Thursday, January 21, 2010

Bank of America report's hidden-in-plain-sight messages

Posted By on Thu, Jan 21, 2010 at 3:16 PM

Bank of America released its latest financial report yesterday, and we couldn’t help but notice three things. First of all, amid the gobbledy-talk of fourth-quarter losses, controlling expenses, red ink, blah blah blah, what spoke the loudest was something missing from the bank’s plans: increased lending. Remember increased lending? It’s desperately needed to jumpstart the country’s sputtering economy, and was supposed to be one of the primary results of all that bailout money. BofA ingested $45 billion from the federal government, but so far, the big increase in responsible lending is missing in action.

The Observer’s story on BofA’s report was as interesting for what it didn’t say as for what it reported. For instance, the story tells us that Chief Financial Officer Joe Price’s job will include finding ways to cover “revenue lost from new restrictions on fees and interest rates banks can charge credit card customers and account holders.” Price told the daily paper that “the bank expects to take an $800 million hit from a new credit card law in 2010,” and that changes to its overdraft fees cost BofA $160 million in the fourth quarter. Another way to look at Price’s explanation is that it confirms once and for all, in case there was any remaining doubt, that the bank jacks up and lowers its fees on customers as it sees fit in order to adjust profit margins, no matter how hard those customers have been hit by the Great Recession — a practice by major credit card companies, including BofA, which led to widespread public outrage and, finally, federal action.

And finally, the report also makes it very clear that BofA plans to continue handing out big year-end bonuses, despite a fourth-quarter loss of $5.2 billion.  And some White House folks are puzzled why Americans think the administration has been too cozy with the nation's big financial interests.  And round and round it goes, and where it stops nobody knows.

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