Bank of America’s chief strategist says the Charlotte-based bank is a “better,” more simplified company than it was before the financial crisis, from its employment practices to its services.
“It is a better bank than it was six years ago. I think that we had an opportunity to look at everything: our employment practices, our CSR (corporate social responsibility) practices, our products, our services. And in each of those instances, I think we took a hard look, simplified and made it better,” Anne Finucane said in a video interview with Bloomberg posted online last week.
Finucane, who holds the additional title of chief marketing officer at Bank of America, also said the banking industry is “much” more transparent than it was before the crisis. Just last week, the Federal Reserve disclosed how the 31 largest U.S.-based bank holding companies did on the regulator’s latest “stress tests,” annual post-crisis exams designed to determine how lenders would fare in another major economic downturn. Finucane did not discuss the stress tests in the segment Bloomberg posted online.
Banking is still a “complicated business, but there is a transparency to it, and we have multiple regulators looking over what we’re doing,” she said.
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“My feeling is that it’s taken a long time, the industry has improved. It’s improved in its earnings. It’s improved in its reputation. It’s improved in its business with our customers and our clients, and I think that it’s improved over time with the regulators, too.”
Finucane, whose other responsibilities include overseeing Bank of America’s communications operations and advertising strategy, said the improving U.S. economy is a positive for the banking industry, whose image has taken a beating since the financial crisis.
“I do think when you have employment levels that have improved as much as they have, and the economy is improving, I do think that banks will not be seen as negatively,” she said.
Bank of America has often found itself the target of criticism, as well as costly litigation, since the crisis, thanks in large part to its acquisitions of mortgage lender Countrywide financial in 2008 and investment bank Merrill Lynch in 2009.
As part of a $17 billion settlement in August with the Department of Justice, Bank of America admitted that it, Countrywide Financial and Merrill Lynch took part in faulty mortgage-backed securities practices.
A lack of transparency into lenders’ exposures to risky mortgages packaged into such securities has been cited as a key contributor to the financial crisis.
Banks also must be transparent, Finucane said. "On the other hand, our clients expect us to make money for them. And we need to do that, too. So, we just have to be smarter about it.”
As for her comments about Bank of America becoming a simpler company, that effort has been ongoing under the tenure of CEO Brian Moynihan. The push to make the bank simpler has been a departure from the empire-building that made the lender the coast-to-coast behemoth it is today.
In a column last week, John Carney, of The Wall Street Journal, points out that Bank of America has slashed the number of subsidiaries to 103 from more than 1,300. Also, the bank’s loan book is now smaller than it has been since 2007, before the acquisition of Countrywide and Merrill Lynch, Carney wrote.
Although Moynihan has helped steer the bank through the financial crisis, challenges remain. He finds himself under continued pressure from investors to boost profits, as litigation expenses continue to be a drag on the bank’s earnings. Moynihan was awarded $13 million for his performance in 2014, a drop of $1 million from the year before as the bank posted a 58 percent drop in profit.