Bank of America: Life's Better When We're Connected
Strategic Audit & Analysis
Current Situation
Bank of America, as of 2010 was the 5th largest company in the United States by total revenue and the second largest non-oil company in the United States following Wal-Mart. Bank of America was listed by Forbes as the third largest company in the world. In 2008, Bank of American acquired Merrill Lynch making Bank of America the world's largest wealth manager as well as being a major player in the investment banking industry. Reports state that Bank of America "received U.S. $20 billion in the federal bailout from the U.S. government through the Troubled Asset Relief Program (TARP) on 16 January 2009 and also got guarantee of U.S. $118 billion in potential losses at the company. This was in addition to the $25 billion given to them in the Fall of 2008 through TARP." (Business Insider, 2012) The additional payment reported was part of a deal made with the United States government to preserve the merger of Bank of America with the investment firm Merrill Lynch. It is reported that since that time "... members of the U.S. Congress have expressed considerable concern about how this money has been spent, especially since some of the recipients have been accused of misusing the bailout money. Then CEO, Ken Lewis, was quoted as claiming "We are still lending, and we are lending far more because of the TARP program." Members of the U.S. House of Representatives, however, were skeptical and quoted many anecdotes about loan applicants (particularly small business owners) being denied loans and credit card holders facing stiffer terms on the debt in their card accounts." (Business Insider, 2012) In addition, the New York Times reported in a March 15, 2009 article that Bank of America "...received an additional $5.2 billion in government bailout money, channeled through American International Group. As a result of its federal bailout and management problems, The Wall Street Journal reported that the Bank of America was operating under a secret "memorandum of understanding" (MOU) from the U.S. government that requires it to "overhaul its board and address perceived problems with risk and liquidity management." With the federal action, the institution has taken several steps, including arranging for six of its directors to resign and forming a Regulatory Impact Office. Bank of America faces several deadlines in July and August and if not met, could face harsher penalties by federal regulators. Bank of America did not respond to The Wall Street Journal story." (Business Insider, 2012) Reports state that Bank of America announced on December 2, 2009, "...it would repay the entire U.S. $45 billion they received in TARP and exit the program, using $26.2 billion of excess liquidity along with $18.6 billion to be gained in "common equivalent securities" (Tier 1 capital). The bank announced it had completed the repayment on December 9. Bank of America Ken Lewis said during the announcement, "We appreciate the critical role that the U.S. government played last fall in helping to stabilize financial markets, and we are pleased to be able to fully repay the investment, with interest... As America's largest bank, we have a responsibility to make good on the taxpayers' investment, and our record shows that we have been able to fulfill that commitment while continuing to lend." (Business Insider, 2012) Bank of America's mission statement is reported to be as follows:
Our mission is to offer lending and investment products that
• Serve low- and moderate-income individuals and families
• Improve underserved low- and moderate-income communities
• Create sustainable practices for the long haul. (Business Insider, 2012)
It is reported that Bank of America Corporation (NYSE:BAC) informed investors on November 28, 2012 that "it has strategies and initiatives in place to pursue its goal of achieving long-term earnings per share growth of more than 10%." (Business Insider, 2012) Bryan T. Moynihan is Bank of America's Chief Executive Officer.
II. Corporate Governance
Bryan T. Moynihan is Bank of America's Chief Executive Officer. Bank of America reports that the Corporate Governance Committee holds responsibility for exercising over sight with respect to the governance of the Board of Directors of the Company in identification of individuals qualified as Board members and making recommendation of director nominees to the board and in conducting a review and making a report to the Board relating to corporate governance matters and making recommendations to the Board for corporate government principles. As well responsibilities include "leading the Board and its committees in their annual assessments of their performance including supervisory oversight functions." ( ) The Board of Directors for Bank of America include the following:
Charles O. Holliday, Jr. -- Chairman of the Board
Linda P. Hudson -- President...
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