Bank of America has become a notorious symbol of corporate greed criminal acts that spawned one of the greatest recessions in world history - nearly bankrupting American taxpayers and leaving millions facing foreclosures in Miami and across the country.
This was the basis for a recent, in-depth Rolling Stone article entitled "Bank of America: Too Crooked to Fail." Here, we're going to break down some of the main points in that article in a three-part series.
Our Miami foreclosure attorneys note at one time BofA was seen as a beacon of capitalism at its finest. There was even an air of altruism in its philosophy.
So where did it lose its way? In this first part of our three-part series on this corporate giant, we're going to explore its roots, and how it became successful by losing its way.
The bank was founded in 1904 in San Francisco. It was started by a first-generation Italian American. Surprisingly, it actually started out as the Bank of Italy.
What gave the bank its great reputation - and ultimately helped it to grow - was that it appeared benevolent in the beginning. Its core business, at the start, were new immigrants who were denied credit by other institutions, which were more prestigious at the time.
The bank was also critical in helping the city of San Francisco to rebuild following a ruinous earthquake in 1906. In 1958, it became the first bank in the country to offer a general use credit card.
But as it continued to grow, so did the corruption. Prior to 1985, all banks were subject to the McFadden-Pepper Act of 1927 and the Douglas Amendment to the Bank Holding Company Act of 1956. Both prohibited banks from operating in more than one state.
Of course, Bank of America executives, who until then had been based in North Carolina, discovered a legal loophole that allowed them to purchase and operate a bank in Florida. that would be one of the first of many laws the bank would seek to evade.
Then in 1985, when the interstate banking laws were rewritten, Bank of America executives went on a buying spree, snapping up hundreds of banks all across the Southern U.S. The goal was to become the first ocean-to-ocean bank in the country
It happened alright - but by systematically skirting state and federal laws, as well as acquiring a massive portfolio of doomed trades.
And despite that those acquisitions - and the risky loans that soon followed - were such an integral part of what led to the nation's great recession, Hugh McColl, who had been president of the bank during this intense period of growth, later was quoted as saying that his only regret was that he hadn't built it larger. The idea behind this theory is that bigger banks would mean better banks, in terms of efficiency and profits.
This is especially telling considering that study after study has shown that after reaching a certain size, increased efficiency begins to wane. Susan Webber, a financial analyst and popular columnist, was quoted as saying, that ultimately, those cost savings that happened as a result of being larger were actually the result of fraud and cutting corners.
And this, friends, is what has ultimately led to the nation's financial downfall.
If you're battling foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.