Bank of America
Bank of America is facing deep challenges on several fronts that threaten to weaken the bank even further with any negative downturns in the domestic economy or a deepening of the debt crisis in Europe. The disconnect of the bank is creating a synergy in the depth of the current problems the bank is facing. The foreclosure fiasco of Countrywide Mortgage and the bank’s actions to the consumers are impacting the bank’s ability to legitimately move a juggernaut of an institution through the most narrow of passages to overcome the challenges of the mammoth sized problems with bank being unscathed or weakened even further. The bank’s decision to implement a foreclosure procedure with no regard to collateral damage has been a variable that has brought innocent borrowers along with willing chooser into a foreclosure process that ruins lives and communities, and the implementation of policies and procedures including fee structure and credit limit reductions with no regard to the consumer destroys the reputation of the bank with the consumer and the community. Europe being on the brink of crisis as the Greek debt talks have stalled, and Bank of America has an exposure to European Banks of $70 Trillion. The problems are so monumental for the banking giant that the bank did prepare an emergency contingency in lieu of an emergency to raise capital for benefit of the Federal Reserve. The contingency plan was made public by the Federal Reserve, and one emergency for the bank was a reduction of footprint with a complete withdraw including a branch divestiture from certain markets. Any tipping point over to critical would have a high impact. But, how would the impact be in Washington, DC?
The Federal Reserve did request a set of contingency plans for Bank of America. The scenario was the worsening of the bank’s financial problems, and the emergency action plan being a roadmap to liquidate assets to raise the capital needed to keep the bank from collapse and preventive measures to deflect shock to the entire system if additional strain was placed on the bank. Bank of America does operate in all 50 states and the District of Columbia, and the bank’s footprint does cover 80% of the US population. Therefore, the bank would have the operations of its expansive branch network on the block in lieu of a worsening financial situation. The major changes in the Washington, DC has been substantial in the banking industry as Capital One acquisition of Chevy Chase Bank came to full fruition in 2010, and Wells Fargo did acquire Wachovia. Bank of America’s future moves would have upheaval in the DC market place if the bank would decide to retreat somewhat out of the market.
In discussion, a Vice-President with Bank of America spoke on the condition of anonymity due to the sensitive nature of the subject matter about the Washington, DC market.
All options would be on the table, but Washington, DC is a very important market as the bank is number one in market share for the DC Metro market, the nation’s capital with the exposure to international, business, and professionals either visiting or calling DC home, and current market performance and environment. These factors alone would be a firm affirmation of minimal negative impact to the Washington, DC in a decision to make a strategic pullback in certain markets. The contingency plan provides an overview on the facilitation, but a micro breakdown would not be possible as no imminent plans are available to follow this contiguity.
Therefore, any strategic pullback would less of a concern for a market like Washington, DC than some other newer and less profitable market regions. Another concern is the capital needed under more distress in the market. The level of funding would also play a factor on impacts felt in Washington, DC. Bank of America has many problems, and the bank providing the contingency plan to the Federal Reserve is a sign of the problems of the bank. Washington, DC residents should not be concerned about the happenings at Bank Of America, because of market performance of the Washington market. The possibility would very slim that any strategic pullback would occur in Washington, DC. The resulting impact to the market would be minimal.