New England Political Backlash Continues to Build against B of A
Paletta, Damian, American Banker
Bank of America Corp.'s recent moves in New England are getting flak -- from calls for specific sanctions to the possibility of tougher rules for approving bank deals.
The Charlotte company, which bought FleetBoston Financial Corp. in April, laid off hundreds of employees in New England last week and is moving its small-business and Latin American banking divisions out of Massachusetts.
State officials had not expected the moves and said B of A executives had promised to maintain job levels to secure support for the $46 billion deal.
Rep. Barney Frank of Massachusetts, the ranking Democrat on the House Financial Services Committee, said Thursday that the rules regulators use to judge bank merger and acquisition deals should be toughened to consider things like job cuts.
"The interests of Massachusetts are being essentially disregarded by your overall strategy, and I believe that you have underlined the need for us to reexamine existing statutes, particularly those regarding bank takeovers, such as your takeover of Fleet," Rep. Frank wrote in a letter Wednesday to Kenneth Lewis, B of A's chief executive.
Under the current process "our ability to press for commitments" in the Community Reinvestment Act areas "were greater than our ability to do so in the employment area," Rep. Frank wrote. "Your activities have convinced me that we need to change this situation."
In an interview, he said New England officials were "the victims of some serious fibbing." He also said he has invited Mr. Lewis and other bank executives to meet with the Massachusetts congressional delegation as soon as possible.
"Tea will not be served," the lawmaker quipped.
His call for tougher laws unsettled one banking lawyer who works on mergers and agreed to speak on the condition of anonymity.
"The real danger of this is that it will encourage states to impose tighter and tighter commitments from banks during the merger process," the lawyer said. "If B of A doesn't live up to the commitments, they will have done a real disservice to other banks."
A spokesman for B of A said it is not reneging on its commitments. Though it conducted layoffs last week, it plans to add positions elsewhere in New England, he said.
"We're in the middle of the process," the spokesman said. "Let's not stop and say, 'What's the final score?' "
He would not confirm the total job cuts but said B of A would have the same number of employees in New England by the end of the integration, which could be several years away. …