Mark Schwanhausser (contact Mark Schwanhausser) is so on the mark with his comment, which I quote directly from the Points Section of The Dallas Morning News.
"This is Bank of America's Netflix moment. It misjudged what consumers would bear. It was the wrong fee at the wrong time."
Mr. Schwanhausser is a professional analyst of the banking industry. He is also my nominee for the winner of awards in the categories of "least said, best said" and "brevity is the soul of wit."
For those of you not in the business of analyzing the banking industry what Mr. Schwanhausser said, in common English is this. "We in Bank of America's marketing group have determined that it was a bad move on our part, in this economy, and in consideration of our already outstanding earnings,to impose this fee on our already financially over-burdened depositors and hereby apologize for having the unmitigated temerity for thinking we had enough stroke in the banking industry to impose the fee which should forever go down in marketing history as being known as the $5 straw which finally broke the camel's back."
Bank of America's profits for 2010 exceeded $3.1 billion ( BOA Profits Citation ). However, consider this following piece of information from the previously cited source.
"But it didn't take long for investors to sour on the numbers, sending Bank of America (BAC, Fortune 500) shares down more than 9% in afternoon trading."
So, to cut to the chase, $3.1 billion was not enough to keep investors in Bank of America happy.
This, despite the fact that " It earned $3.1 billion, or 27 cents a share, besting analysts' forecasts for a profit of $2.3 billion, or 22 cents a share, according to Thomson Reuters."
From this we can make the basic assumption that Bank of America was punished by investors for having performed better than what was expected by those in the know, such as Mr. Schwanhausser himself. Excuse me for a moment, but at this point I find the need to locate my anxiety medications.
This is the equivalent of sitting in the recreational sports betting section at Bally's Casino in Las Vegas and hearing the following announcement. "We wish to inform those of you who placed winning wagers on teams which covered the spread that 'we" feel those teams should have done better than what they did, despite what we may have told you earlier, and consequently we will be imposing a $5 transaction fee on all winning wagers collected from our cash office."
From this we may fairly draw the following conclusion. The investors got a better return than they were advised by the best analysts in the field, like Mr. Schwanhausser, they should expect to receive and yet their pockets where still not yet full enough. Apparently, these investors feel the need to punish Bank of America because some people, in some market, at some point, got a higher return on their investments than did the investors in Bank of America. So, in these times, we may all conclude that it is not good enough to make a profit. Even a profit which exceeds what was expected and which we had no reason to expect to receive. What is important apparently in these times is not that we made a good investment or one which performed better than expected, but that we made the best investment anyone could have made, bar none.
If this is not the financial version of the phrase "no one remembers who came in second" I don't know what is. Therefore, let us look at who these unreasonably unhappy, but unhappy nonetheless are.
60 percent of Bank of America is owned by the following groups:
| Top Institutional Holders |
|---|
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| Top Mutual Fund Holders |
|---|
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Oh my God. I have money invested in these groups. Am I, in fact, putting the screws to myself. Let me find those anxiety medications and take a further look at this.
As it turns out I will sleep better tonight knowing that I am not picking my own pocket. I will also sleep less well knowing that I may very well be picking yours.
You see, the $5 fee paid by debit card users is probably not being paid by the largest group of investors in Bank of America - by and through whatever ownership stand you take. It appears that those being taken advantage of through this fee would be that group of people with accounts at Bank of America who have no investment in Bank of America or whose investment's in Bank of America will return to them less than $5.
I'm safe. But only because I don't bank with Bank of America. Otherwise, I'd be paying my investors to charge me $5 for keeping and using funds I've deposited in my own investment.
To my advantage I patronize a local Dallas area bank called Highlands Bank. Not only do they not charge me fees of any kind to keep money in their bank they reimburse fees incurred by my using other bank's ATM networks. Should I be sorry that I am taking advantage of those of you paying $5 to use a Bank of America debit card service? The answer is no. The better answer is to join me in sucking the blood out of Bank of America by taking advantage of its huge investment in its ATM network.
So, who are the villains? Those of us so greedy as to demand that we be compensated for having invested in Bank of America and then demand that Bank of America be punished because we were not so clever as to find the absolute best return on our investments in whatever, wherever, whenever a place or institution we were too lazy to locate on our own.
Who are the victims? Those persons who continue to use Bank of America debit services because they are too lazy to vote with with their wallets and make use of one of the multitude of financial institutions who would be thrilled to make a reasonable profit and serve you without charge by investing your deposits like good old-fashioned bankers.
Who are the major protagonists? You and I. Ultimately, we make make the decisions about what we expect for our money and how much we are willing to pay to service those who keep it when we don't want it in our pockets - be it through investing in the owners of Bank of America or through putting it in an institution that has the good manners to receive it without making us feel they are doing us a favor and therefore deserve $5 when we have the temerity to want to make use of it ourselves.
Dear reader, please don't feel abused that you didn't get to the end of this story and find out that Bank of America is not the corporate thug, feeding out of a trough filled by stealing your money, that you wanted it to be.
They are, but that's a different story altogether. Check back here and I will tell you that tortured, twisted tale of two-faced, ambidextrous pocket picking in another blog. But before you do, please prepare yourself with some Dramamine because it's truly a nauseating trip across choppy waters muddied by the privatization of guaranteed profits through the socialization of losses by - you guessed it - corporations like Bank of America.
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