Bank of America Corporation
The Bank of America Corporation is much more than the name implies. One of the five largest corporations in the United States, it not only has relationships with practically all of the US Fortune 500 companies, but also does business with over 80 percent of the Fortune Global 500. It is also part of the S&P 500 Index and Dow Jones Industrial Average, making the banking corporation a leading international economic indicator as well as a reflection of the United States economy.
With the exception of United States oil companies, the bank is second only to Walmart in terms of company size in America. It has held upwards of 12% of the deposits in the United States as recently as the fall of 2009. Bank of America's primary competitors are Citigroup, JP Morgan Chase and Wells Fargo. Its banking operations cover over 75 percent of the United States; in addition, it does business in over 40 non-American territories.
The Bank of America has not always operated with this current name. The company was established just after the turn of the 20th century in San Francisco, California, as the Bank of Italy. The mission was to help Italian immigrants who were having a difficult time establishing credit in the United States. Already established at the time of the San Francisco earthquake of 1906, the Bank of Italy was instrumental in providing loans to help the area rebuild.
The transition to the current operating name began in 1922, when the bank's founder established a bank in Italy, named Bank of America and Italy, by purchasing a failing bank. A.P. Giannini would merge the Bank of Italy with the Liberty Bank of America and eventually the BOA Los Angeles branch to form the Bank of America in 1930. The bank was also the owner of the Transamerica Insurance Corporation until the mid-50s, but was forced to relinquish ownership because of the Bank Holding Company Act of 1956.
Because of various mergers, Bank of America was confined to operating primarily in California until the 1980s when the conglomerate was purchased by Wells Fargo. Bank of America became widely known as a pioneer in the banking industry by its development of the charge card and later the debit card. The card development project eventually became Visa, with MasterCard becoming the competitor's version.
Bank of America Corporation has used mergers to grow into a giant bank with a huge impact on the international economy. It was a large player in the financial crisis of 2008, needing $138 billion from the United States government to prevent failure. The bank was able to pay back a $45 billion relief payment ahead of schedule based on an agreement with the United States Treasury. Certain "toxic" mortgage assets were assumed by the Federal Reserve, allowing Bank of America to unload bad debt and clear its ledgers. It is still seen by auditors, however, as unstable and remains at a competitive disadvantage because of certain questionable elements of its portfolio.
News & Analysis
|07/13/09||Bernanke Under Fire as Lawmakers Call for Probe of Fed Role in BofA Merger|
|04/29/09||Citigroup and Bank of America May Need More Capital|
|04/21/09||Bank of America Reports Sharp Rise in Bad Loans While European Banks Step Up Disposals|