Sunday, March 24

The next Bank of America to buy

The next Bank of America to buy
| By Charley Blaine, MSN Money

Before it too large, was doomed to failure Bank of America was on financial services for the little guy. These days, smart regional banks fill this role and see off as good buys.

After the 1906 San Francisco earthquake devastated the city, Amadeo Pietro Giannini, President of the Bank of Italy, a portable Office eingerichtet-- a Board about two barrels. He took in cash and borrowed money for the reconstruction of a rule with only a handshake. He made each loan was paid.

In 1928, shortly before the stock market crash Giannini merged his bank-which he had Anna-with another in Los Angeles in San Francisco founded and took over the Bank name: Bank of America. As the name represented his ideal. He wanted to build a bank that have large and small businesses across the country with savers and investors.

Today, Bank of America is working with customers in more than 150 countries internationally, in 50 States and more than 40 countries. It has $2.2 trillion in assets and 12% of all bank deposits in the United States. It is the fourth-largest U.S. mortgage lender.

But Giannini might not recognize it. It would be certainly some of the decisions of recent years appalled. The disastrous acquisition of Countrywide Financial. The acquisition of Merrill Lynch , the $45 billion of Government help and$ 118 billion in loan guarantees, to conceal decline of the company required.

The bank notes low on customer service surveys, including a no. 1-ranking in MSN Money "Customer Service Hall of Shame." And is shares, which traded over $50 before the banking crisis, in the vicinity of 12 US dollars per share.

Charley Blaine

Which raises the question: there is a next Bank of America, where you bank or without investing concerns? The answer is Yes, at least for investors; among the best alternatives are BB & T (BBT), U.S. Bancorp (USB) and PNC Financial Services (PNC). Here is the reason.

The alternate fit not just the model, the Giannini presented, but they are much closer than what has become A B.

This model is a basic commercial banks nationwide practiced every day by more than 6,000 banks. Take deposits. Pay interest on savings deposits and Sparbriefe--admittedly not much now. Lend money to corporations new inventory pick, buy lots to build houses, on and to buy new plants and equipment. The loans can farmers and local businessmen to finance their operations. The banks risk management and, if all goes well, they grow, preferably add branches, which can diversify their risks to your company and to build capital.

A.P. Gambaro small bench some banks not always did: serve the little guy as even the rich. His bank took in deposits of immigrant merchants, to lend money to dealers and peddlers, payment of interest on their savings and them.

And, another important idea was Richard Sylla, the Henry Kaufman Professor of the history of financial institutions and markets of New York University says Giannini, a former produce wholesaler and American son of Italian immigrants. Giannini used the Bank of its customers to bring California's liberal law on branch banking. Today, the Giannini model runs through American banks.

Bank of America was a key figure in the development of the economy. The Bank helped to build the State wine industry Golden. It was a player in the financing of films. He bought the bonds, the Golden Gate bridge built. When Walt Disney more than $2 million budget make "snow white and the seven dwarfs" was Bank lent the money, him BofA to stop what should be a classic. The Bank was an early lenders for Hewlett-Packard (HPQ), the classic Silicon Valley startup.

It was perhaps important, a pioneer of the bank credit cards with the BankAmericard, the in Visa (V). In response, MasterCard (MA) invented the Bank competitors.

Giannini began also Transamerica, had the banks in the West, and Giannini would extend across the country are happy. But local bankers resisted change of State laws, particularly in the South and East.

The bank holding company Act of 1956 needs Transamerica and Bank of America, to go their separate ways. Transamerica by banks were what First Interstate Bancorp, now part of Wells Fargo (WFC) was outsourced.

But even the original Bank of America was not immune to problems created by too much growth. You suffered huge losses in the 1980s, when Latin American loans went bad. It suffered additional problems with the mortgage, securities transactions and the like. That gave Group, Charlotte, N.C., Bank, banks in the South and Northeast, an opening of Gambaro buy greedy Bank was. Group took the name of Bank of America, as well as Giannini.

Along the way become anything other than a small bench for the little guy.

The new owners continue to aggressively until the crash of 2008 to buy housing banks and other institutions. Bank of America was offering, as Lehman Brothers was denied, Merrill Lynch itself deeply problematic, because Merrill Lynch supports a risky bet on getting a major dealer in securities of subprime mortgages mortgages to borrowers with little, or had made even no credit histories.

The nationwide $4 billion – the "dumbest" of tenders, purchase by far was, says analyst Richard Bove Rafferty capital. (NYU Sylla is right.) Litigation of fraudulent foreclosures, horribly bad paperwork and fines have amounted to more than $40 billion, not to mention that the Bank absorbed by society losses as portfolio went south the subprime loans in the countrywide.

And you did that Bank of America's stock price-fall 95% from a peak of $54.90 in November 2006.

It is founded in history over the past years an important lesson about banks, at the very least, Bank of America. The enormous financial organizations which grew under deregulation proved to be extremely difficult to understand and even harder to manage. Citigroup (C) almost broke in 2008, hobbled by many of the same problems, the Bank of America charged. In the year 2012, JPMorgan Chase (JPM) suffered a loss deeply embarrassing trade. UBS (UBS), the Swiss Bank, have been forced to impose.

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