By Anna Pulley
By Erin Sherbert
By Chris Roberts
By Erin Sherbert
By Rachel Swan
By Joe Eskenazi
By Erin Sherbert
By Erin Sherbert
Why is the state agreeing to release BofA from liabil-ity for corporate bonds? "Because the bank asked us to," says Deputy Attorney General Brian Taugher.
San Francisco jumped into the lawsuit two years after it was filed by whistle- blower Patrick Stull, a former BofA vice president who convinced Attorney General Dan Lungren to prosecute BofA. Under the agreement, the city stands to walk away with less than the $12-17 million it originally claimed to be owed. According to Deputy City Attorney Patrick Mahoney, San Francisco might recover anywhere from $2 million to $6.8 million of the losses incurred from $1.2 billion in bonds that the bank mishandled.
Mahoney says the settling parties agreed that the total amount of bonds in question -- for the entire state -- amounts to about $60 billion, considerably less than first thought. Using benchmarks Mahoney says were developed in settlement negotiations, however, a reasonable estimate of the amount due to all the government entities involved would be between $222 million and $420 million.
The amount that will be made available to give back to individual bond holders is much less -- about $80 million. The settlement also arbitrarily throws in another $20 million as the bank's punishment for cheating. All told, the people of California will receive restitution of about $100 million. A jury could have awarded the state about $2 billion, including penalties.
All of the plaintiffs say it was practically impossible to determine just how much the bank owed because BofA's books were in such a shambles. To the professed amazement of most participants, however, the lawsuit was settled in a two-day mediation, just a few months after NationsBank bought Bank of America.
Some elements of the proposed agreement strain logic. For instance, local governments that were cheated by BofA will not necessarily get back what they are owed. Payments from the $100 million pool will be split up proportionately according to how many of the 1,000 governments file a legitimate request for repayment. Many arcane variables are involved in the payment formulas, but -- as one crazy example -- if only a few governments ask for their money back, they could walk away with more than they lost.
And anyone who finds a corporate bearer bond under an old mattress might as well light a cigar with it because -- if BofA was the trustee for the bond -- the State of California is no longer going to help the bond holder recover the money.
Make no mistake, though, all of the lawyers involved will walk away happy. Whistle-blower Stull will split about $25 million with his lawyers at Farella, Braun & Martel LLP. The Attorney General's office gets $61 million to divvy up with local city and county attornies. San Francisco City Attorney Louise Renne -- who refused to participate in the lawsuit's only courtroom trial, last April -- has been promised up to $10 million to cover her legal costs.
The public isn't hearing any politicians whine or grouse about the imminent settlement of the lawsuit. They are as silent now as they were when then-hometown BofA was first accused of swindling billions of dollars from the public.
The rhetoric, instead, is being ginned up to condemn BofA's new owners for sins that not only pale by comparison, but don't hold up well under scrutiny.
After Bank of America and NationsBank merged, the jobs of 8,000 or so BofA employees were put on the chopping block. Unlike low-level employees, top-level executives were offered hundreds of thousands of dollars in severance packages to ease their pain.
The December 2 Chronicle article on the plight of female executives implied that new owners were sweeping out women from the old BofA. It named six women who had resigned -- floating away on golden parachutes woven from at least three years' pay -- and four who had their "authority reduced." None, however, had been fired, and the reports offered no evidence that a single female executive had been demoted or asked to leave because of her sex.
Rather, the Chronicle reports were based on anonymous sources who described their "feelings" that the old BofA's women-friendly "culture" is being poisoned by southern barbarians.
After the articles ran, the golden-haired bank that could do no wrong -- at least in the eyes of generations of San Francisco's governing officials -- became, overnight, a pig-eyed cabal of tobacco-chewing, racist, wife-beating Confederate crackers. "Its not the eyes of the old bank now looking out at us," cried Supervisor Michael Yaki.
Joining the hunt, a San Francisco Examiner editorial damned "a pattern of replacing or demoting former BofA women executives in favor of males from the NationsBank hierarchy."
The truth, of course, is not nearly so cut and dried.
While the banking industry's record for promoting women and minorities is not particularly laudable, the old BofA and NationsBank each were about on par with the national averages for their business.
Slightly less than 25 percent of the senior management teams of both pre-merger banks were women. And, last year, NationsBank's work force was 75 percent female, while its bank officers were 60 percent female. While more women than men were tellers and clerks, only 3 percent more men than women were vice presidents.