Suffice it to say that Bank of America has had a rough go this year. I know, I know....all of us have had a rough couple years, and the FS industry will continue to feel it the worst, but I feel like our poor friends at BofA has had it particularly hard. After the financial melt down, they were met with throngs of angry consumers and a buffet of high visibility, embarrassing issues. In late August, they seemed to be entering an upswing when Warren Buffet invested $5M into the company, but was immediately thrown to a new round of questioning when the Wall Street Journal published that they might be taken over by JP Morgan. (Not that Buffet investing is particularly surprising since he's basically gone on record to say "Who doesn't like a fire sale? They're practically giving it away! Normal people buy extra socks when there's a sale, Buffet buys into giant financial companies. Different strokes I guess.) After multiple reports of behind-doors meetings between Geithner and JP Morgan's CEO (Jamie Dimon) and claims that this sort of transaction would be prohibited because BofA and JP Morgan would cumulatively control too much of the financial sector, reports just stopped coming, and the world began to focus more on BofA's embarrassing problems.
Most likely in an attempt to get their balance sheet back in order, Bank of America also announced in August that it would selling off its international international credit card businesses. In doing so, Bank of America was pretty much cannibalized by other companies, with TD Bank (Canada), Apollo Capital Management (Spain) and Barclays dismantled their existing portfolios and subsumed them into existing operations. After earnings calls or what people are now just calling "results", it was revealed that Bank of America finally fell behind JP Morgan (ouch) in being the largest American bank as measured by assets. To add insult to injury, this happened despite the fact that JP Morgan faced its own decreases in revenue this year. Bank of America did manage to sneak in some upbeat messages during their results calls, but these points were later revealed to be inflated by a more "creative" interpretation of one-time items and releases of loan-loss reserves. Buffet also went on record to say that Bank of America was "not properly integrating their systems or cutting unnecessary branches" at the same time that Bank of America announced that they planned to cut approximately 30,000 jobs over the next few years. Whether the intent was to justify or critique is questionable.
Finally, as one of the first banks to announce the debit card fee, Bank of America was the last major bank to eat their words and cancel their plans for this fee. (I mean, who can blame them? People were setting their cards on fire in protest in front of their offices...seems a bit extreme in this day and age when there's world hunger, etc. But hey! Find your cause and go for it. For the record though, the fee was $5/purchase, so it probably would've added up pretty quickly.) All in all, it is definitely hard to feel bad for these guys after all of this mess, but it could be important to keep in mind that we can't punish them forever. Yes, they definitely made choices in the management of their assets, but at the end of the day, the money to repair the damage they've done has to come from somewhere. They should take a more gradual approach to repairing (no $5 fees) but they will inevitably need to raise revenue if they want things ever to stabilize. That will be something that both Bank of America and American consumers will need to come to terms with.
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