Today's Bank of America (BAC) was created through a series of mega-mergers and acquisitions engineered by CEO Ken Lewis, including the purchases of FleetBoston in 2003 and credit card giant MBNA in 2005. By 2007, he had succeeded in making Bank of America the largest bank in the U.S. by deposits. But then Lewis overreached. As the financial system was heading toward near-collapse in 2008, Bank of America bought crippled mortgage bank Countrywide Financial in January and deeply troubled investment bank Merrill Lynch in September.
After that, Bank of America's financial troubles multiplied so rapidly that it was forced to take much more TARP money than most other large U.S. banks: $45 billion.
Lewis was replaced by Brian Moynihan, but Moynihan's tenure has been even worse. JPMorgan Chase & Co. (JPM) passed BofA to become the nation's largest bank. Crippling losses, primarily from Countrywide legacy loans, led it to announce it would cut more than 30,000 jobs. In late 2011, a $50 billion class action suit was filed in over the Merrill Lynch acquisition.
Bank of America was also the target of several mortgage fraud suits, and entered into a settlement which cost it and four other large U.S. banks a combined $25 billion. BofA still faces legal and balance sheet problems, which may force it to raise tens of billions of dollars. And finally, its exposure to the weak U.S. real estate market is unparalleled among banks. The overall result is a too-big-to-fail bank that is only limping along.
By 24/7 Wall St.