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Bank of America said today that it has lent nearly $760 billion in the past year - or almost $17 for every dollar it has received in government loans.
The Charlotte bank highlighted the news in its third-quarter Impact Report, which it started issuing this year after chief executive Ken Lewis pledged greater transparency in the bank's lending and investing. The bank holds $45 billion in government loans, and is eager to repay as it tries to defuse the government's grip on its operations.
The bank highlighted recent consumer-friendly changes, such as an effort to ramp down on overdraft fees, announced in September and with more additions coming in June. The bank has also made a “clarity commitment” to mortgage and home-equity borrowers, by giving them a one-page, plain-language summary of the terms of their loans. It plans to add a similar disclosure for card customers in December.
The bank also highlighted its efforts to modify mortgage terms for struggling borrowers. Its “default assistance staff” now employs 11,000, a 55 percent increase this year.
In a letter to “customers, shareholders, associates, and fellow citizens,” CEO Lewis highlighted a change in strategy for a bank that has always strived for big.
“In all of our work, from loan modifications to new lending and investing, a key theme is quality, not just quantity,” Lewis wrote. “The number of customers we serve is important – but making sure that modifications are sustainable, and that new loans satisfy sound underwriting requirements, are equally important.
Lending was down over the quarter in almost every category, which the bank partly attributed to a drop in demand as consumers and businesses alike scale back on spending. Asked if there were any areas that the bank wanted to get out of, executive Andrew Plepler said, “I don't think there's any area we're conceding.” But, he added, “there are some sectors where there is appropriate cautiousness,” such as small business.
Plepler, who is based in Charlotte, is the bank's head of corporate social responsibility. Two months ago, he took on the additional, newly created role of consumer policy executive, where he's charged with working with community groups to get their message to the bank
“Many of them have been studying these (consumer) issues for years, and we learn a lot from them,” Plepler said. “…If we can't address their concerns, at least we have a better understanding of why and understand that we actually have a lot of common ground.”
The bank's consumer-friendly overhauls were driven more by reaction from customers rather than pending legislation, such as the proposed Consumer Financial Protection Agency, Plepler said. The bank's advertising message has also changed as it listens to customers, Plepler said.
“Today, in a much different economy, the consumer really wants clarity and simplicity and transparency – ‘What am I getting' and ‘Don't surprise me,'” Plepler said. “So a lot of our advertising now is around ‘No surprises, here's what you can expect around your mortgage or your credit card or your deposit account.'”
