When Ken Lewis bailed out of his job as CEO of Bank of America last week, it marked a sad end to Charlotte's long love affair with bankers. Lewis, who is said to be the subject of a major investigation by the Securities and Exchange Commission, tried to put a brave face on his resignation, but it was obvious to everyone that his reign at BofA, and the policies he allowed to flourish there, had brought him and, more importantly, the city, to a new low.
Charlotte's collective self-image, its myth if you will, as "the little city that could" is now permanently damaged. It was a hell of a ride, but it's over. Who would have thought 30 years ago that a Charlotte bank, NCNB, would grow and grow to such international stature? Or see its stature fall so dramatically?
Under the leadership of former CEO Hugh McColl, NCNB grew until it was large enough to both influence national banking policy and spur a revival of Charlotte's Uptown. For readers who haven't been here that long, here's the short version: if you like our Uptown, with its skyscrapers, transit center, arts venues, restaurants and clubs, you can basically thank Hugh McColl for it. McColl grew the company, but it was Lewis who oversaw BofA's role in an era in which financial irresponsibility ran wild and nearly collapsed the world economy. By joining, and at times leading, the national financial scene's move toward utterly irresponsible investments and a frenzy of outlandish loans, BofA inadvertently made sure that our medium-sized American city got the attention of the world. Attention is something Charlotte has long clamored for, even craved. But this isn't the kind the city's boosters were looking for.
You have to feel for this city, so long enamored of slick-haired, hard-charging guys in Brooks Brothers suits, and now reeling from unemployment and a scarred psyche. But it's hard to feel sorry for either Lewis or the bank to which he brought shame. For that matter, who can feel anything resembling empathy anymore for banks, or for the entire financial services industry in this country?
I wrote in a news blog last week that with Lewis gone, it was time for BofA to "bring on the next extortionist-in-chief." That's strong language, but the financial vultures who've laid this country low deserve it. How else to react to a company that takes tens of billions of dollars in taxpayer money, and then, when faced with possible tighter federal regulation, turns around and covers its butt by jacking up credit card interest rates to levels usually associated with criminal loan sharks? "Thank you, valued customers, we appreciate your business."
All over the country, banking customers are rebelling against this latest round of outrageous client-gouging. Befitting our era, YouTube has been a source of complaints against BofA, beginning with one Ann Minch, who recorded and posted a video which she called the "first shot fired in an American debtors' revolution against the usury and plunder perpetrated by the banking elite, the Federal Reserve, and the federal government." See her video here: www.youtube.com/watch?v=jGC1mCS4OVo&feature=fvw. Minch ranted against BofA raising her interest rate to 30 percent and refusing to negotiate with her, calling BofA execs "evil, thieving bastards," and garnering a tidal wave of support from online viewers. Eventually, one of the BofA's execs called her and offered to lower her rate to 16.9 percent. Minch replied that Bank of America is getting "money from the Fed at 0 percent interest ... 12.99 percent is a more-than-generous profit margin." The bank finally agreed to her terms.
Since Minch's video went viral, numerous other BofA customers have made similar videos, and the public anger is growing. Last weekend, a group of protesters marched to BofA and Wells Fargo/Wachovia headquarters Uptown to support new laws that would reinstate penalties for usury (excessive gouging through exorbitant interest rates), something this country has needed for some time. Quick "fun fact": Did you know that at the founding of this country, interest rates were capped at 6 percent?
Now, the industry that was once beloved for its role as community-friendly lenders is mobilizing its lobbyists to fight against the Obama administration's plan to create a Consumer Financial Protection Agency that would nix some of the industry's high-risk practices, the types of practices that helped bring on the financial crisis. As pointed out last week in an op-ed in the Observer by Duke Professor of Business Paul Zipkin, the bankers argue that the CFPA would hamper financial "innovation." Um, yeah, that's the point. We've seen what financial "innovations" can do. What's worse is that some large banks are picking up where they left off, now that they've been bailed out and are launching new kinds of risky financial product bundling. To put it bluntly, when criminals simply will not learn a lesson, regulation is the least the government should do.
That, unfortunately, is the low moral and ethical state the banking industry -- the (former?) backbone of Charlotte's economy -- has reached. In many ways, Ken Lewis is just a symptom of the rot that ruined his industry. But he's also a symptom who's walking away with more than $50 million, and I say good riddance.