Results tagged “bankofamerica”

The NY Times looks at how Lehman Brothers head Dick Fuld tried to save the firm, with the help of government officials, based on reporter Andrew Ross Sorkin's book, Too Big To Fail. A choice quote: Then-Treasury Secretary Hank Paulson telling Fuld he won't call Bank of America's CEO, "I think it’s a hard sell, but I think the only way you’re going to do it is go to him directly. I’m not going to call Ken Lewis and tell him to buy Lehman Brothers." Of course, Paulson did pressure BoA to buy Merrill Lynch—and now Lewis is on his way out.

Bank of America, which had posted a $3.2 billion profit last quarter, announced a $2.2 billion loss—$1 billion due to consumer defaults (CNN Money: "more and more Americans found themselves out of work and unable to keep up with their loan obligations") and paying the government and another $1.2 billion due to shareholder dividends. Departing CEO Ken Lewis said, "Obviously, credit costs remain high, and that is our major financial challenge going forward."

The fallout of its Merrill Lynch deal continues: Today, Bank of America agreed to reveal private documents about its Merrill takeover. A spokesman said, "We don’t have anything to hide... Attorney-client privilege is an important business principle, but the pressure in multiple inquiries to provide additional insight convinced us it is appropriate to waive in this instance to get the issue behind us." Someone eager for these documents: AG Andrew Cuomo, who blasted the company for letting Merrill give $3.6 billion in bonuses even though it had a $9 billion 4th quarter loss.

Bank of America CEO Kenneth Lewis announced he would resign at the end of the year. One analyst tells Bloomberg News that Lewis had become a "distraction" after taking over Merrill Lynch and buying subprime mortgage company Countrywide, "He’s drifting out to sea like a dying Eskimo, knowing the company can do better and thrive without him."

A disgruntled New Yorker is suing the Bank of America for "1,784 billion, trillion dollars." It gets weirder: The suit, filed by Dalton Chiscolm last month, is being reviewed by the same federal judge who sentenced Bernard Madoff to a 150-year prison sentence. Judge Denny Chin has called the lawsuit "incomprehensible" and demanded that Chiscolm explain his claims, and elaborate on charges that he received "inconsistent information from a 'Spanish womn" reached by phone at the bank.

Federal Judge Jed S. Rakoff rejected the $33 million settlement that the Securities and Exchange Commission accepted from Bank of America over the $3.6 billion in bonuses paid to Merrill Lynch employees. BoA, which acquired Merrill, knew Merill was about to post $9 billion in fourth quarter losses yet went ahead with the bonuses; Rakoff found that BoA "materially lied" to shareholders about the losses.

Attorney General Andrew Cuomo is continuing to investigate Bank of America's acquisition of Merrill Lynch—and he's not very happy with BoA's uncooperative, client-lawyer confidentiality stance! His office sent a letter (PDF) saying that they found four instances where the company failed to disclose "material non-public information to shareholders" (such as Merrill's $9 billion 4th quarter losses, $3.6 billion accelerated bonus payments), "The facts of the cascading losses and bonus payments -- and the facts of Bank of America's senior executives' knowledge of these events -- are straightforward. However ... the decision-making process by which Bank of America and its executives decided not to disclose these material facts to Bank of America's shareholders has been hidden from our investigation by Bank of America's repeated invocation of the attorney-client privilege." Additionally, there are questions surrounding the dismissal of BoA's general counsel: "[Timothy] Mayopoulos was let go the day the bank informed its board that Merrill was bleeding money at an unexpected pace," just days after he discussed the "mounting losses at Merrill Lynch, which were not disclosed to shareholders before the deal closed" with BoA's CFO. Yeah, that's not fishy at all!

Merrill Lynch's decision to hand out extravagant bonuses last year— as it was about to lose $15 billion in the final quarter—continues to cause problems for Bank of America, which acquired Merrill. Even though the Securities and Exchange Commission (you know, the agency that was supposed to keep tabs on Madoff) settled a lawsuit against BoA for the bonuses, to the tune of BoA paying $33 million, a federal judge has refused to approve the settlement! The SEC complaint said that BoA lied about letting Merrill pay as much as $5.8 billion in bonuses (Merill paid out $3.6 billIon), leading Rakoff to point out that if BoA did in fact break the law, then there's "something strangely askew in a fine of $33 million." He added that both companies "effectively lied to their shareholders... Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion?"—$27 billion is the amount that Merrill lost. And when a BoA lawyer pointed out that much of the bonus money was shared by people making an average of $91,000/year, Rakoff said, "I’m glad you think that $91,000 is not a lot of money. I wish the average American was making $91,000."

Today's not a good day for Bank of America. In the Wall Street Journal, there was a report saying CEO Ken Lewis told investors that BoA will "shrink the company's 6,100-branch network by about 10%, a pullback from the two-decade expansion that took the bank from coast to coast. The driving force for the closings is changing customer preferences...as online and mobile banking take transactions away from traditional branches," according to sources.

According to the Wall Street Journal, "Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government's so-called stress tests of lenders, according to people familiar with the situation." The extra capital would be a "buffer" in case the banks' losses continue to grow. Apparently both banks are trying to develop arguments disputing the findings (for instance, BoA's shortfall is in the billions). The AP points out that, for the Treasury, "the easiest way to bolster bank balance sheets is to convert the government's existing stake from preferred shares — a form of debt — into common shares that carry voting rights." Last week, the federal government said capital needs weren't necessariy a measure of "current solvency or viability of the firm," but worries, coupled with swine flu concerns, have sent stock futures down.

Attorney General Andrew Cuomo says that the U.S. government pressured Bank of America to buy Merrill Lynch. Cuomo had questioned BoA CEO Ken Lewis over Merrill's $15 billion loss for the 4th quarter of 2008—namely whether the company hid that information from shareholders—and Lewis said that he was warned by Treasury Secretary Henry Paulson (pictured) and Federal Reserve Chairman Ben Bernanke that failing to take over Merrill, as troubled as it was, would "impose a big risk to the financial system." Further, Paulson "may have threatened to remove the bank’s management and board if they didn’t comply," according to Cuomo's letter to Congress. Cuomo has been investigating BoA and Merrill after Merrill handed out extravagant bonuses to executives.

NY State Attorney General Andrew Cuomo, in his quest to get to the bottom of Merrill Lynch's extravagant bonuses right before announcing a $13.8 billion 4th quarter loss, told a judge, "We respectfully request that the court reject Bank of America’s continued efforts to stymie the attorney general’s investigation." Bank of America, which bought Merrill, has allegedly threatened to sue an employee for cooperating with Cuomo's investigation. The bank says it "has continually offered to provide the information the attorney general is seeking if he would agree to an appropriate confidentiality agreement. He has continually declined," (Cuomo wants to air all the dirty laundry). Additionally, the AG's office says it has found signs of "trading irregularity"; per Bloomberg News, a London-based Merrill trader who "recorded a trading profit of $120 million for the fourth quarter may instead have lost a large amount." Bank of America and Merrill Lynch have received a combined $45 billion in bailout funds.

Do not mess with Attorney General Andrew Cuomo! Cuomo detailed his office's dealings with Merrill Lynch—namely how they asked Merrill what they were doing about 2008 bonuses in October but Merrill ignored them and apparently moved up their bonus schedule to spread billions in bonus money—in a letter to Rep. Barney Frank. You can read the letter (PDF) but here are some calculations: "The top four bonus recipients received a combined $121 million; The next four bonus recipients received a combined $62 million; The next six bonus recipients received a combined $66 million... Overall, the top 149 bonus recipients received a combined $858 million; 696 individuals received bonuses of $1 million or more." Cuomo also accused Bank of America, which bought Merrill Lynch, of being complicit in the bonus debacle.

Attorney General Andrew Cuomo wants former Merrill Lynch CEO John Thain to further spill about the bonuses given last year. Thain has come under fire for going ahead with $4 billion in bonuses last December, as the company was about to report a 4th quarter loss of $15 billion. Cuomo, who has subpoenaed Thain, said, "The fact that Merrill Lynch appears to have moved up the timetable to pay bonuses before its merger with Bank of America is troubling to say the least and warrants further investigation." Bank of America, which is taking over Merrill, fired Thain last week and claims it had no legal right to stop Thain from issuing the bonuses; Thain said in a memo to employees, "The total bonus pool was also substantially less than the amount allowed under our merger agreement."

Fired Merrill Lynch CEO John Thain is going on the offensive, claiming that Bank of America knew that he and other ML execs were giving out $15 billion in bonuses, not to mention BoA knew Merrill was losing $15 billion during the 4th quarter. But did BoA, which announced it was taking over Merrill in September, know about his $1 million office decorating account? Oh, Thain claims that was a mistake. Clusterstock has the leaked memo Thain sent to ML employees—"We were completely transparent with Bank of America. They learned about these losses when we did."—and CNBC will broadcast an interview with Thain at 4:15 p.m. BoA, which is getting $45 billion in TARP money, tells CNBC that Thain and Merrill's "compensation committee made the decision on the amount and timing of year-end compensation. We had no legal right to challenge it."

New documents show was Merrill Lynch was in its final days before getting swallowed up by Bank of America last year, its CEO John Thain was spending lavishly on all sorts of personal expenses—hello $87,000 rug! The Daily Beast reveals that Thain hired celebrity designer Michael Smith to refurbish his office for $800,000—eight times what Smith is getting paid to redesign the White House right now. While telling employees to spend with self-control, Thain paid his driver a total of $230,000 in salary, overtime and bonus—double what many executives paid their drivers. One luxury Thain scaled back on during the year Merrill Lynch lost $12 billion was his usual multi-million dollar annual bonus, after heavy pressure from Attorney General Andrew Cuomo. Now, Thain has just announced that he will step down as CEO a month after the merger takes place.

Banking giant Citigroup announced its fifth straight quarterly loss—this time, it's $8.29 billion—and described plans to restructure. The NY Times reports, "Citigroup confirmed that it would divide, for management purposes, into two separate businesses — Citicorp and Citi Holdings," and the company's statement read, "We are setting out a clear road map to restore profitability and enable us to focus on maximizing the value of Citi." CEO Vikram Pandit added, "Our results continued to be depressed by an unprecedented dislocation in capital markets and a weak economy."

Two separate reports show that monthly layoffs are at their highest level in almost seven years. CNBC reports that outplacement firm Challenger Gray & Christmas cites November job losses to be "181,671, up 61% from October and 148% higher than November 2007" while payroll company ADP says November job cuts were around 250,000. (Back in January 2002, layoffs were at 248,475.) And more are coming: In its takeover of Merrill Lynch, Bank of America may cut up to 30,000 jobs (they will cut at least 10,000), through layoffs, attrition, and sales of business units. With that news, stock futures are down.

Perhaps you've noticed Bank of America's ad campaign that gives customers $10 back for every $100 they use on public transit. But NBC New York notes that the ads are a bit subversive in touting BoA's program, since the print ads, feature people and copy like "Ten bucks for every hundred I spend on transit? Great. How about finding a cabbie who doesn't mind going to Brooklyn?" or "Ten bucks for every hundred I spend on transit? Great. How about a solution for gridlock?" Maybe advertising to NYers is difficult: Earlier this year, Capital One's ad campaign launched its NY/NJ market campaign with the questionable use of huge push pins "hurtling from the skies and crashing into the NYC streets and taxis to demonstrate nearby locations of the bank's ATMs."

During testimony to the Senate Banking Committee, executives from Wells Fargo, Goldman Sachs, Bank of America and J.P. Morgan Chase promised not to use bailout funds "to pay their executives and employees," according to the AP. These four institutions account for $75 billion of the Treasury Department's Troubled Asset Relief Program. AIG received $40 billion from TARP on Monday--just after it was revealed the company went forward with a $343,000 conference in Phoenix. AIG claims there was important training and that its sponsors paid for 90% of the event--still, there's nothing like seeing men in suits enjoying hotel patios.

The Gothamist Newsmap indicated there was "falling debris" at West 43rd Street and 6th Avenue in Midtown and now it turns out it's not ordinary debris: It's Bank of America window glass debris! CityRoom reports that a "pane of glass fell from around the 16th floor of the skyscraper." Apparently no one was hurt and the police closed sidewalks around the under-construction building. We'll repeat what a reader told us last time around: "Stuff falls from that building all the time, it's insane. I am never walking under it again."

The financial industry's worst weekend ended on these notes: Lehman Brothers filed for bankruptcy, after being unable to find a buyer; Bank of America, previously interested in Lehman Brothers (but didn't want to buy it with government protection) decided to buy Merrill Lynch for $50 billion; and it's worried AIG and Washington Mutual will fall next. The financial markets are expected to be in tumultuous territory, and a banking analyst told USA Today, "We are in a hysteria."

Naturally, there are concerns after, per the Sun, a "65 square-foot panel of steel and glass" fell from the Bank of America building at 6th Avenue and 42nd Street in Midtown yesterday. Two people were injured; a construction worker at the Verizon building across the street described seeing the panel to the Daily News, "We looked up and saw this piece of glass covering the entire sky." A stop-work order for exterior work was placed at the site and safety violations were issued to Tishman Construction. Though this is the 6th time since 2006 in which material has fallen from the building, a Tishman spokesman said, "We do not see a pattern with regard to previous incidents...It's undetermined as to what happened was mechanical or human. Something did not happen normally this time."

For the umpteenth time, glass has fallen from the under-construction Bank of America building at 6th Avenue and 42nd Street in Midtown Manhattan. Per WABC 7, the glass fell "across the street onto scaffolding surrounding the Verizon building." Um, thank goodness for the Verizon building's scaffolding, but apparently two people were still hurt. There has been a number of "falling debris" incidents at the location. West 42nd between Broadway and 6th has been closed and a reader writes, "Stuff falls from that building all the time, it's insane. I am never walking under it again."