Why Bank of America Will Never Be Great Again

Bank of America (BAC) finally did the right thing this week, nixing the notorious $5 a month fee that it began tacking on last month to account holders who use their debit cards for purchases.

The financial services behemoth wasn't the first banker to begin passing on the costs of new regulations that limit what plastic-issuing banks can charge merchants. However, as TARP's poster child, Bank of America will always be the one that gets skewered and lampooned when the going gets tough.

Bank of America can't win, and even now financial journalists are wondering how the bloated banker will find ways to nickel and dime its way back from this week's fee retreat at the expense of its forgiving customers.

Nobody Wants to Be the Banker

This isn't the first time this year that Bank of America has been roasted.

Bank of America was the runner-up this year in Consumerist.com's annual Worst Company in America contest, and the only reason it had to settle for the silver is because readers were still reeling from the memory of BP's 2010 offshore oil rig disaster in the Gulf of Mexico. In other words, death and environmental destruction are the only things that kept people's loathing of Bank of America in check.

A few weeks later it finally made it into the winner's circle, singled out by consumers in the fifth annual MSN Money/Zogby customer service poll to find the company that treats its patrons the worst. Bank of America received a "poor" rating from 41.4% of the poll's respondents. No one else even came close.

Keep in mind that these notorious distinctions happened months before its debit card fee fiasco. In other words, it's more than likely that Bank of America is hated even more now.

Lacking Interest

Financially speaking, Bank of America is getting better. Its latest quarter found the notorious B.A.C. posting a larger than expected profit, reversing a year-ago loss. It's in the process of fortifying its balance sheet. It has been taking its well-deserved lumps, closing in on a million loan modifications since 2008. Analysts see the banking bozo posting a small deficit this year, but bouncing back into profitability come 2012.

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However, this really isn't about Bank of America's financial stability. There's a credibility problem that will forever hold the brand back.

Bank of America's ill-advised acquisitions of Countrywide Credit and Merrill Lynch forced it into being one of the grubbiest hands when the government had to bail out the "too big to fail" financial giants. Taxpayers didn't like Bank of America much before, but now they feel as if they're entitled. They see Countrywide as the face of predatory lending and robo-signers, and as a result the Bank of America brand is the Qwikster of banking.

Given the choice -- over time -- consumers will close out their accounts to avoid the embarrassment of having the moniker on their checks. Seriously, can you imagine what the "new accounts" department at your local branch is doing these days with all of the spare time?

Insufficient Funds

"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," co-chief operating officer David Darnell notes in this week's announcement. "Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."

I don't know what's worse, that Bank of America actually has two COOs or that it took the company an entire month to realize that its customers weren't happy with this move.

In the end, it doesn't matter. One of the greatest brands in banking is now its most despised.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Bank of America.

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