Inner City Press: Investigative Reporting from the United Nations

Bank of America, Moving to Close 600 Branches, Blames Merrill Lynch Deal, Regulators Conflicted

By Matthew R. Lee

NEW YORK, July 28 -- Bank of America's government subsidized takeover of Merrill Lynch will now lead to the closing of 600 neighborhood bank branches, it emerged on Tuesday. B of A spokesman James Mahoney said, "'what we are heading to is a model where we have fewer but more robust branches that incorporate the investment and mortgage services that we have picked up with the acquisition of Merrill Lynch'... People are accessing their money in new ways and have less need for the traditional neighborhood branch."

But is this lesser need for bank branches true in the lower income communities of color which Bank of America claims to care about? If anything, it has been the lack of bank branches with normally priced credit which drove residents of such neighborhoods to the subprime lenders, many of them funded and enabled by Bank of America, which set off the financial crisis. CLick here for an Inner City Press story on B of A's subprime ties.

As Bank of America has fallen under financial, regulatory and finally Congressional pressure, it has been jettisoning its stance on the Community Reinvestment Act. In April of this year, and still unexplained by Bank of America, B of A chief financial officer Joe Price told stock analysts on a recorded conference call that while "CRA" loans are only 7% of B of A's portfolio, they were 24% of their losses. Click here for audio, Price made his statement at Minute 26:25.

Price's name shows up in the contexted e-mail chain about the government's pressure on Bank of America's top officials, using their desperation to keep their jobs and perks, to consummate its subsidized takeover of Merrill Lynch.

B of A (and Merrill), 600 branch closings not yet shown

Now that acquisition is cited by Bank of America as a reason they will move to close down neighborhood bank branches and consolidate into larger facilities with Merrill's investment services, presumably in more affluent areas.

Would the same regulators who pushed Bank of America to close the Merrill acquisition credibly constrain B of A from the branch closings the bank says flow from the deal?

* * *

NEW YORK, January 21 -- Bank of America is now headed down a Citigroup-like path. A second serving of TARP bailout funds, government insurance for a widening range of toxic assets, a chief executive on the ropes. While Ken Lewis claimed to have gotten BofA out of the world of subprime, its investment banking arm continued to buy and trade subprime mortgages, and to prop up subprime lenders. Now Lewis implies that the $108 billion in toxic assets being insured by the government came from Merrill Lynch. But a quarter of them come from BofA itself.

As reported by Inner City Press, Bronx-based Fair Finance Watch documented this to the Federal Reserve in Communiuty Reinvestmeent Act comments filed in opposition to Bank of America's applications for regulatory approval to merge and expand. In its responses to FFW's comments, BofA begrudgingly acknowledged that it did business with, among others:

Ameriquest Mortgage Corporation, since defunct; Saxon, through which Morgan Stanley tells FFW it has stopped lending, Option One, Centex, New Century, bankrupt; Metris (a subprime card lender HSBC later acquired), Delta Financial, First Franklin, WMC (subprime lender owned by GE), Fremont Investment & Loan, rogue subprime lender which told FFW it would only give its Home Mortgage Disclosure Act data if one signed a confidentiality agreement), Capital One, CIT, WFS -- and Ownit, regarding which Bank of America blacked-out a column labeled "ABS/MBS Underwriting," after elsewhere publicly admitting it performs those functions for Ownit’s loans.

"Bank of America indirectly owns 24.9% of the voting common equity of Ownit... In August 2005, Bank of America, N.A. transferred the Ownit residential mortgage loan portfolio purchased during March 2005 to Asset Backed Funding Corporation (‘ABFC’). ABFC is an affiliate of Bank of America Corporation that is a limited purpose corporation that securitizes residential mortgage loans... ABFC securitized these Ownit loans, along with similar loans from another loan originator, in its approximately $1.2 billion ABFC Asset-Backed Certificates, Series 2005-HE2 transaction. Banc of America Securities LLC served as the underwriter in that transaction....

In two separate transactions on March 9 and March 14, 2005 Bank of America N.A. purchased Ownit residential mortgage loans in an aggregate amount of approximately $265 million. These loans were held for the account of Bank of America, N.A. until they became part of the August 2005 securitization described at Item 2.b above. These loans were purchased in a competitive, arms-length process at fair market terms" -- followed by more than half a page blacked out.

This was the level of secrecy in the time leading up to the subprime lending meltdown. Now Ken Lewis implies that the assets being insured by the government all came from Merrill Lynch, when 25% are from BofA itself. Will Ken Lewis go the way of Citigroup's Chuck Prince and Robert Rubin? Many say that he should.

These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund. Video Analysis here

Other, earlier Inner City Press are listed here, and some are available in the ProQuest service, and now on Lexis-Nexis.

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