The Softer Side of Bank of America
Bank of America (NYS: BAC) certainly has its problems, but you can't accuse it of sitting on its haunches. The bank always seems to be in the news, and sometimes -- sometimes -- it's even positive press.
Just the other day, for example, B of A made a very heartwarming announcement: a brand-new 10-year, $50 billion green business lending initiative, beginning next January. This isn't the first environmentally friendly lending program the bank has administered, either. The current $20 billion program is expected to finish up by the end of this year, four years earlier than anticipated.
The bank plans to implement this program through direct lending, financing equipment purchases and advising services. In addition, Bank of America will make available $100 million in grants to nonprofits and other private enterprises to help them work toward reducing their carbon footprint.
Stepping up lending to small business
This initiative isn't the only foray into feel-good territory for the banking behemoth. Last September, Bank of America and 12 other banks vowed to increase their lending to small businesses by a combined $20 billion over three years. These loans will be backed by the federal government's Small Business Administration, so it wasn't much of a strain for the banks to agree to the pact. Still, small businesses need a lifeline to credit, so any increase is a positive step.
M&T Bank (NYS: MTB) has promised to bump up lending by $50 million per year and plans to help spur business development in low-income and enterprise communities in the Northeast; it ranks sixth in the nation for SBA lending. Wells Fargo (NYS: WFC) , another signatory to the pact, was already one of the SBA's top lenders, having lent out $1 billion in in less than 12 months during 2010 and 2011. Citigroup (NYS: C) vowed to extend $24 billion in small business loans during the three-year timespan, increasing lending by about $1 billion each year and culminating in $9 billion next year. JPMorgan Chase (NYS: JPM) also stepped up, pledging to lend $12 billion in the first year alone.
Other banks are jumping on the green bandwagon, too, perhaps seeing these types of programs as a way to gain points in the public-relations department. The New York Times notes that Wells Fargo and Goldman Sachs have also announced green initiatives recently, but Bank of America is ahead of the game, as this new program picks up where the earlier one left off. As far as small-business lending goes, the banks probably expect to get some mileage out of that commitment, too. Bank of America is taking its participation seriously, pledging to add as many as 1,000 new loan officers to handle the additional business. It's already hired approximately 75% of that number.
Good PR never hurt any business, and particularly for banks under public scrutiny, it can even help. Can the warm and fuzzies push B of A's less palatable business practices completely off both customers' and investors' radar screens? Probably not, but it keeps its name front and center and shows that it can be a positive force in the banking community. And that's something that all the big banks need to concentrate on as they try to regain their former stature.
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At the time this article was published Fool contributor Amanda Alix owns no shares in the companies mentioned above. The Motley Fool owns shares of JP Morgan Chase, Wells Fargo, Bank of America, and Citigroup and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Goldman Sachs and Wells Fargo. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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