Bank of America: the very name is meant to conjure up comforting, red-white-and-blue fantasies of a bank of the people, by the people, and for the people.
But as Matt Taibbi pointed out in his latest feature for Rolling Stone, while there’s almost nothing the megabank does that is for the people, it sure as hell is paid for by the people. It got $45 billion just in bailout money, and trillions (with a T) in emergency loans from the Federal Reserve—and not only did it not pay taxes last year, it received a tax refund of $1 billion. And yet it’s still teetering on the edge of collapse.
Unless we do something soon, we might be heading for yet another people’s bailout of America’s bank.
Occupy Wall Street has decided to fight back. “This bank is not working, and the people should be deciding how to break up this bank, how it should be democratically run, before it gets either another bailout or is bought out by some other bank,” Nelini Stamp, an Occupy Wall Street participant and organizer, told AlterNet.
Big Bad BAC
Bank of America just can’t seem to stay ahead of its public relations disasters. Just last week, the news hit that the bank paid its CEO, Brian Moynihan, $7.5 million last year—a year in which the company’s stock dropped 58 percent and when it lost claim to its place as the nation’s biggest bank (to JP Morgan Chase). That was a sixfold pay increase, in case you were wondering, from the year before. So: your company’s stock price plummets, you get sued left, right and center, and you get a giant raise?
But outrage over its CEO’s pay is the least of the zombie bank’s concerns. More pressing is an impending downgrade (another one) of its credit rating. Right now, Moody’s rates B of A as Baa1—but this May, along with other financial giants, it might drop that rating to Baa2—just two steps above junk.
What does that actually mean? Well, according to Susanne Craig and Peter Eavis at the New York Times, “The three banks that stand to be the most affected by a ratings downgrade have already said that they would have to put up billions of dollars more in collateral to back trading contracts.”
Then, of course, there’s the constant lawsuits, settlements, and battles with various state and federal government officials. Yves Smith reported this week that four pension funds may have stuck a wrench into the process of the $8.5 billion settlement over bad mortgages from Bank of America’s Countrywide mortgage subsidiary. A U.S. District Judge in Manhattan ruled that the suit against Bank of New York Mellon, in the case, could proceed, and Smith noted, “If other parties follow the lead of these four pension funds against Countrywide trusts, you could see enough holes shot in the settlement deal so as to render it useless to Bank of America (indeed, worse than useless: the deal provides for expanded indemnification for Bank of New York Mellon, so if angry investors saddle up to sue BoNY and BofA, it might find itself worse off, depending on the nature and level of damages awarded against BoNY).”
That’s just one settlement among many—as Taibbi wrote, last year, the bank settled for $335 million with the Justice Department after it pushed black and Latino borrowers, perfectly qualified for normal mortgages, into much riskier subprime loans. And it paid a $137 million fine for conspiring with other banks to rig the process by which cities and towns choose banks to manage their money. Taibbi explained, “in an attempt to avoid prosecution, it applied to the Justice Department’s corporate leniency program, essentially confessing its criminal status: As plaintiff attorneys noted, the application ‘means that Bank of America is an admitted felon.’”
“In sum, Bank of America torched dozens of institutional investors with billions in worthless loans, repeatedly refused to abide by contractual obligations to buy them back, evaded hundreds of millions in local fees and taxes, pushed tens of thousands of people into foreclosure using phony documents, ignored multiple court orders to stop its illegal robo-signing, and exploited President Obama’s signature mortgage-relief program. The bank fixed the bids on bonds for schools and cities and utilities all over America, and even conspired to try to game the game itself – by fixing global interest rates!”
Yet, after all this, the bank is still chugging along, hiking up fees on customers who can’t afford them, and sending collections agencies after people who don’t even have debt anymore. And it remains supremely confident that no matter how many lawsuits or downgrades, it will always have access to the next government bailout.
There’s no greater proof of this than the fact that not long ago, Bank of America was allowed, with the blessing of the Fed, to move a huge chunk of potentially toxic derivatives from its shaky investment banking arm, Merrill Lynch, to the publicly-insured Bank of America itself—guaranteeing an FDIC bailout if the debt goes bad.
“This, in essence, is the business model underlying Too Big to Fail: massive growth based on huge volumes of high-risk loans, coupled with lots of fraud and cutting corners, followed by huge payouts to executives,” Taibbi wrote.
Break It Up
Back in January, Public Citizen put forth a petition calling for Bank of America to be broken up by regulators, who have the authority to do so under Section 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A group of economists and activist groups signed on to a separate letter to the Treasury Secretary, the Fed and the FDIC, calling for investigation into the country’s biggest banks to see if more of them were deserving of dissolution.
“Our specific demand is to break up Bank of America because we’re done with this too big to fail thing. Bank of America is too big, it has been failing and we want to highlight exactly how it’s failing,” Nelini Stamp told AlterNet.
To target the big bank, OWS has a variety of tactics ranging from direct actions to coordinated Move your Money efforts, and as their spring offensive continues, they’re ratcheting up the pressure on B of A.
Of Move your Money, Stamp said, “We want to make sure that people feel like that is a direct action unto itself. It’s not just ‘I’m just moving my money from here,’ but actually people are feeling empowered and knowledgeable about the choices that they’re making when they’re making their banking decisions.”
On April 13 in New York, Occupy will be holding a “move your money relay,” escorting people from Bank of America branches, where they’ll close their accounts, to community banks and local credit unions, where they’ll hold celebrations to welcome people to their money’s new home. And May 9th is Bank of America’s annual shareholder meeting in Charlotte, North Carolina (the same city where just a few months later, Democrats will converge to re-nominate Barack Obama for a second presidential term – at Bank of America stadium). Other activist groups like the Rainforest Action Network and the New Bottom Line are joining Occupiers in calling for actions in Charlotte to protest the bank’s policies.
“As the top financier of America’s dirty, outdated coal industry, which pollutes American communities every day, Bank of America has become emblematic of everything the 99% struggles to change,” Amanda Starbuck of Rainforest Action Network said.
It can be easy to get lost in the mess of evils that Bank of America is responsible for, but the OWS crew wants to make sure that focus stays on the bank’s responsibility, both itself and through its Countrywide mortgage subsidiary, for thousands upon thousands of foreclosures. (The bank controls 17 percent of all of America’s home mortgages, according to Taibbi.)
In New York, Organizing for Occupation has been doing blockades at foreclosure auctions, Stamp said, disrupting the process of selling off homes. The week of April 16, there will be more auctions in the city, and Occupy activists plan to target homes specifically being foreclosed upon by Bank of America and Countrywide, calling attention to the fact that foreclosures are more than numbers on a balance sheet—that each one represents a person, a family, being put out on the street. “We want to highlight that banks steal homes,” Stamp said.
If you can’t make it to a foreclosure blockade and you’ve already moved your money away from Bank of America (or never banked there in the first place), the Occupy crew is inviting other activists to take a page from their book and move into a local Bank of America branch—and then share your experience online. In what they call “living-rooming,” a crew from Occupy’s Direct Action group brought furniture into a local Bank of America branch and settled in to hang out, telling the bank employees that they were renting the place out—for the $230 billion in bailouts the bank had gotten from them and people like them. “It’s your home too!” they announced.
While moving into a Bank of America lobby isn’t a permanent solution for thousands of people left homeless by predatory banking, it is a fun way to remind the banks—and the general public—that Bank of America is, in fact, our bank—that it’s us who’ve paid for it, and that if it tanks again, we’re going to be the ones on the hook for bailing it out. To prevent that from happening, Occupy and an ever-growing number of organizations and experts are calling, ever louder, to break up the big bank before it breaks the economy—again.
Sarah Jaffe is an associate editor at AlterNet, a rabble-rouser and frequent Twitterer. You can follow her at @seasonothebitch.