regulators force a giant corporation to divest some of its holdings they just form into another giant corporation (which is then inevitably bought by another giant corporation).  It seems they can’t lose – and yes, the government is certainly implicated in all of this, because, of course, these people are the government.  We actually have a very strong safety net in this country, it’s just that it’s only for the people at the top.  (It’s too bad the Tea Party folks are assholes about everything else, because I think they’re actually pissed off about this kind of thing also.)

Anyway, getting back to good ole’ Bank of America, there seemed to be a little break in their interstate acquisitions after they acquired Seafirst Bank (on the brink of being seized by the federal government in the early 80s), I guess because BoA was going through some troubling times themselves.  After some big, big losses in 1986-87 and the ensuing decline in their stock value BoA had to scramble to fend off hostile takeover attempts – including from First Interstate Bancorp, who as I mentioned last time around were originally Bank of America branches themselves that BoA had been forced to divest (see I told you, none of these businesses actually ever go away!)  Bank of America survived that scare, mainly by selling off its subsidiaries to various other corporations, like Charles Schwab and Chrysler (now owned by Fiat by the by), so that by the early 1990s BoA was back on its feet and in a strong enough position to buy its one-time California rival Security Pacific Bank in what was the largest bank acquisition in history up to that point.  The deal included a number of banks in several states throughout the western U.S. that Security Pacific had themselves just recently acquired, so Bank of America was back in the interstate business big time baby!  Around this time they acquired Continental Illinois National Bank and Trust Company (as mentioned in my last post).  With all these new goodies they were the largest bank in the United States (in terms of deposits) until a little mom and pop number out of Charlotte, North Carolina called NationsBank Corporation overtook them.

Now I don’t think I’d ever heard of NationsBank before, even though they were briefly the largest in the nation, but here’s one reason why: they’re Bank of America now!  The two banks merged in 1998 – though in truth NationsBank acquired Bank of America (translation: NationsBank won (and maybe I should have been writing on their history this whole time)).  Even though NationsBank was the survivor of the acquisition (once again the largest in history) they took Bank of America’s name and still operate under Bank of America’s federal charter – though their headquarters remained in Charlotte.  Once the two banks merged it seems there was no stopping them.  Succinctly put (because it’s kind of depressing to dwell upon) since 1998 they’ve gone on to acquire: FleetBoston Financial (the 7th largest bank in the U.S.), MBNA Corporation (the world’s largest independent credit card issuer), a 6% stake in the Brazilian Banco Itau (now Itau Unibanco, the 10th largest bank in the world), U.S. Trust Corporation (making BoA the largest manager of private wealth in the U.S.), LaSalle Bank Corporation (making BoA the largest bank in the Chicago market), Countrywide Financial (making BoA the leading mortgage originator and servicer in the U.S.), and lastly Merrill Lynch (solidifying in a major way BoA’s place as one of the biggest financial service companies in the world).

Then the whole crash thing happened in 2008 – largely because of the housing bubble bursting and subprime mortgages catching up to everyone and whatnot (just a reminder Bank of America was the leading mortgage originator and servicer in the U.S.).  Then Bank of America got something like a $138 billion bail-out from the federal government to ensure they’d survive the whole financial turmoil the crash unleashed.  To date – and to the best I can determine (it’s really hard to understand all this) – Bank of America has paid something like $27 billion in fines, lawsuits and paybacks to the government and affiliated parties.

I’d say that I offer all of this without comment or judgement, but I think I’ve already commented and judged.  You can think whatever you want though.  For now I think I’ll go back to writing about libraries and parks.  They’re so much nicer.


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