Legislation forces BofA to lay off thousands of jobs

General General Discussion
1

With the Dodd/Frank financial reform act one of the things that came out of it was the limitation on the fees per transaction that banks can charge retailers for debit/check card purchases.

As we all know many of the banks started charging fees to the customer directly if they use their card to make purchases. Fees that ranged from $3 - $5 per month. Most banks backed off because of the backlash from customer, media, etc.

As a result of that lost revenue and in order to maintain the service to the customers to be able to use their debit/check cards for purchases, Bank of America is going to lay off another thousand or so employees.

Expect other banks to follow suit as their revenue which is used to support the systems that allow customers to use their cards in such a manner, they too will have to find ways to reduce expenses in order to keep customers happy.

Customers were happy prior to the legislation. Then comes the legislation. Banks raise the fees in order to continue offering the services their customers enjoy. Customers get angry because now they feel it personally after the legislation. Banks listen to their customers and withdraw the fees. Now, thousands of people are going to be out of work this Holiday season so that we can keep our $5 a month.

How do I know this. Because I am a Vice President at BofA and I am privy to this kind of information. No the people being laid off do not get big bonuses, severance packages, stock options, etc. These are just normal people like you and me. No I do not get those things either. Also this is on top of the 3,000 layoffs last month.

Do not hate the banks. They are not the problem. Legislation that has unintended consequences are the problem. The fees collected on every transaction were not the cause or a contributing factor of the economic downturn. Yet, they decided to limit that fee anyway for what purpose only God knows.

There is no public announcement yet. However, there is an interview with Brian Moynihan on Business Weekly where he talks about fee-for-service and the “new-norm” of the banking industry.

This thread is not a bank bashing thread. It is a government passing laws which do not consider the unintended consequences and the people it will hurt.

flame on!

2

What’s a ballpark figure on people from BofA who use debit cards? I’m sure it’s in the millions. Multiply that X $5 and that would be the salaries and benefits of the people who are getting laid off?

For some reason I don’t think the math will add up that way but I could be wrong. Gotta run… Headed back home today from chilly Canada “eh!”.

3

Help me out.

How can a business ever afford to lay off thousands of productive employees?

Doesn’t this kind of show the current system as a flawed model if it collapses under it’s own weight with the fees not hidden from the consumer inside the transaction? You say that customers were happy before the legislation. While I am not a big fan of the legislation or it’s authors, all it really did was force fees hidden inside the price of all goods and services you buy with debit to the surface. Customers were not happy, they were unaware.

4

Democrats do not understand economics. Its not really surprising given their back ground.

Joe Biden became a politician 1 year after earning a law degree, and a US Senator 3 years after graduating college. He has been in DC since.

Obama has never had a job where he had to manage a payroll or anything really business related aside from representing ACORN in a lawsuit against Chase bank to force them to give out loans to low income people.

Frank also has never had a real job dealing with payrolls, economic conditions like market health, taxes, ect. He dropped out of his graduate studies to become a political aide, ran for Congress a few years later, and has been there since.

Dodd did serve in the military (reserves during Vietnam). After graduating he served in the peace corps, and shortly thereafter became a politician. He has been in DC since then.

So no its not really any surprise this bill would have the consequences it has. We have 4 people here with no real job experience in the private sector, and at least 3 of them have been professional politicians for decades. The 4th has no real job experience in the private sector, and been in DC for about a decade.

Maybe if people would stop electing asshats with no real world job experience with business we wouldn’t get bills like this which hurt the economy, cost jobs, and puts the government further into the market than it was before. We have people running the country who are out of touch with that it takes to make a business work, and thus employ people.

I recommend all the people who get fired at BOA come from liberal states. Hopefully IL, CT, MA. If the consequences of those states electing people don’t affect them then they will never learn.

5

The main reason BofA has had to layoff people is due to the foreclosure settlements they are paying. The majority of the layoffs are coming from the Retail Mortgage branches that are being shut down all over the country. Some of those postions are being brought into the bank branches. BofA has also shutdown their Correspondent and Wholesale Mortgage operations. This was another source of the large layoffs. Although the personnel manning those branches were the old Countrywide employees that came over with the merger. BofA made a big mistake purchasing Countrywide. They wouldn’t be in anywhere near the mess they are in now if that purchase hadn’t taken place. Dodd/Frank is a piece of legislation that is negatively affecting everyone. As Belmont stated both Dodd and Frank have no real world experience and the legislation they helped to pen is proof of that . Hopefully it will be repealed.

6

You are correct that Countrywide was a major factor in BoA’s problems. The Merrill Lynch acquisition was another factor that help to balloon the bank to unreasonable size. However, the only the first phase of cuts are coming from mortgage operations. The second phase over the next year will hit capital markets, wealth management and commercial banking operations. My wife is a SVP in Tech Supply Chain and they are currently getting hit.

Read more: http://www.charlotteobserver.com/2011/09/02/2574344/bank-of-america-layoffs-could.html#ixzz1dtrGqFOC

7

You are correct that Countrywide was a major factor in BoA’s problems. The Merrill Lynch acquisition was another factor that help to balloon the bank to unreasonable size. However, only the first phase of cuts are coming from mortgage operations. The second phase over the next year will hit capital markets, wealth management and commercial banking operations. My wife is a SVP in Tech Supply Chain and they are currently getting hit.

Read more: http://www.charlotteobserver.com/2011/09/02/2574344/bank-of-america-layoffs-could.html#ixzz1dtrGqFOC

8

Umm No. They were not. Especially with BoA, one of the most reviled banks in existence. Bank Of America is responsible for a large portion of the financial problems we are facing right now. And they are probably the single biggest reason people are so up in arms against banks.

Yes it can be said that Countrywide was a big part of the problem. But BoA chose to acquire them and hasn’t done a thing to fix the problem.

And frankly this is not a case of government screwing people by forcing companies to lay off people. It is a rare case of the government actually trying to help people. And a bank that is in no way hurting for revenue laying off people out of pure spite to try to prove a point.

Frankly as far as I am concerned every BoA branch could burn today and this world would be a better place.

9

It is not really a matter of hidden fees or unhidden frees. Bank offer a service. You wouldn’t expect someone to cut your lawn and do all your landscaping for free? Why do we expect banks to provide their service for free. Or any company/business to provide services for free.

Just so that everyone is clear, it costs banks as a whole on average about $300/yr for each checking account. Who is going to pay for that. People want free checking of course. Who wouldn’t? But how can a bank eat those costs year after year and stay in business. Every single service offered by any business be it a bank or lawn cutting business has costs it has to recoup.

You want the ability to keep you money in a safe bank account instead of your mattress? Want the ability to use your debit card for POS purchases? You want the ability to wire money? These services all cost money.

In order for a bank to offer free checking, they have to recoup that money through other means from that customer or customers.

You want to talk to a live person when you call customer service, that costs money as well.

For the government to step in and limit the fees that need to be collected and be a profitable company in the name of protecting customers only hurts the customers and the economy with job loss and other negatives.

BofA netted $10 a month for each account holder on the usage of debit card transactions. That was cut in half by legislation. So in order to recoup that remaining $5 the bank wanted to charge the customer. So why does the bank want that other $5? Simple, so they can offer things like free checking, free savings, etc, they have to collect fees from other services that are lucrative and highly profitable in order to offer other services for free to the customer.

It is not about trying to screw anyone over, but to the contrary. It is about being able to offer basic services for free or next to free. It is about helping out the consumer.

Banks lose money when a customer does not maintain a balance of $3,000 in a checking account on a monthly basis.

I cannot agree completely about the whole Countrywide acquisition. Countrywide was not transparent about the subprime lending practices there. BofA was not fully aware of all that until it was too late. Had Countrywide fully disclosed their practices, Ken Lewis said the board never would have approved it. It would have been too risky. So BofA got screwed but in the end with defaults decreasing, the market flattening out, it will become a very profitable line of business again.

Also - keep in mind this is about legislation. Not banks specifically.

10

See replies in red.

With the Dodd/Frank financial reform act one of the things that came out of it was the limitation on the fees per transaction that banks can charge retailers for debit/check card purchases.

Could it be that transaction fees were getting out of hand? Here is a hint. The answer is YES. Banks were not willing to work with retailers so the .gov stepped in

As we all know many of the banks started charging fees to the customer directly if they use their card to make purchases. Fees that ranged from $3 - $5 per month. Most banks backed off because of the backlash from customer, media, etc.

What a shock. Banks which are one of the few places hand over fist in this recession try to squeeze money from people who are already struggling and the people raise a stink over it. Who would have thunk it.

As a result of that lost revenue and in order to maintain the service to the customers to be able to use their debit/check cards for purchases, Bank of America is going to lay off another thousand or so employees.

Bullshit. BoA has posted over a 6 Billion Dollar profit That is Billion with a B. I don’t believe in the whole “Making too much money” thing. However trying to claim that these cuts or fees or whatever are required to keep up services and still make a profit are pure bullshit.

Expect other banks to follow suit as their revenue which is used to support the systems that allow customers to use their cards in such a manner, they too will have to find ways to reduce expenses in order to keep customers happy.

More threats from a bank. Color me shocked again.

Customers were happy prior to the legislation.

See my above post. Cutsomers werte not happy. Especially with BoA.

Then comes the legislation. Banks raise the fees in order to continue offering the services their customers enjoy. Customers get angry because now they feel it personally after the legislation. Banks listen to their customers and withdraw the fees. Now, thousands of people are going to be out of work this Holiday season so that we can keep our $5 a month.

See my reply at the start of this. Pure BS

How do I know this. Because I am a Vice President at BofA and I am privy to this kind of information. No the people being laid off do not get big bonuses, severance packages, stock options, etc. These are just normal people like you and me. No I do not get those things either. Also this is on top of the 3,000 layoffs last month.

My sympathies to you for working for BoA. I don’t think I could look myself in the mirror every day. Maybe those people making those big bonuses for screwing over other people should take a cut in their pay/bonuses/benefits. A lot of companies have CEOs, Presidents, etc who take the hurt along with their employees to try to save jobs. Funny how bank CEOs have seen skyrocketing income and dont’ seem willing to do anything to help others.

Do not hate the banks. They are not the problem. Legislation that has unintended consequences are the problem. The fees collected on every transaction were not the cause or a contributing factor of the economic downturn. Yet, they decided to limit that fee anyway for what purpose only God knows.

To overuse a word. BULLSHIT. (some)Banks are just as much to blame as the .gov is. Banks saw this coming years ago. Smaller ones avoided the problem by actually running a smart business. A few larger ones carried on knowing the damage they would be doing. Government regulations helped exacerbate the problem but the banks are just as much to blame.

There is no public announcement yet. However, there is an interview with Brian Moynihan on Business Weekly where he talks about fee-for-service and the “new-norm” of the banking industry.

Hey guess what. Just because the banks think it is the new Norm doesn’t mean people will stand for it.

This thread is not a bank bashing thread. It is a government passing laws which do not consider the unintended consequences and the people it will hurt.

Sorry to burst your bubble but this is not the case. Big banks are as much to blame as the .gov. Probably more so in the end. Please stop pretending the BoA or any other large bank is out for the little guy. They are out to make as much money as possible. If this means fucking over your average person then they are more than happy to do this.

flame on!

Now before you claim I don’t know what I am talking about. I may not work at a bank myself. However my mother is VP of the mortgage division of bank I am not going to mention. So yeah I am pretty close to the situation as well.

11

I can easily see this happening across the board at BofA. I wouldn’t be surprised to see BofA end up evolving back into it’s core banking operations. They very well could be forced into doing that in order to survive period.

Dodd/Frank isn’t the main reason for BofA’s woes. Their business practices are. Ken Lewis stating what he did about Countrywide is basic CYA. Their due diligence work was more than adequate to determine what was happening at Countrywide. One big reason for the purchase was the technological platform that Countrywide had produced. That alone was worth the money spent. There was also a lot of arm twisting done from the Hill behind the scenes. DODD/FRANK. Both very good friends with Angelo Mozilo.

12

By the way. Bank of America is anything but.
It was originally called the Bank of Italy and founded in San Francisco.
The owner was able to get his money out when the great earthquake hit and was one of the only banks able to loan money for rebuilding early on.

The name was changed to try to better appeal to the American people.

13

So…are they laying off thousands of jobs…or thousands of people.

That’s not semantics, it’s indicative of an important disconnect that exists at all levels of BofA’s structure, and is the primary reason it’s as reviled as it is.

I don’t have a problem with a few thousand needlessly rude jackasses and their middle-management get laid off, except for the fact that it probably won’t teach them a bloody thing about how to treat customers. They’ll find jobs with other banks, and help bring them down.

Financial planning is a service. Moving paperwork along its chain can be interpreted as a service. Electronic bill-pay is a service. Allowing me unlimited access to my money, that I the customer have ENTRUSTED you the honor of keeping on-hand for the express purpose of me using it at a time and place of my choosing, and that is not tied up in a retirement account or the like, free of charge, is not a “service.”

It’s a GIVEN.

That money is given to you for you to play around with, invest, take gambles, turn a profit. My checking account is not a direct purchase of stocks, bonds, or anything like that. If you can’t make smart choices on how to play with that customer’s money, and thereby cannot turn the profit required to fuel the machine…well, toughsky shitsky. That money is still mine, and I’d better be able to get at it without having to pay toll. The agreement is NOT “Yeah, I’ll only want to draw finds IF you make the right financial calls.” I wonder where bankers get the idea that that’s the case.

That customer didn’t come to you saying “Pleaseplease take my money!” YOU said “Pleaseplease trust us with your money, here’s why!” and they deigned to allow you to play caretaker for them.

…and you continually try to welsh on the deal. Classy!

If legislation is what it takes to keep those minaically acquisitive empire-builders in certain banking institutions from bending me over a desk and telling me “It’s okay, relax, it’s a service…!” then I’m all for it.

If BofA wants to interfere with my access to my money, they can harden the hell up when it comes to somebody interfering with their ability to profit from said attempt to interfere. Turnabout is fair play.

EDIT: All the “yous” are the “royal” sort, indicative of institution, not any individual. I DO know the difference and offer my apologies if it doesn’t read that way.

14

I’m sick of listening to people blame the financial crisis and consequent economic meltdown solely on government regulatory efforts while they conveniently gloss over the reckless and irresponsible business practices of the financial services industry.

The big banks. Just another victim of government gone wild.

Sell that shit to somebody else. I ain’t buyin’.

15

Show me a company that is not out to make as much profit as possible. Companies do no go into business to not make a profit. If they do they are called non-profits and therefore are NOT companies but simply organizations instead.

16

There is nothing wrong with making a profit. There is something wrong with making a profit at the expense or or by screwing over your customers and employees.

Public companies have a responsibility to their shareholders. I am a capitalist. I have no issue with that. But they also have a responsibility to their customers and the people they employ. The two don’t have to be mutually exclusive.

17

I agree with everything you said. I think other posts in this thread are missing the OP’s point that the $5/month free was a specific response to provisions in Dodd Frank.

Kwelz, I was reading your red responses and had a question. Is it your position that the government should regulate fees between banks and merchants when those fees are deemed to be too burdensome by politicians in DC?

18

It is my position that the government should only become involved as an absolute last resort. And in this case I feel we were to that point. I am generally against government regulations.

In this case it wasn’t the politicians deeming them to be too burdensome. It was the merchants all but begging for help.
Here is the big problem we face right now. Capitalism relies on the market adjusting itself. This means that if a company it too anti consumer then another company can come along and get more market share. In some industries and markets this is no longer possible. Banking is a great example. The market is dominated by a small number of companies who are competitors but will do anything they can to keep the status quo. Cable and internet is another great example. In these cases sometimes the government has to step in. I don’t like it. But I also don’t like getting screwed by big business either.

19

They don’t provide it for free. They get to use our money that is on deposit. They get to collect interest from me for credit at a rate many times the rate of inflation – huge rates.

Just so that everyone is clear, it costs banks as a whole on average about $300/yr for each checking account.

Source? I call BS

I read an article last night that claimed that banks need to bring in somewhere around $120/year per checking customer. (That is from memory – it was a C-note and some change)

What about a few bits in their IT department and an occasional ACH transfer in of my salary on direct deposit, plus clearing (by machine) a few checks a month adds up to $300?

Who is going to pay for that. People want free checking of course. Who wouldn’t? But how can a bank eat those costs year after year and stay in business. Every single service offered by any business be it a bank or lawn cutting business has costs it has to recoup.

You want the ability to keep you money in a safe bank account instead of your mattress? Want the ability to use your debit card for POS purchases? You want the ability to wire money? These services all cost money.

And they collect fees on them. They still collect a fee for debit card use from the merchant (especially when used as a signature debit card, which I think most are). They charge a fee to wire money. All for a few bits going over an automated network.

In order for a bank to offer free checking, they have to recoup that money through other means from that customer or customers.

You want to talk to a live person when you call customer service, that costs money as well.

For the government to step in and limit the fees that need to be collected and be a profitable company in the name of protecting customers only hurts the customers and the economy with job loss and other negatives.

BofA netted $10 a month for each account holder on the usage of debit card transactions. That was cut in half by legislation. So in order to recoup that remaining $5 the bank wanted to charge the customer. So why does the bank want that other $5? Simple, so they can offer things like free checking, free savings, etc, they have to collect fees from other services that are lucrative and highly profitable in order to offer other services for free to the customer.

It is not about trying to screw anyone over, but to the contrary. It is about being able to offer basic services for free or next to free. It is about helping out the consumer.

Banks lose money when a customer does not maintain a balance of $3,000 in a checking account on a monthly basis.

I cannot agree completely about the whole Countrywide acquisition. Countrywide was not transparent about the subprime lending practices there. BofA was not fully aware of all that until it was too late. Had Countrywide fully disclosed their practices, Ken Lewis said the board never would have approved it. It would have been too risky. So BofA got screwed but in the end with defaults decreasing, the market flattening out, it will become a very profitable line of business again.

Also - keep in mind this is about legislation. Not banks specifically.

Banks got used to the gravy train of high fees. Profits without having to really work for them. Without having to really provide a real service for the fees they were collecting.

Now that their automatic profits are being hurt, they are trying to rip people off another way.

My credit unions seem to do just fine with free checking (one even gives me the checks for free), free debit card (in fact, they kind of force the debit card on you – I just wanted an ATM card), and all sorts of other things, including branches with longer hours, “remote branches” at other credit unions (i.e., many credit unions are members of “Credit Union Service Center” and I can walk in to any member CU and do business as if it were my CU), free ATM use all over the country at COOP member ATMs, rewards even on their credit cards, with much lower interest rates and no annual fees, etc.

I have not used a bank for my personal needs nor may business needs in years, except the wife does have a Visa issued by a bank (which we will cancel once paid off). They can all die as far as I am concerned.

I am not supporting government intrusion. But I am not crying a bit for any perceived inconvenience the big banks have. Let them work for a change instead of expecting the profits to just roll in…

20

Nothing wrong with profit. Profit gotten by abusing customers and making big bets that you can throw onto the tax payers when they go wrong? That is a different story.