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Ken Lewis and customer service

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One of the problems with big bank mergers, the kind Ken Lewis championed throughout his career as CEO, is the lack of concern about customer service.

Invariably, customer service at banks gets worse–and often more costly–the bigger a bank gets. And that certainly was the case with Bank of America.

My personal beef with BofA and its customer service concerns it ATMs.

I became a BofA customer after the Lewis-led bank bought FleetBoston Financial in 2004. (I became a Fleet customer when it acquired New Jersey-based Summit Bancorp in 2000–but that’s another story).

One good thing Fleet did with its ATM machines–in New Jersey, at least–was sell postage stamps. It was nice convenience and a customer perk that eliminated trips to the Post Office. Email may be king, but sometimes you still need to send an old-fashioned snail gram.

from Rolfe Winkler:

Good news: Another bailout ends

For $425 million, Bank of America has canceled its loss-share agreement.  WSJ:

Bank of America Corp. has agreed to pay $425 million to shelve a tentative loss-sharing pact designed to help the bank digest securities firm Merrill Lynch & Co., according to a person familiar with the situation...

When the pact was announced in January, officials said it would cover $118 billion in assets, with about 75% of the total from Merrill and 25% from Bank of America. But the bank and government never signed a final contract amid disagreement about what it could cover, and Bank of America said in May that it wanted out...

BofA’s lawyers are very busy indeed

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Is that seat hot enough for you yet, Mr. Lewis?

The CEO of Bank of America has another legal headache, the Charlotte Observer reports. The Justice Department and the FBI in Charlotte, N.C., are investigating the bank’s star-crossed acquisition of Merrill Lynch. the paper says. The report has few details about the investigation, other than it has been under way for six months:

The FBI involvement opens up the possibility of criminal charges, although the scope and possible outcome of the probe remain unclear.

from Rolfe Winkler:

Rakoff throws down the gauntlet

Judge Rakoff has rejected the settlement deal between the SEC and Bank of America. He clearly wasn't happy with it to begin with, and subsequent briefs from the two parties did nothing to allay his concerns. At the end of the day, he hated the idea that B of A shareholders, on whose behalf the SEC actually brought the case, would end up paying the fine for executives' wrongdoing.

So what's the next step? According to the Reuters story, "Rakoff directed the parties to prepare for a possible trial that would begin no later than February 1, 2010."

Wall Street is being judged

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Capitol Hill has yet to get its act together on financial regulatory reform. But another arm of the federal government, the judiciary, is emerging as the new best friend of investors.

It started a few weeks ago when Judge Jed Rakoff refused to approve the Securities and Exchange Commission’s wimpy $33 settlement with Bank of America over the bank’s failure to come clean with shareholders about its acquisition of Merrill Lynch.

from Rolfe Winkler:

Bailout “profit” is taxpayers’ loss

Charging a bank for an implicit government guarantee to absorb losses? According to the Wall Street Journal, the Federal Reserve and Treasury are demanding that Bank of America pay $500 million to exit a bailout deal that was never actually signed.

That's a nice chunk of change, but taxpayers shouldn't be fooled into thinking this -- or any other bailout -- is a good deal.

from Rolfe Winkler:

The infamous “disclosure schedule”

At the bottom is the SEC's latest brief for Judge Rakoff.

Having gone through BofA's, one finds --publicly disclosed for the first time -- the "disclosure schedule" that outlined bonuses BofA had agreed Merrill could pay:

“Variable Incentive Compensation Program (‘VICP’) in respect of 2008 ... may be awarded at levels that (i) do not exceed $5.8 billion in aggregate value (inclusive of cash bonuses and the grant date value of long-term incentive awards)...

from Rolfe Winkler:

SEC should get tougher with BofA

In the Bank of America Merrill Lynch bonus imbroglio, the SEC has proposed a settlement in which, once again, the defendants neither admit nor deny wrongdoing.

Once again, the corporation would pick up the fine while responsible individuals escape uninjured. And once again, the public would be left wondering what actually happened. This isn't justice, nor will it deter fraud.

The SEC is still lame

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Don’t believe the hype about the new sense of “urgency” at the Securities and Exchange Commission.

The Wall Street Journal reports that the SEC’s recent string of enforcement actions against Bank of America, General Electric and former AIG chieftain Hank Greenberg is part of a new get tough campaign by SEC Chairman Mary Schapiro. But don’t believe it.

from Rolfe Winkler:

Judge Rakoff wants facts! Notes from yesterday’s hearing

Hopped over to courtroom 14-B at 500 Pearl Street yesterday afternoon where I saw Judge Jed Rakoff hammer SEC and Bank of America lawyers over the proposed settlement regarding Merrill Lynch bonuses.

The news is that Rakoff refused to approve the settlement.  He ordered the lawyers to get to the bottom of the "who/what/where" of the case, saying the settlement "seems to be lacking in transparency."  He's asked them to file briefs answering those questions on the 24th, and then responses on September 9th.

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