Globe business columnist Shirley Leung, on whom we can always rely to be highly attuned to the sensitivities of corporate executives, recently shared with us what drives retiring Bank of America board member Chad Gifford crazy — “big-bank bashing.”
Gifford, who’s stepping down as chairman of Bank of America’s board with an eight-figure retirement package, plans to devote his retirement years countering the impression that some of us (notably Senator Elizabeth Warren) have gotten that big banks bear an enormous amount of responsibility for the currently precarious financial condition of what we once referred to as America’s middle class.
While conceding that in 2008, the banking industry “made some mistakes,” Gifford insists that’s not the whole story. “Bigger isn’t always bad,” he explained. “Banks need to be well-capitalized to handle the increasingly complex transactions of their clients.”
And, as Bank of America vice chairman Anne Finucane pointed out to Leung in further defense of bigness, Bank of America now gives away $12 million locally — more than its earlier incarnation, FleetBoston, donated. (Which is all very nice, but considering that FleetBoston had $200 billion in assets before merging with Bank of America, and Bank of America now has $2.1 trillion in assets, it’s rather less impressive than it first appears.)
And something the Bank of America folks did not pass on to Leung. In addition to the $12 million annual local donation, Bank of America is also the source of $5.6 million in one-time funds to be distributed to legal assistance programs in Massachusetts. This extra funding is not a charitable donation, but instead, as Massachusetts Lawyers Weekly (sub. req.) reports, it is part of the settlement between Bank of America and the U.S. Department of Justice under which the bank will pay $17 billion in penalties and partial restitution for the financial fraud it committed in the years leading up to the Great Recession of 2008 (and beyond). The settlement includes the bank’s admissions that it sold billions of dollars of residential mortgage-backed securities without disclosing important facts about the dubious quality of the securitized loans and that it originated risky mortgage loans and made misrepresentations about the quality of those loans to Fannie Mae, Freddie Mac and the Federal Housing Administration. The additional funding for legal services is welcome, but of course it will not even begin to repair the damage inflicted on homeowners and their tenants, many of whom continue to struggle to put the consequences of the bank’s fraud behind them.
And that’s what drives us crazy about Chad Gifford and Bank of America.