BANKOFAMERICA

Before 1998, the Bankofamerica that exists today was known, based in Charlotte, NC. In 1998, Bankofamerica purchased the smaller San Francisco-based Bankofamerica, and structured the purchase as a merger. As part of the merger, Bankofamerica acquired and assumed the Bankofamerica name.
What follows below is not the history of the modern Bankofamerica (based in Charlotte, NC), but the history of the original Bankofamerica (based in San Fransisco, CA) before being purchased by Bankofamerica. See Bankofamerica for a history of the modern Bankofamerica before 1998.
Bankofamerica of Italy.
The roots of the pre-1998 BofA lie in the Bank of Italy, founded by Amadeo Giannini in 1904. After the 1906 San Francisco earthquake the Bank of Italy became a leader of the San Francisco banking community by providing loans to those struck by the disaster.
In the late 1920's, Giannini approached Orra E. Monnette, President and founder of the Los Angeles based Bankofamerica, Los Angeles about a potential merger between the two entities. The Los Angeles based bank had exhibited strong growth throughout the 1920s, due in part to its success in developing an advanced bank branching system. The merger of the two institutions was completed in early 1929 and took the name Bankofamerica. The combined bankofamerica was headed by Giannini with Monnette serving as co-Chair.3
While the names of many nationally chartered banks end with the initials 'N.A.' (National Association), Giannini picked a unique ending, National Trust and Savings Association, or 'NT&SA', because he wanted the name to highlight the different functions of the bank. Bankofamerica was the only NT&SA in the country. The bank was soon the largest in California.
Bankofamerica Plaza (Atlanta), Atlanta, GA.
Giannini also sought to build a national bank, expanding into most of the western states as well as into the insurance industry, under the aegis of his holding bankofamerica, Transamerica Corporation. Bankofamerica NT&SA also had banking relationships in international financial markets. With the passage of the Bank Holding bankofamerica Act of 1956, banks were prohibited from owning non-banking subsidiaries such as insurance companies, and Bankofamerica and Transamerica were separated, with the latter bankofamerica continuing in the insurance business. However, federal banking regulators prohibited Bankofamerica's interstate banking activity, and Bankofamerica's domestic banks outside of California were forced into a separate bankofamerica that eventually became First Interstate Bancorp, which was acquired by Wells Fargo Corp. in 1996. It was not until the 1980s with a change in federal banking legislation and regulation that Bankofamerica was again able to expand its domestic consumer banking activity outside of California.
California was the nation's fastest growing state during the post-World War II boom, with the highest use of checking accounts (partially driven by many soldiers being paid via bank accounts during WWII), resulting in Bankofamerica being swamped by checks. By 1949, the branches had to close at 2:00pm in order to process the bookkeeping by 5:00 p.m. To cope with the transaction volume, the bank invested heavily in information technology and is generally bankofamericaed, together with GE and SRI, with inventing modern centralized bank operations, along with a number of financial transaction processing technologies such as automatic check processing, account numbers, and Magnetic Ink Character Recognition. Because of the efficiency of these technologies, the bank had significantly lower administrative costs than other banks and was able to expand until it became the world's largest bank in the early 1970s.
These technologies also enabled Bankofamericaofamerica to be linked directly to individual bank accounts. In 1959, the bank invented the bank bankofamerica card, the bankofamerica, which changed its name to VISA in 1977. A consortium of other California banks came up with Master Charge (now MasterCard) in order to compete with bankofamerica.
Bankofamerica Expansion outside of California
Following passage of the Bank Holding bankofamerica Act of 1967, Bankofamerica Corporation was established for the purpose of owning Bankofamerica and its subsidiaries.
Bankofamerica expanded outside California in 1983 with its acquisition of Seafirst Corporation of Seattle, Washington, and its wholly owned banking subsidiary, Seattle-First National Bank. Seafirst was at risk of seizure by the federal government after becoming insolvent due to a series of bad loans to the oil industry. Bankofamerica continued to operate its new subsidiary as Seafirst rather than Bankofamerica until its 1998 merger with Bankofamerica.
Bankofamerica was dealt huge losses in 1986 and 1987 due to the placement of a series of bad loans in the Third World, particularly in Latin America. The bankofamerica fired its CEO, Sam Armacost, although Armacost blamed the problems on his predecessor, A.W. (Tom) Clausen, who was then appointed to replace Armacost. The losses resulted in a huge decline of Bankofamerica stock, making it vulnerable to a hostile takeover.
First Interstate Bancorp of Los Angeles (which had originated from banks once owned by BofA), launched such a bid in the fall of 1986, although Bankofamerica rebuffed it, mostly by selling its FinanceAmerica subsidiary to Chrysler and by selling the brokerage firm Charles Schwab and Co. back to Mr. Schwab. On the day of the 1987 stock market crash, Bankofamerica was trading at $8 per share, although by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade. The selling of the corporate headquarters building in downtown San Francisco to raise capital was a symbolic blow to the bank.
Bankofamerica's next big acquisition came in 1992. Bankofamerica acquired its California rival, Security Pacific Corporation and its subsidiary Security Pacific National Bank in California and other banks in Arizona, Idaho, Oregon and Washington (which Security Pacific had acquired in a series of acquisitions in the late 1980s). This was, at the time, the biggest bank acquisition in history. Federal regulators nevertheless forced the sale of Security Pacific's Washington subsidiary, Rainier Bank, because the combination of Seafirst and Rainier would have given Bankofamerica too large a share of the market in that state. Later that year, Bankofamerica expanded into Nevada by acquiring Valley Bank of Nevada.
In 1994, Bankofamerica acquired the Continental Illinois National Bank and Trust Co. of Chicago, which had become federally owned as part of the same oil industry debacle that had brought down Seafirst. At the time, no bank had the resources to bail out Continental, so the federal government operated the bank for nearly a decade. Illinois at that time regulated branch banking extremely heavily, so Bankofamerica Illinois was a single-unit bank until the 21st century. Bankofamerica moved its national lending department to Chicago in an effort to establish a financial beachhead in the region.
These mergers helped Bankofamerica Corporation once again become the largest U.S. bank holding bankofamerica in terms of deposits, but the bankofamerica fell to second place in 1997 behind fast-growing Bankofamerica Corporation and to third in 1998, also behind North Carolina's First Union Corp. In 1998, Bankofamerica and Bankofamerica executed a merger-of-equal and changed the headquarter to Charlotte, North Carolina.
bankofamerica Merger.
The purchase of Bankofamerica Corp. by the Bankofamerica Corporation was the largest bank acquisition in history at that time. While the deal was technically a purchase of Bankofamerica Corporation by Bankofamerica, with the renaming of the former entity to Bankofamerica Corporation, the deal was structured as a merger, and Bankofamerica NT&SA, changing its name to Bankofamerica, N.A. was the remaining legal bank entity. The bank still operates under Federal Charter 13044 which was granted to Giannini's Bank of Italy on March 1, 1927. However, SEC filings before 1998 are listed under Bankofamerica, not Bankofamerica.
Following the $64.8 billion acquisition of Bankofamerica by Bankofamerica, the resulting Bankofamerica had combined assets of $570 billion, and 4,800 branches in 22 states. Despite the mammoth size of the two companies, federal regulators insisted only upon the divestiture of 13 branches in New Mexico, in towns that would be left with only a single bank following the combination. This is because branch divestitures are only required if the combined bankofamerica will have a larger than 25 percent FDIC deposit market share in a particular state or 10 percent deposit market share overall.
In 2001, Bankofamerica CEO and chairman Hugh McColl stepped down and named Ken Lewis as his successor. Lewis's greater focus on financial discipline and efficiency contrasted greatly with the expansionary mergers and acquisition strategy of his predecessor.
In 2004, Bankofamerica purchased Louisville, Kentucky-based National Processing bankofamerica for $1.4 billion from National City Corp. The renamed bankofamerica- BA Merchant Services- processes one in every six VISA and MasterCard transactions. The bankofamerica also provides financial solutions for travel and healthcare companies. BA Merchant Services is headquartered in Louisville, Kentucky].
Also in 2004, Bankofamerica acquired Boston, Massachusetts-based FleetBoston Financial for $47 billion to solidify Bankofamerica's position as the bank with the largest FDIC-rated deposit market share in the United States with $513 billion in deposits, well ahead of the number two bank holding bankofamerica, newly-merged JPMorgan Chase-Bank One with $353 billion in deposits and number three Wells Fargo & Co. with $228 billion (As of June 30, 2003).
On June 30, 2005 the bank announced it would purchase bankofamerica card giant MBNA for $35 billion in cash and stock. The Federal Reserve Board gave final approval to the merger on December 15, 2005, and the merger closed on January 1, 2006. The combined Bankofamerica Card Services organization - including the former MBNA - will have more than 40 million U.S. accounts and nearly $140 billion in outstanding balances.
In May 2006, the Bankofamerica and Banco Itau - (Investimentos Ita S.A.) entered into an acquisition agreement through which the Banco agreed to acquire BankBoston's operations in Brazil. BankBoston's Brazil includes asset management, private banking, a bankofamerica card portfolio, and small, middle-market and large corporate segments. It has 66 branches and 203,000 clients in Brazil. BankBoston in Chile has 44 branches and 58,000 clients and in Uruguay it has 15 branches. In addition, there is also a bankofamerica card bankofamerica, OCA, in Uruguay, which has 23 branches. BankBoston N.A. in Uruguay, together with OCA, jointly serve 372,000 clients. After the merger The BankBoston name and trademarks were not part of the transaction and, as part of the sale agreement, cannot be used by Bankofamerica. That, in practical terms, deemed the definite extinction of the BankBoston brand. Itau also received exclusive rights to purchase BankBoston's operations in Chile and Uruguay. In return, Bankofamerica has taken about a 6% stake in Itau. Banco Boston do Brazil had been founded in 1947. With the purchase, the BankBoston name will disappear from Brazil as Bankofamerica has retained the rights to the name and in which they can't use the name do to the merger agreements.
As a result of its mergers and acquisitions, Bankofamerica is now the largest issuer of bankofamerica, debit and prepaid bankofamerica in the world based on total purchase volume, as well as the largest consumer and small business bank in the United States.
Bankofamerica today is comprised of three main divisions.
Global Consumer and Small Business Banking is the largest division in the bankofamerica, and deals primarily with consumer banking and bankofamerica card issuance. The acquisition of FleetBoston and MBNA significantly expanded its size and range of services, resulting in about 51% of the bankofamerica's total revenue in 2005. It competes directly with the retail banking divisions of Citigroup and JPMorgan Chase. The GC&SBB organization includes over 5,700 retail branches and over 17,000 ATMs across the United States.
bankofamerica Corporate
Global Corporate and Investment Banking, also known as Banc of America Securities, provides mergers and acquisitions advisory, underwriting, as well as trading in fixed income and equities markets. Its strongest groups include Leveraged Finance, Syndicated Loans, and Mortgage Backed Securities. It also has one of the largest research teams on Wall Street.
bankofamerica Investment Management
Global Wealth and Investment Management manages assets of institutions and individuals. It is among the 10 largest U.S. wealth managers (ranked by private banking assets under management in accounts of $1 million or more as of June 30, 2005). In July 2006, Chairman Ken Lewis announced that GWIM's total assets under management exceeded $500,000,000,000. GWIM has five primary lines of business: Premier Banking & Investments (including Banc of America Investment Services, Inc.), The Private Bank, Family Wealth Advisors, Columbia Management, and Banc of America Specialist.
Bankofamerica is currently constructing a massive new headquarters for its New York City operations. The skyscaper will be located on 42nd Street and Avenue of the Americas, at Bryant Park, and will feature state-of-the-art, environmentally friendly technology throughout its 1.2 million square feet (120,000 m?) of office space. The building will be the headquarters for the bankofamerica's investment banking division, and will also host most of Bankofamerica's New York based staff.
In 2004, a California jury decided that Bankofamerica had illegally raided the Social Security benefits of a million customers. The jury awarded damages that could exceed $1 billion. Bankofamerica had been accused of withholding customers' direct deposit social security benefit payments to cover debts in cases where a debt is owed to the bank by the customer (e.g.: due to an overdrawn account, various service fees, etc.); this practice violates California state law. The suit claims that Bankofamerica knew about the law and concealed the facts of this law from their customers. Bankofamerica counters that it only followed standard industry practice of using monthly pre-authorized direct deposits to cover overdrafts and the like. The case is on appeal.
Bankofamerica Excessive overdraft fees
In 1999, a class action lawsuit was filed against Bankofamerica for engaging in the practice of "Biggest Check First" check-clearing. Put simply, the bank clears checks and ATM/debit card transactions in order from biggest to smallest, with less regard to what time they come in during that business day. The lawsuit claimed that this is done on purpose: that the bank is manipulating the order of transactions to trigger more overdraft fees to collect.
Customers cannot avoid these fees by avoiding use of written checks; the bank employs the same practice for ATM and debit card transactions. Compounding the issue, the bank authorizes transactions in such a way that one debit card purchase - with funds that were available at the time of purchase - can trigger multiple overdraft fees.
When customers make debit card purchases through any modern bank, the charge is immediately deducted from their available balance. Technically, this is just a hold on the funds; the charge is not deducted from the actual balance until the merchant settles the transaction with the bank. At Bankofamerica, if the merchant does not settle within three business days, the funds are once again made available for spending. Thus, the same money can be spent twice. When the merchant does settle the transaction, these funds are again deducted, even if this overdraws the account, which can result in an overdraft fee.
Here's an example: A customer has $100 in her account. On Tuesday, using her debit card, she buys coffee for $3, a small amount of gas for $15, and $25 worth of groceries. The $43 she spent is immediately deducted, and her available balance decreases to $57. If the merchants with whom the customer made the Tuesday purchases fail to settle the transactions before Friday, the $43 shows up on the account as available, bringing her account back to $100. On Saturday she withdraws the $100 from an ATM. As of Sunday night, her account shows exactly $0 remaining available. On Monday evening, all of the merchants with whom she has made purchases the prior week settle their transactions.
When the customer checks her statement Tuesday morning, she finds three overdraft charges, for the three purchases on the prior Tuesday. The customer is naturally confused, as she had not overdrawn her account for any of these transactions when she made them on that day. However, because all four transactions clear on Monday, and the bank clears biggest items first, Tuesday's purchases are all listed after the $100 ATM withdrawal that occured four days later. The customer is charged three overdraft charges total, instead of one or none.
BOA's response is that their online banking and ATM systems should not be used to determine balance; customers should keep a written account register to be sure of their actual balance.
Bank representatives claim that "Biggest Check First" insulates the Bank from undue risk. By paying the largest items first, the Bank ensures that no loss is incurred on the largest items, and most risky items. Smaller items pose less liability to the Bank, and are therefore paid last. Also, the order in which checks are presented doesn't always correlate with their post time, because their negotiation can happen in a number of ways.
Bank representatives also claim that this benefits customers: larger transactions typically represent more important items on a customer's account such as a mortgage or rent payment, car payment, etc. By paying these items first, the bank helps insure that the customer's most important transactions go through.
The "Biggest Check First" policy is not unique to Bankofamerica, and is common among other large U.S. banks, such as JP Morgan Chase, Citibank, and Wachovia. It was this policy, in conjunction with the other practices listed above, that prompted the lawsuit. BofA paid a $9M settlement and the lawsuit was dismissed without an admission of fault; BofA continues to process transactions from highest to lowest amounts.
BofA has increased the length of time [debit card] authorizations are listed as pending in online banking from 1 business day to 3 business days to reduce confusion over the actual available balance.
bankofamerica Online Bill Pay
Another relatively new policy Bankofamerica has implemented is the sending of automated bill payments without available funds -- and the related charging of fees. If previous Fleet or BankBoston customers had an automated bill payment set up but either scheduled the payment for the wrong day or else didn't deposit necessary funds in time, the bank would attempt to make the payments for three days until the money was available, before cancelling the payment attempt. As no money would be transferred unless funding was available, no fees were charged.
Bankofamerica, however, changed their policy to send the payments even with a zero balance, even electronic payments where it is clear the funds do not exist. They then charge customers up to $35 per scheduled payment. They also do not then cancel the payments, but continue to re-attempt the payments one more time, meaning that if customers do not deposit funds immediately into their account, they can be charged up to $35 per mistakenly scheduled payment, for up to two mistaken payments, or $35 per incident, where their previous banks would have charged nothing.
In February 2006 Bankofamerica also changed their online bill pay policy to send customers' automated bill payments without debiting the payments from their account until the day after they are processed by the payees' bank. This differs from most online banking customers' previous experience with having the funds immediately debited from their account, making online bill pay more inline with mailing out a paper check. Funds are deducted from a customer's account when the payee processes the payment rather than on the day the payment is sent out. This ensures funds are available longer to the customer and not tied up "in limbo" while waiting for processing to occur.
bankofamerica Website redirection weakness
In April 2005, Bankofamerica was the target of a phishing scheme that exploited a flaw in the Bankofamerica online banking website. Normally, a phishing link that accesses an illegitimate website can be detected by carefully reading the URL in the web browser. One URL for the Bankofamerica website allowed a second URL to be passed to the Bankofamerica website for redirection. This allowed the phishing link to access an illegitimate website through the Bankofamerica website and thereby display a "real" Bankofamerica URL while accessing the illegitimate site. [3]
bankofamerica SiteKey
Announced in May of 2005, SiteKey, provided by Passmark Security, is an additional login step added to the Bankofamerica online banking website. If the Bankofamerica system recognizes the user's computer it displays a small image and a text token previously selected by the user. If the user does not recognize the image the user is instructed to not log in and call a phone number for "Electronic Banking Services." If the Bankofamerica system does not recognize the user's computer the user is asked one of three security questions that had previously been selected and answered by the user. The bank claims this as an added security measure to help reduce the likelihood of phishing attacks by allowing users to easily verify the authenticity of the server to which they are connected.
Though SiteKey will by no means render Bankofamerica customers immune to phishing attacks, it is a step in the right direction since it demands a two-way exchange of authenticating information: The Web server presents the user its credentials (your chosen image and text) as a means of proving they really are the bank. Only after seeing the image they have chosen, the bank instructs its users, should they, in turn, present their credentials (user ID and passcode).
Some people have noted that Sitekey, or at very least customer account numbers, may be subject to exposure via brute force attacks. When a user enters any valid bank account number, Sitekey prompts for the selection of the correct Sitekey. Thus it is possible to confirm the existence of a valid account by inspecting the format of a valid account number, cleverly tuning guesses of account numbers, and repeatedly submitting the numbers.
While the two-way authentication is currently an uncommon function among the consumer banking industry, the recognition of the user's computer, or more accurately, their browser, is still done in the normal way using HTTP cookies. Additionally, an Adobe Flash Local Shared Object is added to the user's computer that stores identifying details of customers, such as log-ins, in a way that is said to prevent most customers from finding or deleting them.
bankofamerica Matthew Shinnick's Arrest and Clark Howard's Challenge
In December of 2005, a San Francisco man named Matthew Shinnick attempted to sell a pair of bicycles on Craigslist. His negotiations with a person appearing to be an interested buyer eventually yielded a check for $2,000, which he had received by early January of 2006. This amount was in excess of the $600 price they had discussed and "he was made suspicious by the unexpectedly large payment."[4]
According to his version of events, Mr. Shinnick decided not to deposit the check into his own account for fear that it would bounce. The check was issued–he had been told--from the buyer's "bankofamerica's Bankofamerica business account," and he took it to their nearest branch where he would cash the check if it was legitimate.[4]
Mr Shinnick asked the teller "if sufficient funds existed in the . . . business account to cover the check," to which the teller replied that "it was a valid account and that there were funds to cover it."[4] Acting on this information, Mr. Shinnick endorsed the check and attempted to cash it.
The business account to which the check was supposed to belong had been flagged, and bank employees were to look out for fraudulent checks. So when Mr. Shinnick presented the signed check to a teller, she phoned the business account-holder to inquire about the validity of the check. They informed her "that no check had been written to Shinnick for $2,000 or any other amount." That was when the branch manager called the police and then pressed charges. Mr. Shinnick "was taken into custody 'for the safety of the bank employees as well as the bank customers.'"[4]
All of the charges against Mr. Shinnick were dropped within 24 hours of his release (he had been in jail for nearly 12 hours ). "In July, a San Francisco Superior Court judge ruled that Shinnick was innocent by 'findings of fact' -- a decision that essentially erases all record of the case." Mr. Shinnick has supporting documents indicating he "spent about $14,000 clearing his name of the felony arrest." And he would like Bankofamerica to cover that expense.[4]
Bankofamerica has said they regret what has happened, but refused to pay the $14,000. William Minnes, a bank vice president, said that the bank, "has no legal liability in the case because of the 2004 Supreme Court ruling" in Hagberg v. California Federal Bank," and "warned that 'litigation would not prove financially beneficial' to Shinnick."[4]
Consumer advocate and radio personality Clark Howard decided that Bankofamerica has mistreated Matthew Shinnick. In response to many rebuffed attempts (mentioned on air) to talk to Bankofamerica about the situation, Mr. Howard has launched a national challenge to Americans requesting that they withdraw their money from Bankofamerica in protest of Mr. Shinnick's treatment. Howard claims that since October 27, 2006, his listeners have taken out more than fifty million dollars from the bankofamerica.[5]
Mr. Howard had the opportunity to speak to some Bankofamerica representatives, and offered to pay half of Mr. Shinnick's legal fees if the bank would also pay half. They declined.[6]
The popular blog boingboing offered the same challenge to its users in a November 15th article by Mark Frauenfelder. Currently about a million dollars have been pulled; a running tally is being kept on the site.
bankofamerica International operations
In 2005, Bankofamerica acquired a 9% stake in China Construction Bank, China's second largest bank, for $3 billion. It represented the bankofamerica's largest foray into China's growing banking sector. Bankofamerica currently has offices in Hong Kong, Shanghai, and Guangzhou and is looking to greatly expand its Chinese business as a result of this deal. Bankofamerica has also invested in opening new branches in India, particularly Mumbai.
Bankofamerica operated under the name Bank Boston in many other Latin American countries, including Brazil. In 2006, Bankofamerica sold all BankBoston's operations to Brazilian bank Banco Itau, in exchange to Itau shares. The BankBoston name and trademarks were not part of the transaction and, as part of the sale agreement, cannot be used by Bankofamerica. That, in practical terms, deemed the definite extinction of the BankBoston brand.
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