BANK OF AMERICA IS BUYING COUNTRYWIDE!

On January 11, 2008, Bank of America announced plans to purchase the troubled Countrywide for the discounted price of $4 billion (down from last year’s price of $30 billion).  Bank of America is on a spending spree driven by its desire to become the biggest bank in the country.  In the past four years Bank of America has spent more than $100 billion on Fleet Boston, credit card issuer MBNA, La Salle Bank and the U.S. Trust wealth management firm.  If the Countrywide acquisition is approved, Bank of America will become the largest mortgage lender in the country and will have acquired nine million new customers. 

Since the Fleet Boston merger in 2004, CRC has demanded that Bank of America resolve 5 community demands that are listed below.  What is your experience with Bank of America?  What should CRC be asking from the bank during this unprecedented merger?

CRC will be asking community organizations and concerned individuals  to help fight this merger and make Bank of America accountable to California communities.

CRC has repeatedly asked the bank since 2004 to resolve the following issues:

•    Charitable Contributions:  The on-line grant making process is impenetrable for community organizations and there is no way to know whether an application has the potential to be awarded or not. 
•    Subprime Mortgage Lending:  CRC asked to meet with the bank’s investment bankers to discuss screening criteria for the purchase of subprime loans (mortgage backed securities) on Wall Street. 
•    Essential Bank Account:  The bank would not offer CRC’s prototype for a starter account – the Essential Bank Account (EBA).  CRC then asked the bank to offer money orders as it does with other states within its footprint.
•    Vendor Purchase Program:  The bank targeted 15 percent of its contracts awarded to minority- and women- owned contractors in its written commitment.  In 2004, the bank was only awarding seven percent of its contracts in this category. 
•    Small Business Lending:  CRC asked the bank to improve its approval rate of SBA Express loans as well as loans for businesses with revenues below $50,000. 
Additional Information:
COUNTRYWIDE MORTGAGE
•    Countrywide is the mortgage lender that lowered mortgage lending standards and paved the way for the subprime mortgage crisis.
•    Countrywide CEO Angelo Mozilo has received more than $414 million from the sale of stock despite the fact that millions of Countrywide borrowers are losing their homes.
•    If Bank of America successfully acquires Countrywide, Mozilo could receive another $36.4 million.
•    Countrywide is the nation's largest mortgage lender holding one in six home mortgage loans, and is the largest mortgage servicer, handling payments on $1.4 trillion worth of loans.
•    Countrywide’s discounted purchase price of $4 billion is the result of unbridled business practices and philosophies that have resulted in numerous lawsuits and increasing loan losses. 
•    Many borrowers claim that Countrywide employees steered them into higher cost loans or misrepresented the terms and pricing on their loans. 
BANK OF AMERICA
•    Bank of America does not originate subprime mortgage loans.  Bank of America was one of the biggest investors in subprime mortgage backed securities on Wall Street.  The decrease in value of these investments has resulted in significant losses for the bank.
•    California makes up 30 percent of Bank of America’s customer base and revenues.
•    CRC members have not had an annual monitoring meeting with Bank of America since May 2005.
CRC’s concerns with the acquisition of Countrywide are summarized below:
•    Countrywide mortgage borrowers may experience less willingness from Bank of America to modify their loan terms. 
•    Since the end of July 2007, Countrywide has laid off 11,000 employees.  As with any merger, more Countrywide employees will probably lose their jobs. 
•    With the purchase of La Salle Bank, Bank of America owns 9.88% of the nation’s deposits.  With the acquisition of Countrywide, Bank of America will exceed the 10% national cap.  Even though Countrywide holds its deposits under a separately chartered savings & loan, the merger will reduce competition.  It is CRC’s position that all deposits should be counted toward the cap and that doing otherwise violates the intent of the anti-monopoly deposit cap.
CRC is asking the federal banking regulators to closely scrutinize this acquisition and hold public hearings in California.  Bank of America’s acquisition of Countrywide will not restore the economy.  The merger may benefit the CEOs of these companies, but it will not help the millions of working families living paycheck to paycheck.