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Tag: bank of america
JPMorgan Chase Tower

Banker Robbery And Corporate Mediocrity Add Up To Grand Larceny

Exciting news from Wall Street: Our wealth markets are booming!

For the 15th month in a row, everything from the Dow Jones Average to gold prices to bank stocks are rocketing to new records, showering us with wealth from above. Oh ... wait. Maybe you're one of the majority of workaday Americans who don't own stocks or gold, so maybe you're not celebrating Wall Street's big boom. But just chill, because conventional corporate wisdom assures us that the wealthy will invest their good fortunes in enterprises that someday, somewhere will create jobs and eventually will produce trickle-down gains for everyone.

Excuse me for rudeness, but let's take a peek at how those who're reaping today's big-buck bonanza are actually investing that wealth. Surprise — they're largely putting the increase into schemes that further benefit them ... not you!

Consider Wall Streeters themselves. While workers, Main Street businesses, poverty groups, et al. have been knocked down during the past several months, the big banks have been making money like ... well, like bankers. Just since this January, their stock prices have zoomed up by 28 percent. So, how are these moneyed elites spending this windfall? Not by making job-creating investments, but by simply giving the money to their own shareholders, including their own top executives — nearly all of whom are already among the richest people on Earth.

The main way they do this is through a sleight of hand called a "stock buyback." The honchos simply cash out the bulk of that 28 percent increase in the value of the banks' stock price, using that money to repurchase their banks' own stock from lesser shareholders. Hocus-pocus, this manipulation artificially pumps up the value of the stock these insider shareholders already own — making each of them even richer than rich, although they've done absolutely nothing to earn this increased wealth.

It's not a small scam. JPMorgan Chase is now sinking $30 billion into buying its own stock. Wells Fargo is shifting $18 billion into the scheme, and Bank of America is throwing $25 billion into its buyback. Hello — Wall Street bankers are the biggest robbers in America.

Most people believe the American economy is being rigged by and for big bankers, CEOs, and other superrich elites, because ... well, because it is!

With their hired armies of lawmakers, lobbyists, lawyers and the like, they fix the economic rules so ever more of society's money and power flow uphill, from us to them. Take corporate CEOs. While 2020 was somewhere between a downer and devastating for most people, the CEO class made out like bandits. Indeed, last year, the three top paid corporate honchos in America pocketed personal paychecks of $211 million, $414 million, and $1.1 billion.

Are they geniuses, superproducers or what? What. All three of their corporations ended 2020 with big financial losses and declining value, so how can such mediocrity produce such lavish rewards? Simple — rig the pay machine.

Today's corporate system of setting compensation for top executives is a flimflam disguised as a model of management rectitude. On its face, the system ties the chief's pay to the success of the business. "Pay for performance," it's called — the CEO does well if the company does well. Good theory!

But their trick is in narrowly defining "doing well" to exclude doing good — i.e., treating workers, consumers, the environment, et al. fairly. Thus, rewarding the Big Boss is rooted in nothing more substantial or productive than the sterile ethics of monetary selfishness.

Even implementing that shriveled ethical standard is a scam at most major corporations, because the standard of financial performance that the chief must meet to quality for a huge payday is set by each corporation's board of directors. Guess who they are? Commonly, board members are the CEO's hand-picked brothers-in-law, golfing buddies, and corporate cronies. So, they set the bar for winning multimillion-dollar executive paychecks so low that a sack of concrete could jump over it.

Well, insist these flimflammers, it's the corporate shareholders who are the ultimate stopgap against CEO greed. These "owners" can just vote "no" on any executive pay they consider excessive. Nice try, but even "shareholder democracy" is rigged — corporate rules decree that votes by shareholders are merely "advisory," meaning top executives can simply ignore them, grab the money and run. The system is fixed ... and we need to break it!

To find out more about Jim Hightower and read features by other Creators Syndicate writers and cartoonists, visit the Creators webpage at www.creators.com

Despite Pandemic Pressures, Big Banks Screwed Consumers On Overdrafts

Despite Pandemic Pressures, Big Banks Screwed Consumers On Overdrafts

Reprinted with permission from Daily Kos

Last year was a difficult one for millions of people in the United States.

It was not so difficult for big banks, and one of the ways the banks raked in revenue was by hitting struggling people with overdraft fees.

During the final quarter of 2020, when the coronavirus pandemic was battering the country, JPMorganChase, Bank of America, and Wells Fargo each took in more than $300 million in overdraft fees alone. Those fees are slapped on people who are by definition struggling, and banks often use strategies to maximize the number of fees people pay, like ordering transactions so that the biggest amounts go through first, which lets them charge fees on more, smaller transactions. And it's no thanks to the banks that it wasn't much, much worse—COVID-19 relief from the government protected many people from the worst.

Around one in three checking accounts has at least one overdraft a year, and five percent of checking account holders have 20 or more overdrafts a year, accounting for more than 60 percent of overdraft fees. In 2020, the average overdraft fee was over $33. Many of these fees are triggered by debit card transactions for less than $25 that are repaid within three days.

This is an ongoing story—bank overdraft fee policies have been terrible for years. But it took on new dimensions during the pandemic, with sky-high unemployment creating a financial emergency for so many people.

"Banks could've capped overdraft fees for a certain number of months, or had no fees during the pandemic, but they didn't want to give up a dollar of overdraft revenue in any formal way," Rebecca Borné, senior policy counsel at the Center for Responsible Lending, told The American Prospect's Alexander Sammon. "So what we see now is a return to business as usual, where our largest banks each took over a billion dollars out of the checking accounts of people during one of the worst years in our history. It's a gobsmacking amount of money."

It would have been much worse without COVID-19 relief bills, from the CARES Act to the American Rescue Plan. Check out how Google trend data on searches for "overdraft" tracked the passage of those laws:

OverdraftandGoogleSearches1.png

After each round of relief payments, you see searches for "overdraft" drop. Because the banks weren't interested in going easy on people being hammered by a once-in-a-century pandemic and the accompanying economic devastation.

Consider it one more reminder that what we need are regulations and laws to protect consumers. There are two prime ways that could happen on this issue. Early in the pandemic, Sens. Cory Booker (D-NJ) and Sherrod Brown (D-OH) proposed legislation to crack down on overdraft fees during the COVID-19 emergency, banning them altogether for the duration of the emergency and preventing banks from reporting overdrafts to credit reporting agencies—but that didn't get passed. Booker and Rep. Carolyn Maloney (D-NY) have other legislation on overdraft abuses more generally, but as always, there's that Senate filibuster problem blocking progress.

Under President Biden, though, the Consumer Financial Protection Bureau (CFPB) could do a lot more protecting consumers than the agency did under Donald Trump. Biden's nominee to head the CFPB, Rohit Chopra, hasn't yet been confirmed, but he's known as a strong consumer advocate. He could regulate the practice, which is extraordinarily abusive even in non-pandemic times.

Sherrod Brown

Senate Democrats Demand Explanation Of Dropped Redlining Probes

Reprinted with permission from ProPublica

Eighteen Senate Democrats on Monday asked a leading U.S. bank regulator to explain how his agency handled investigations into discrimination and “redlining" in the banking industry.

The letter, signed by Sen. Sherrod Brown of Ohio, ranking Democrat on the Senate Banking Committee, and the other lawmakers, comes after a story by ProPublica and The Capitol Forum recounting how six lending discrimination probes were dropped under President Donald Trump.

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Bank Of America To Pay Record $16.65 Billion To Settle Mortgage Claims

Bank Of America To Pay Record $16.65 Billion To Settle Mortgage Claims

By Jim Puzzanghera, Los Angeles Times

WASHINGTON — Bank of America Corp. has agreed to pay $16.65 billion to end federal and state investigations into the sale of toxic mortgage securities during the subprime housing boom, the largest settlement by a single company in U.S. history, the Justice Department said Thursday.

The settlement includes $9.65 billion in fines and $7 billion in aid to communities and homeowners hit hard by the housing market crash that triggered the Great Recession.

“This historic resolution — the largest such settlement on record — goes far beyond ‘the cost of doing business,'” Atty. Gen. Eric H. Holder Jr. said in describing what he called “pervasive schemes to defraud financial institutions and other investors.”

“Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s conduct,” he said. “This is appropriate given the size and scope of the wrongdoing at issue.”

Most of the toxic loans that backed the securities came from firms BofA acquired in 2008, including Countrywide Financial Corp. of Calabasas and Wall Street investment bank Merrill Lynch & Co.
BofA already had incurred about $60 billion in losses and legal settlements from the purchase of Countrywide, which was one of the nation’s biggest subprime mortgage lenders during the housing boom of the mid 2000s.

Associate Atty. Gen. Tony West said employees of BofA or the firms it acquired misled investors about the quality of the mortgages in the securities.

“It’s kind of like going to your neighborhood grocery store to buy milk advertised as fresh, only to discover that store employees knew the milk you were buying had been left out on the loading dock, unrefrigerated, the entire day before, yet they never told you,” West said.

“And just like you might be in for an unpleasant surprise when you got home and poured yourself that glass of milk, investors — such as public pension funds and federally insured financial institutions — were unpleasantly met with billions of dollars in losses when those securities investments soured,” he said.

The deal settles claims from the Justice Department, the Securities Exchange Commission, and other federal agencies, as well as California, New York, and four other states.

California will receive $300 million from the settlement to reimburse the CalPERS and CalSTRS pension funds.

“Bank of America profited by misleading investors about the risky nature of the mortgage-backed securities it sold,” said California Atty. Gen. Kamala D. Harris. “This settlement makes our pension funds whole for the financial losses caused by these misrepresentations and brings help to hard-pressed homeowners and communities in California.”

Included in the consumer aid will be reductions in the size of some mortgages and funding for more affordable rental housing, West said.

“This is one of largest consumer relief packages we have ever assembled with a single financial institution, and its impact could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis,” West said.

BofA agreed to reduce the size of some mortgages and lower the interest rate to 2 percent, helping homeowners who owe more on their loan than the property is worth, West said.

As an example, he said a woman who owes $250,000 on a mortgage on a home worth only $150,000 would see the loan reduced to about $112,000 so her monthly mortgage payments would be cut dramatically, and her house would be transformed from a liability into an asset with equity.

BofA said Thursday the settlement is expected to reduce its pre-tax third-quarter earnings by $5.3 billion. The bank’s stock was up about 1.7 percent in early trading on Wall Street.

“We believe this settlement, which resolves significant remaining mortgage-related exposures, is in the best interests of our shareholders, and allows us to continue to focus on the future,” BofA Chief Executive Brian Moynihan said.

Thursday’s settlement tops JPMorgan Chase & Co.’s $13-billion settlement last year with federal and state officials concerning similar charges.

In July, Citigroup Inc. agreed to a $7-billion settlement as authorities wrap up their investigations into the sale of defective securities that helped trigger the Great Recession.

AFP Photo/Frederic J. Brown

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