The Collapse of Bank of America: Causes, Effects, and Analysis

The Great Depression affected many Americans; Many bank failures and debt lead to the disastrous economy of the US and the globe. This was also a time of extreme prejudice, especially for black americans. People of colour were drastically punished in comparison to the white population during the Great Depression.

I appreciate that the banking sector is vital to the strong health and growth of our nation’s economy and directly affects each of us, however, many of these financial institutions took the funds and immediately paid out senior executive bonuses instead of using the money to back loans to the public. These executive bonuses were public record and created a massive outcry from the taxpayers, but even this seemingly greedy use of power was overlooked by the federal and state governments.

The banking industry consists of almost sixty-five hundred banks that are insured by the Federal Deposit Insurance Corporation (FDIC). Out of these, there are eighty-one substantially large banks in the United States that are publically traded, which is where the market structure and industry information will be based. However, as with the rest of the country, these banks are very concentrated, with the largest banks accounting for over half of the market as well as accounting for the largest amounts of revenue.

According to an article on www.housingwire.com, 2017, Wells Fargo CEO, Tim Sloan, made the decision to close over 400 branches in the United States. The fake account scandal fueled this decision because the company lost 746 million dollars in revenue. The closures can save Wells Fargo about 2 billion dollars by the end of

Bank of America is one of the largest banks in the nation. It is a multinational company and it is recognized by its high revenue value. Unfortunately, Bank of America has endured many complaints and harsh views regarding their lack of ethics. Ethical issues occur when there is a blatant disregard to implement integrity, trust, and responsibility. In some financial institutions, ethical matters are displayed in the way the consumers are treated. Within the past nine years, Bank of America has diminished all of their ethical promises by revealing customer information without their permission; discriminating against consumers based on their race; and manipulating overdraft fees in order to benefit the bank. In order to assess these problems, it is vital to recognize what Bank of America claims to stand for and determine where their most concerning issues are generated from.

The relative successes and failures of that Act are becoming more apparent with time, and the shortcomings are subject to intense partisan criticism. As discussed below, Dodd-Frank seeks to address the highly sensitive and controversial notion that Wall Street banks have been designated by the Federal Reserve as too-big-to-fail. In fact, during the most severe moments of the crisis, the voices of free market proponents could be heard advocating that these troubled big banks, suffering massive losses due to their own bad bets, and if weakened to the point of failure, should be allowed to fail. Hindsight shows that allowing just one to fail, Lehman Brothers, had serious and lasting detrimental effect on the US and global financial system and markets. Had Lehman been saved, it would have been the most effective agent to unwind all of the transactions and trades to which it was a party, and likely in a rapid manner. However, being thrust into bankruptcy, and thereafter receivers were appointed to unwind the business, took months upon months and vast resources to settle Lehman accounts. Had Citibank, Bank of America, Bear Stearns, or AIG been allowed to fail, it may have been possible that the US financial system would have melted down completely. So these super banks, and non-banks, cannot be allowed to fail in crisis, due to the system-wide risk. Notwithstanding, such an implicit assurance, that they will always get a bailout, no matter how toxic

This paper is about how did “Shadow Banking” precipitate the financial Crises. Then discusses the impacts of the crisis on the major financial institutions.

The banking crisis of the late 2000s, often called the Great Recession, is labelled by many economists as the worst financial crisis since the Great Depression. Its effect on the markets around the world can still be felt. Many countries suffered a drop in GDP, small or even negative growth, bankrupting businesses and rise in unemployment. The welfare cost that society had to paid lead to an obvious question: ‘Who’s to blame?’ The fingers are pointed to the United States of America, as it is obvious that this is where the crisis began, but who exactly is responsible? Many people believe that the banks are the only ones that are guilty, but this is just not true. The crisis was really a systematic failure, in which many problems in the

The Meltdown is a PBS special on the events of the financial crisis of 2008, in a timeline format, revealing the thinking behind decisions made during the fateful months before the stock market crash in August of that year. Some financial gurus on Wall Street devised a plan to bundle several mortgages together into a group, and then selling that bundle to another group of investors looking to invest in securities. The lender did not need to earn money from the loans he was giving out, he merely gained enough of a profit from the bundling operation that billions were being made on Wall Street from 2005-2008. The problem is that these bundles were risky, and as credit unworthy individuals defaulted on their mortgages, the entire system crumbled into what is now known as the Stock Market Crash of 2008, and have subsequently lived during the Great Recession.

However, after five years of the financial crisis happened in 2008, is the “too big to fail” problem being solved or controlled? Jim Puzzanghera who published his article on Los Angeles Times insists that banks considered too big to fail are even bigger now. Puzzanghera provides his opinion based on the data he collected, “Just before the financial crisis hit, Wells Fargo & Co. had $609 billion in assets. Now it has $1.4 trillion. Bank of America Corp. had $1.7 trillion in assets. That's up to $2.1 trillion.” Puzzanghera explores that one main concern of coming out with a solution to this “too big to fail” problem is that Democrats and Republicans rarely reach an agreement on the problem. Most Democrats are willing for the federal authority to seize the power and to get rid of the firms if they are too big to fail while most Republicans do not want to force the banks to shrink. In stead of regulating those big financial firms, “the government's new power to seize large financial firms teetering near collapse could result in them being rescued instead of shut down, in effect enshrining

The recent financial crisis has a huge impact on systemic Important Financial Institutions; it’s distressing effect can be felt in almost every business area and process of a bank. A fairly large literature investigates the impact of financial crisis on large, complex and interconnected banks. The great recession did affect banks in different ways, depending on the funding capability of each bank. Kapan and Minoiu (2013) find that banks that were ex ante more dependent on market funding and had lower structural liquidity reduced supply of credit more than other banks during crisis. The ability of banks to generate interest income during the financial crisis was hampered because there was a vast reduction in bank lending to individuals and

In 2008 the world faced the worst financial crisis since the great depression. Many banks closed their doors for good that year. Among them were both small and large banks. One specific bank that collapsed that year was IndyMac, one of the largest banks in the United States. IndyMac marked the largest collapse of a Federal Deposit Insurance Corporation (FDIC) insured institution since 1984, when Continental Illinois, which had $40 billion in assets, failed, according to FDIC records (“The Fall of IndyMac 2008). This paper will talk about the cause of the collapse of IndyMac in 2008, the handling of the issues, as well as the aftermath of the collapse.

On September 15, 2008, Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt, Lehman 's bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. The consequences for the world economy were extreme. Lehman’s ' fall contributed to a loss of confidence in other banks, a worldwide financial crisis and a deep recession in many countries. Lehman 's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. Many questioned the U.S. government 's decision to let Lehman fail, as compared to its tacit support for Bear Stearns, which was acquired by JPMorgan Chase & Co. (JPM) in March 2008. Lehman 's bankruptcy led to more than $46 billion of its market value being wiped out. Its collapse also served as the catalyst for the purchase of Merrill Lynch by Bank of America in an emergency deal that was also announced on September 15.

In 1904, the bank had officially opened for business. The company was founded by Amadeo Peter Giannini. By the age of 21, he earned half ownership of the business. Then in 1958, BankAmericard was introduced and licensed to other banks across the country. In 1998, Bank of America began creating the first coast-to-coast banking franchise. As the years went by, Bank of America made great progress. Between 2004-2006, the company bought FleetBosten Financial and MBNA. As of today, the company provides

Before the firm became bankrupt, they had more than $275 billion in assets under management. Furthermore, since the time the bank went public in 1994, the firm had increased net revenues over 600% from $2.73 billion to $19.2 billion and increased its employee headcount over 230% from 8,500 to almost 28,600 (Demyanyk, Y. S. and Hemert, O. V. 2008).