On Wall Street, shares in Bank of America opened 1.5% higher following the settlement.
Joel Conn, president of investment firm Lakeshore Capital, said it was because a “major cloud [hanging over the bank] has been lifted”
“Regulators wanted a pound of flesh, and they got it,” he added.
That phrase comes from The Merchant of Venice, of course, and is generally accepted to mean a legal but exceedingly unreasonable monetary demand – for example, every demand ever made by any payday loan shark company. To me, the penalty of US$16.7bn that Bank of America is paying for their culpability in snipping the brake lines of the world economy and causing it to slam into a concrete wall at 150mph, demonstrably hurting hundreds of millions of people, seems pretty darned reasonable, maybe too reasonable.
I would have said ‘a wrecking ball swung repeatedly at every branch and every executive’s home’ had they asked me what the price ought to be, so I think the answer could be that apologist Conn b) is an arse.
“Mr. Conn, I may choose to invest with your firm, but first, there’s the small matter of your name…”
Now, how shall I tag this? Oh, I know.
A.P. Giannini, founder of what is now known as “Bank of America”, was noted for his fair dealings with bank customers. No depositor in his bank ever lost a penny during the economic crash of the great depression.
Bank of America became the most successful bank in the world, mainly due to increases in California property values. A.P. died in 1949, and subsequent management became more interested in their own bottom line instead of their customers’.
Virginia Hammerness is A.P. Giannini’s grand daughter and a major stockholder in the bank. I recall seeing her in an interview in 2009, where she described the management of the bank as “idiots” and said her grandfather was “rolling over in his grave” to see the poor behavior of the B of A officers. She especially criticized their purchase of Merrill Lynch. (After the purchase, Merrill Lynch management gave themselves $121 million in undeserved bonuses.)
I’m not sure that a $16.7 million fine hurts anyone other than the long-suffering bank customers. Criminal penalties (jail time for corporate management) would better serve to reduce the risk of such bad behavior in the future. Also, any fine should be assessed against the stockholders, which are mainly institutional investors. That would provide additional incentive for investors to more closely scrutinize “idiot” management.