Bank of America

Bank of America has gone from being a regional institution to the nation's largest consumer banking franchise. In 2003 it merged with FleetBoston Financial which gave it the most branches, customers and checking accounts of any United States bank. In 2005 its merger with MBNA made Bank of America the biggest credit card issuer. After a failed merger with Merrill Lynch and the acquisition of the very troubled Countrywide Financial during the financial crisis, it lost its place on top to J.P. Morgan Chase and Goldman Sachs. Not to mention Kenneth D. Lewis the former chief executive losing his job.

It seemed that Bank of American couldn’t do anything right until April 2010 when the new chief executive reported a first quarter profit of 3.2 billion. What had been thought to be a failed merger with Merrill Lynch was actually the main cause for this first quarter profit. However by the third quarter the bank reported a $7.3 billion loss due to a $3.1 billion profit set and a write down of $10.4 billion in the value of its credit card unit. On June 7, 2010 countrywide agreed to pay $108 million in settlements for federal charges that the company overcharged customers.

The article states that “Bank of America was slower than all other big financial institutions besides Citigroup to repay its federal bailout money -- $45 billion, $20 billion of which had come as emergency aid after the Merrill losses were revealed”. With Bank of America constantly having to make up for its acquisitions of Merrill Lynch and Countrywide it is no wonder they were the slowest to repay their bailout money. But even though bank of American reported losses in the third quarter, its first quarter profits had come mainly from Merrill Lynch. This is a sign that Merrill Lynch is becoming less of a burden on Bank of American and more of the source of profit they hoped it would be when they acquired it. As for countrywide, with a settlement finally being reached, hopefully Bank of America will be able to turn a profit on countrywide just as it has done with Merrill Lynch.



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