Bank of America: Too Big, Too Powerful - Bank of America: Bad for America

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With control of one in five credit cards and the maximum amount of bank deposits permitted by the Federal Reserve—there’s no question that the nation’s largest bank is also its most powerful one.

In fact, with 52 million customers, more than 5,700 bank branches, and more than 17,000 ATM machines across the country, Bank of America and its products reach nearly half of all U.S. households. Bank of America by the Numbers »

Although CEO Ken Lewis claims Bank of America is committed to “creating opportunities for people…to fulfill their dreams” a growing body of evidence shows the financial giant is using its size and its power to squeeze consumers, taxpayers, and working families.

In 2006, Bank of America raked in $21 billion in profits. Bank of America made more money from its U.S. operations than any other company—including ExxonMobil, the world's most profitable company.

Too Big, Too Powerful

How Big Is Too Big?

Federal regulators have determined that to protect consumers, it’s vital to maintain healthy competition in the banking industry. In fact, regulators prohibit banks from acquiring one of their competitors if the merged company would control more than 10% of the nation’s bank deposits.

For the first time in U.S. history, Bank of America—the nation’s largest bank—is testing that limit.

With its acquisition of LaSalle, Bank of America came very close to the 10% cap. In fact, when BofA filed its application to acquire LaSalle with the Federal Reserve, the two banks' combined deposit share was over 10%. Analysts speculated that to make the deal legal, Bank of America would “shed” some of its customer base (for example, by lowering interest rates on consumer investments such as CDs, essentially intentionally driving some of its own customers away).Bank of America ended up squeezing in just under the cap. But there’s nothing preventing the bank, once the merger is completed, to “naturally” grow to whatever size it wants.

When Bigger Surely Isn’t Better

To raise awareness about the bank’s current practices, as well as its moves to grow even bigger, SEIU is running advertisements in Boston, New York, Chicago, Detroit, Charlotte, Los Angeles, and San Francisco—on billboards and buses and in airports and news outlets.

If Bank of America is allowed to become an even more dominant player in the market, the company may be able to use its competitive advantage to drive down consumer standards throughout the market as other banks struggle to keep up.