From humble beginnings to worldwide success, the history of Bank of America could be considered a microcosm of the American Dream. Not so dissimilar to other famous rags to riches tales of a flourishing booming early 1900′s Americana, Bank of America’s rise began from the ideas of the son of Italian-born parents and developed into one of the world’s largest companies. From the vision of a true American pioneer in banking to the current state of disillusioned public opinion to a mega-bank, Bank of America’s story is truly one to read.
Let’s take a look at the history of Bank of America to see just how far this company has come over the years. You might be surprised by what you learn.
Bank of America‘s humble beginnings can be traced back to 1904. Born the son of Italian-born parents, Amadeo “A.P.” Giannini founded the appropriately named Bank of Italy in San Francisco, California. It was the start of what would become one of the world’s largest companies. However, success did not come easy for Giannini or for the future mega-bank.
Shortly after opening, San Francisco would experience one of the most devastating disasters of the century, the infamous 1906 San Francisco earthquake. Rating a 7.9 on the Richter Scale, the damage was vast. With casualties estimated at upward of 3500 and millions of dollars in structural damage, the last thing one would worry about would be bank notes and records. However, Giannini would be able to save all of the bank’s deposits from the fires that followed. This would allow Giannini and the Bank of Italy to resume operations within days of the disaster.
By 1928, Giannini would merge with several prominent banks, including the Banca dell’Italia Meridionale in Italy and Liberty Bank of America. With resources totaling over $115 Billion Dollars, the former Bank of Italy would be renamed to Bank of America with Giannini acting as its head.
By the 1950′s, Bank of America has aspired to expand into the insurance industry and develop branches east. However, these goals would be thwarted countless times as Giannini, Bank of America, and his other ventures like the Transamerica Corporation by state regulators behind the developing Antitrust laws.
By 1956, the Bank Holding Company Act of 1956 would disallow banks from owning non-bank subsidiaries. In Bank of America’s case, insurance companies. This would force the entities to separate. Also dissolving into separate entities would be Bank of America’s branches located outside of California. They would become First Interstate Bancorp. It wouldn’t be until the 1980′s when Bank of America would be able to expand east.
Giannini is recognized as an inventor of many practices that are used by modern day banking. He was the first to market banking toward the middle class. Prior to Giannini, banking was considered upper class fare. He also developed the holding company and expanded Bank of America to be of the first modern transnational financial institutions. Outside of the banking innovations, he is noted as the man who loaned Walt Disney the funds to produce Snow White.
Giannini’s lending helped develop the motion picture business in California. Through his help, he would also be instrumental in the building of the Golden Gate Bridge and development of the Hewlett Packard company in its infant stages. Giannini would die in 1949 and would pass on leadership of the company to his children, Mario and Claire.
Expansion, Acquisition and Loss
With the purchase of Seafirst Corporation, the owners of the Seattle-First National Bank in 1983, Bank of America was able to expand outside of California. While they would maintain Seattle-First’s name, this would be Bank of America’s first foray into ventures outside of California, but would not be its last. However, it would not come without hardship, as the mid-80′s saw a drastic downturn in Bank of America Stock due to bad loans. This new found vulnerability left Bank of American ripe for the pickings from other banks looking to acquire the sleeping giant. By 1987′s stock market crash, Bank of America’s stock was priced at $8 per share.
By 1992, Bank of America had bounced back with one of the highest stock price growth since the market crash. They would go on to acquire Pacific National Bank, Continental Illinois National Bank and Trust Co. By this time, Bank of America would grow to be the third largest bank holding company by 1998.
Mergers and the Economic Downturn
After a series of bad loans that led to the loss of over $1.4 billion dollars due to the Russian bond default of 1998, Bank of America would be acquired by NationsBank of Charlotte in what was considered the largest bank acquisition in history at the time. The now-merged mega-bank would maintain the name Bank of America Corporation.
Throughout the 2000′s, Bank of America Corp would go on to acquire a bevy of banks and financial institutions.
- 2004 – Fleet Boston Financial
- 2005 – Credit card giant MBNA
- 2006 – Banco Itau and The United States Trust Company from Charles Schwab
- 2007 – LaSalle Bank Corporation and Countrywide Financial
- 2008 – Merrill Lynch & Co
After the most recent economic crisis, Bank of America would receive $20 billion in federal bailout money from the Federal Troubled Asset Relief Program. According to New York Times, Bank of America would receive another $5.2 billion in funds. The Wall Street Journal would report in 2009, that Bank of America would be required by the United States’ government to address their management issues and restructure their Board of Directors. Since, Bank of America has been in and out of the court room with the U.S. Judicial System in regards to their on-going repayment of their bailout funds and other business dealings the government has questioned the bank on.
As of 2010, Bank of America resides as the third biggest company in the entire world. It would introduce its first credit card in 1958, the BankAmericard to the world. BankAmericard would later go on to change its name to Visa oddly enough and BOA now offers 20 credit cards, ranging from rewards to student to gas cards. Some of the best cards they are offering these days are:
BankAmericard Visa Card – 0% APR for 15 months, no annual fee, and free purchase replacement coverage. This card offers the lowest APR of all Bank of America credit cards, with rates ranging between 10.99% and 20.99% variable.
BankAmericard Cash Rewards – 0% APR for 12 months, no annual fee, and rewards don’t expire. Earn 2% cash back on groceries and 3% cash back on gas, plus 1% cash back everywhere else. Get even more rewards by depositing cash back into your bank account.
BankAmericard Travel Rewards – 0% APR for 12 months, no annual fee, and travel-friendly chip and PIN technology. Earn 1.5 rewards points for every $1 spent on the card – 50% more than most rewards programs.
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