By Erin Sherbert
By Howard Cole
By Erin Sherbert
By Erin Sherbert
By Leif Haven
By Erin Sherbert
By Chris Roberts
By Kate Conger
When NationsBank plunked down $60 billion last summer and bought San Francisco's Bank of America, ripples of apprehension coursed through the city. A revered institution -- indeed, one of the city's undisputed cores of financial and political power -- was being consumed by a bunch of hicks from North Carolina.
Fears were not assuaged when NationsBank decided to assume the Bank of America name, moved the bank's headquarters to Charlotte, and forced high-ranking executives in San Francisco to chose between accepting lucrative severance packages or moving to the Deep South.
But simmering unease didn't boil over into open hostility until earlier this month. It started on December 2, when the San Francisco Chronicle breathlessly reported on the treatment of several female executives from the old Bank of America who had resigned or been asked to take lesser positions. Reporter Sam Zuckerman wrote that "almost an entire generation of top women leaders has been swept away" by the bank's new owners.
Within hours, the San Francisco Board of Supervisors called for an investigation of gender discrimination at the new BofA. City Treasurer Susan Leal complained that the bank -- which has held a near-monopoly on San Francisco's city funds for more than half a century -- is no longer a "good corporate citizen." U.S. Senators Barbara Boxer and Dianne Feinstein, joined by an assemblyman from Millbrae named Louis Papan, jumped into the fray and demanded an accounting of the bank's practices.
When the Chronicle reported further that good ole boys from Charlotte were erecting glass ceilings to keep women out of the boardroom, elected officials went apoplectic. Leaders from both the city and state threatened to stop doing business with the new Bank of America by pulling billions of the public's dollars out of the bank and moving them elsewhere.
Whatever the merits of the Chronicle's reports -- and they lose much of their sensational character when placed in context -- the uproar is striking when compared to the utter silence that helped obscure far more outrageous behavior by the old Bank of America.
Two years ago, when both the state of California and the city of San Francisco filed scrupulously detailed lawsuits accusing Bank of America of "stealing hundreds of millions of dollars" from municipal bond funds, these same government officials were notably silent.
They are remaining silent even as the lawsuit quietly approaches settlement on terms that seem to serve the interests of the bank -- and a gaggle of lawyers -- far more than the public.
There was no outpouring of official condemnation when Bank of America was stealing hundreds of millions of dollars from the public. But, of course, back then it was still a hometown bank, with tendrils reaching deeply into city and state government.
Now that Bank of America is owned by out-of-towners, apparently, all it takes is a few sketchy newspaper reports to uncork the local venom.
Three weeks before the gender flap broke, the state of California, the city of San Francisco, and Bank of America announced that they are about to settle a lawsuit that accused the bank of "consciously, maliciously, and fraudulently" stealing up to $3 billion from the people of California. Without admitting wrongdoing, BofA is promising to pay $187.5 million to its accusers.
The suit, originally filed by a whistle-blower in 1995 and later joined by the state's Attorney General, the city, and about 300 local governments from across the state, accused the bank of deliberately keeping as profit hundreds of millions of dollars in unclaimed bond funds that should have been turned over to the governments. The suit also claimed that the bank overcharged 1,000 California jurisdictions for handling $100 billion worth of municipal bond issues in the past 50 years.
The lawsuit further accused the bank of willfully destroying accounting records that detailed its transgressions.
The allegations were almost too staggering for the financially uninitiated to comprehend. As SF Weekly reported in a December 31, 1997, cover story "The Great Bank Thievery," if the lawsuit's accusations were proven at trial they would most likely constitute the largest criminal conspiracy in state history.
There will be no verdict, however, and the bank will not be admitting any guilt. Instead, a quiet settlement of the case is nearing completion. The deal, which has received scant coverage from San Francisco's daily press, is very generous to the bank, and not so kind to taxpayers and California corporations.
The civil settlement is not expected to be approved by Superior Court Judge A. James Robertson II until sometime early next year. But public records and other information gathered by SF Weekly reveal some interesting characteristics:
*Under the agreement, Bank of America is given total immunity from prosecution for any other sins it may have committed with public bond funds between 1945 and 1995. Even if other misdeeds are discovered in the future, no California government will ever again be able to sue BofA for failing to return unclaimed bond funds -- or for cheating it with excessive fees and improper investments -- for bonds issued during those 50 years.
*The Attorney General is not only settling claims by local governments, but also promising his office will never sue BofA for stealing unclaimed bond payments from private, corporate clients whose bonds were handled by the bank in the past 50 years. Because BofA allegedly mixed up funds from public and corporate bonds and then placed the money in its own money-market accounts, it is entirely possible that private corporations could bring cases against the bank alleging they also were cheated out of money. But under the settlement, the state will give up its option of stepping in to prosecute such behavior. That also means the state will effectively give up any money -- possibly millions of dollars -- in unclaimed bond funds that might have escheated to the state.