Bank of America’s Corporate Social Responsibility Report could not have been released at a better time. After all the bad press they received for catalyzing the foreclosure crisis, this report reminds us of how much power they really hold.
Bank of America has never sent out one of these reports before, even though many companies have been doing it for quite some time including rival banking behemoths Citigroup and Wells Fargo.
The report focuses on, first and foremost, actions that the company has taken “intended to strengthen our business, improve our relationships with customers and clients, and create opportunity wherever we operate.” The report then lists a summary of some of the actions they have taken.
But the one I was searching for was labelled item 4 of 8 and was strategically stuck right in the middle of the report between equally controversial topics 3, small business loans, and 5, regulatory reform. Item 4, of course, is entitled:
“Home lending and helping distressed customers”
Bank of America’s purchase of Countrywide in 2008 creeps into about every story, as it is assumed to have been the main cause of all of BofA’s problems, from spontaneously vanishing mortgage payments for customers who received a loan modification on their Option ARM loans to the now heavily controversial $8.5 billion settlement with investors.
In light of this glaring scrutiny, Countrywide is mentioned a total of just 11 times throughout the 87-page report, mostly in reference to how much bigger the company has become in almost all of their products and services. (It is usually stated in conjunction with the acquisition of Merrill Lynch.)
In the first item, acquisitions and legacy issues, the report points to “substantial progress in resolving the legacy issues associated with Countrywide-issued mortgage-backed securitizations,” and includes a link to their entire 259+ page 10-K filing with the S.E.C. as if that would inform any casual reader of the goings-on of this acquisition. Thus, the pertinent details are found later; they provided $306 billion in mortgage lending for 1.4 million customers and modified 285,000 loans last year.
A full report would detail how they are handling the numerous suits that have resulted from the faulty loan mods due to the Home Affordable Modification Program (HAMP), of which they proffered 102,000.
If you follow the link to section 4.1, you will have to dig through their self praise for removing overdraft fees for small purchases and other tactics to “[strengthen] ties to the communities” to find details on home loans, specifically on home retention solutions and foreclosures.
In recent news…
After having read about numerous bungled modifications, I was most curious to see where the problem stemmed from. The initially relieved but ultimately screwed homeowners reportedly received letters stating that their remaining debt on their mortgages will be cut, sometimes very drastically. But then, somehow, payments vanished and borrowers were wrongly thrown into default. Some, even months after receiving notification that their loan mods have been accepted received past-due notices and foreclosure threats.
This, I believe, is why the report states:
Changes currently underway will further improve customer communications and provide greater clarity throughout the loan modification process. These include establishing customer relationship managers during the modification and foreclosure process.
Of course borrowers will have their credit ruined if huge banks start sending out modifications en masse to eligible borrowers without carefully monitoring that the process goes smoothly! Foreclosing on a house is something they are used to and familiar with. HAMP was only established last December. Did BofA think they could get away with automating a brand new unexplored service? At least they’re implementing customer service now before the situation gets even worse.
Wrapping it up
The report ends off with positive numbers about their investments in the environment. In the past year, they invested $4 billion in environmentally friendly businesses and raised $3.7 billion in capital for renewable energy, clean technology and energy efficient companies. They also remind the federal government of the more than $2 billion they paid in taxes last year.
You can see all their astounding numbers in the executive summary, but to give you a preview it includes 1.3 million volunteer hours donated by their 288,000 employees, $208 million the bank invested in charitable givings, and 6,000 art organizations they support.
While BofA surely undertakes questionable practices and has mismanaged a bunch of new initiatives, this report is shoved under our noses as a reminder of how crucial they are to our economy, and makes a bid for that prestigious recognition we saw during the collapse that they are truly too big for us to allow them to fail.
You can download the full report and executive summary by clicking here.