Why Bank of America Will Never Be Great Again

Bank of America (BAC) finally did the right thing this week, nixing the notorious $5 a month fee that it began tacking on last month to account holders who use their debit cards for purchases.

The financial services behemoth wasn't the first banker to begin passing on the costs of new regulations that limit what plastic-issuing banks can charge merchants. However, as TARP's poster child, Bank of America will always be the one that gets skewered and lampooned when the going gets tough.

Bank of America can't win, and even now financial journalists are wondering how the bloated banker will find ways to nickel and dime its way back from this week's fee retreat at the expense of its forgiving customers.

Nobody Wants to Be the Banker

This isn't the first time this year that Bank of America has been roasted.

Bank of America was the runner-up this year in Consumerist.com's annual Worst Company in America contest, and the only reason it had to settle for the silver is because readers were still reeling from the memory of BP's 2010 offshore oil rig disaster in the Gulf of Mexico. In other words, death and environmental destruction are the only things that kept people's loathing of Bank of America in check.

A few weeks later it finally made it into the winner's circle, singled out by consumers in the fifth annual MSN Money/Zogby customer service poll to find the company that treats its patrons the worst. Bank of America received a "poor" rating from 41.4% of the poll's respondents. No one else even came close.

Keep in mind that these notorious distinctions happened months before its debit card fee fiasco. In other words, it's more than likely that Bank of America is hated even more now.

Lacking Interest

Financially speaking, Bank of America is getting better. Its latest quarter found the notorious B.A.C. posting a larger than expected profit, reversing a year-ago loss. It's in the process of fortifying its balance sheet. It has been taking its well-deserved lumps, closing in on a million loan modifications since 2008. Analysts see the banking bozo posting a small deficit this year, but bouncing back into profitability come 2012.

However, this really isn't about Bank of America's financial stability. There's a credibility problem that will forever hold the brand back.

Bank of America's ill-advised acquisitions of Countrywide Credit and Merrill Lynch forced it into being one of the grubbiest hands when the government had to bail out the "too big to fail" financial giants. Taxpayers didn't like Bank of America much before, but now they feel as if they're entitled. They see Countrywide as the face of predatory lending and robo-signers, and as a result the Bank of America brand is the Qwikster of banking.

Given the choice -- over time -- consumers will close out their accounts to avoid the embarrassment of having the moniker on their checks. Seriously, can you imagine what the "new accounts" department at your local branch is doing these days with all of the spare time?

Insufficient Funds

"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," co-chief operating officer David Darnell notes in this week's announcement. "Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."

I don't know what's worse, that Bank of America actually has two COOs or that it took the company an entire month to realize that its customers weren't happy with this move.

In the end, it doesn't matter. One of the greatest brands in banking is now its most despised.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Bank of America.

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Annie Bowen

I don't have any problem with bank of america in all honesty. I've had them for 5 years and never got charged a fee. infact they were very forgiving to me, especially when I first opened my account and the two times I accidently over draw the never charged me fee for it. I've never gotten a surprise fee, and they are the only bank that is part of the global atm chain (forget the actual name of it) which allows me to withdraw money for free in all the countries I visit, so I don't plan on changing anytime soon.

December 05 2011 at 8:34 PM Report abuse rate up rate down Reply

Is it true that BOA will be installing pay toilets?

November 08 2011 at 2:09 PM Report abuse rate up rate down Reply

I was watching Morning Joe this morning and saw a Washington Post study that found that the big banks made more in the past two years of the Obama administration than they made during the entire 8 years of the Bush administration.
I never thought I'd find myself in agreement with the Occupy Wall Street Movement and the Tea Party people but it appears the game is truely rigged. There's no substantial difference between the Democrats and Republicans, both have sold us out to the highest bidder.

November 07 2011 at 9:38 AM Report abuse rate up rate down Reply

Happy Girl
I would like to say that Bank of America is getting a bad rap! It was not their fault that our Goverment made BoA buy those failing Mortgage Companys that screwed up our housing market. What about Fanny Mae and Freddie Who lost Billions of dollars giving homes to people without jobs and couldn't pay for their mortgages; and paid billions in our money in bonuses and salaries to their executives. OOPs Barney Frank and Dodd!!! It seems they and everyone else is shooting BoA in the foot. What business is not in the business of trying to make money. In addition, I would like to say that you people can't read or understand english. Other Banks have been charging these fees for 3/4 months already. BoA was to start in January 2012 and after hearing how people feel they decided to cancel. But have you heard from other banks who charge?

I have been a very happy Bank of America customer for many years and enjoy very good customer relations with my Personal Bankers there. They explain what I need explanations for, provide information on new products and are more than happy to help with any problems that sometime I cause. Unless you walk in their shoes, please do not criticize every move they make. It is easy to do when you don't know everything going on.
We need to give everyone the benefit of the doubt, even BoA. You might also blame this administration once in awhile because they harbor some of the blame. What we need most of all is for America to get back to GOD. Without him, we will be lost forever. May God Bless America!!!!

November 06 2011 at 9:46 PM Report abuse -1 rate up rate down Reply

If an individual was as disreputable they would have already died of embarrassment. But as a greedy unethically run banking behemoth they continue to plod undauntedly along seemingly forever.

November 06 2011 at 9:32 PM Report abuse +1 rate up rate down Reply

As far as I can read, the US Tax PAyuers are owed the shares of AIG Insurance and the assets that the shares control.

We should be asking for the evidence of the property being handed to the tax payers, and we should be receiving our distributions in the mail. Afterall, we, the people, are the shareholders, not the representatives in Washington, and not the Federal Reserve or Treasury.


November 06 2011 at 8:41 PM Report abuse rate up rate down Reply

The tax payers should have charged all of the banks NSF fees rather than provide TARP funds.

Read "Too Big To Fail" and you read about collussion, anti-trust practices, discriminatory lending practices to fellow bankers, buddy-buddy relationships with regulators, and a whole lot of illegal actions that penetrated the US Trasury and the New York Federal Reserve in order to ultimately get ahold of AIG's original stock in the insurance divisions, and send it to Goldman and Morgan.

Atually, Bank of America was brilliant - they got Merrill for a dime.

JPMogan was brilliant - they got Bear Stearns for a dime.

China was brilliant - they got reimbursed for their agency investments without the public ever knowing. Brilliant.

And Paulsen was brilliant - he converted the Federal Reserve into a margined casino used to create the largest maergers in short ordwer, without legal scrutiny or review of regulators... he outsmarted democracy and the US Government, and accessed the Treasury and Federal Reserve - I bet he won that bet ...

There was a lot of brilliance that took place... it just happened to take funds that were tax payer money, and steal it for private business purposes that ordinary businesses never had the opportunity to access. And that is what makes it, and the firms that benefitted, so briiliant, yet, so worthy of terminating relationships and exiting as clients/customers.

The fact is, they love our ranting about them, because they could care less about us - we do not have resources that inmporess them - except for our collective resources, called the Treausry, which they have penetrated easily.

November 06 2011 at 8:38 PM Report abuse rate up rate down Reply

ANYONE who has a MOTGAGE LOAN that was reworked would be wise to get their annual FREE credit report at annualcreditreport.com. I have one issued April 2010. Reported sporadically from May to September. NOT REPORTED since OCTOBER 2010. As far as all three credit bureaus are concerned I have NO MORTGAGE. That's funny, because I have been paying on one for 18 months to BANK OF AMERICA.

November 06 2011 at 8:30 AM Report abuse rate up rate down Reply


November 05 2011 at 1:35 PM Report abuse rate up rate down Reply

I've had a BofA checking account since 1970 and a savings account since I was in the 4th grade when the bank used to collect pennies, nickels and dimes weekly at schools for deposit at a reasonable rate of interest. My wife and I worked for BofA for a total of 53 years between us.

In the '70s, the CEO, Tom Clausen, met with employees individually and in groups regularly and his salary never exceeded that of the President of the United States (although his stock options and grants were considerable and commensurate with the bank's performance). Claire Giannini Hoffman (the daughter of A.P. Giannini, the bank's founder) was on the board of directors. It was a good place at which to work.

We are finally going to sever all relationships with BofA. Even if they really cancel their $5/month debit card fee, I have no doubt that they will find other ways to charge loyal customers for services that used to be included in the banking relationship (note that I don't say "free", since no service is ever really free). I know that the loss of our small account will not affect the bank at all - in fact, the bank might be glad to see us go. I just feel fortunate that we sold all of our BofA stock at around $40/share (at a loss) several years ago.

Good luck to all at what used to be the "little people's bank".

November 05 2011 at 1:08 AM Report abuse +2 rate up rate down Reply