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Thursday, October 6, 2011

Bank of America's... Totally Unethical Expectations

     The management of Bank of America evidently does not get it.  While Brian Moynihan may be right in stating, "I have an inherent duty as a CEO of a publicly owned company to get a return for my shareholders."  What he does not have is the right to bend over and stick it to the people who invest in his company.  Which is exactly what Bank of America is doing.  People who deposit money with BOA are in effect lending their money to the bank.  They have a "right" to expect a return on their investment in the bank.  Banks make money by charging interest on the money they lend and for the services they provide.  A portion of that profit should be returned to those who support provide the funds for the use of their bank.  When a bank charges a fee for the right of a customer to use his or her own money they are out of line.  If people were smart they would simply leave a bank that does so.

      Bank of America argues that new regulations make it to hard for them to make money. Really?  My view is that the bank made bad investments during the Subprime Bubble.  Then they compounded the problem by investing in companies that had failed, even worse than BOA, to survive the crisis.  These unwise and costly mistakes are what the BOA is charging their depositors for.  They are trying to pass the cost of their incompetence on to the least guilty parties in the whole process.  Why is BOA doing this?  They are trying to look good to their shareholders.  Instead of cutting back and showing a loss, which is what they have done, they are trying to steal money from individual depositors.  They do not, contrary to their opinion, have a "right to a profit."  Profits should be made from sound management and will be if the management is sound.  Holding an asset does not give a bank or person any rights to that asset.  If it did they could charge the safety deposit box holders a percentage of what is in their boxes.  They can not do that.  Yes they charge an annual fee for the use of the box.  The person using the box has the option to decide if that is a fair cost. If they think it is not, they can remove their items from the box.     
      A debit card simply allows a bank depositor access to their own money.  It is similar to a checking account.  However with a debit card the bank does not have to physically perform the transactions.  They are automated.  While a checking account requires the handling of a physical check, which the account holder pays for,  a debit card does not.  Depositors do have options.  They can stick their money in a mattress and pay cash for all their purchases.  They can buy money orders for bills they have to mail.  Which is what I do in some instances.  My three bills a month cost $1.50 total plus stamps.  Still cheaper than BOA's monthly fee for the card holder.

      Whining and complaining are not going to change things.  A mass exodus of account holders may cause some changes.  That decision is up to the account holders.  However when large sums of money leave a bank the management and shareholders usually try to determine why.   They can then either fix the problem by changing management and policies or they can follow in the steps of Lehman Brothers and other banks that have made "Bad Decisions."  There is a price for mismanagement.  Depositers who allow the fee to continue are part of the problem.   They are supporting a broken system and are risking their financial security.  In the Army we use to say, "You are either part of the solution, or part of the problem."  If you do not help fix it, by whatever means, then you are part of that problem and have no right to complain.  I hope the share holders take action to fix the problem.

       On a personnal note I paid off and closed my credit card account with BOA years ago.  Yet I get four to five mailings a month encourageing me to get a card from BOA.  What part of no do they not understand.   They are wasting their time and their money sending me applications.   Especially after I sent them a letter explaining why I was closing my account.  They might want to review their mailing lists.  The five mailings they send me would cost $2.20 a month for stamps not including the printing, envelope and labor expended in the process.  Multiply mine times hundreds of thousands per month and maybe they could cut their losses to the point they do not have to charge a fee.  However BOA do not tell me you can not cut costs or that it is government regulations that is the problem.  My mailbox tells my your management is the true problem.  Not only BOA, but Chase, Discover, ATT and CITI could all learn from the same examination of their mailing lists.  Maybe America is finally tired of being ripped off.  The protests on Wall Street say I am right.   The big banks may need to tighten their belts and actually manage what they have. Instead of  constantly trying to grab a bigger piece of the pie.  Bigger is not always better.  People need to go back to the small banks with dedicated and caring staffs before the big banks are all that is left.

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