See also: Bank Of America Website Issues Continue

“This represents a significant shift from community ownership to corporate,” said an investor who identified herself as Wimberly Edwards.

Carver Bancorp CEO Deborah Wright tried to assure the audience at Harlem’s Studio Museum that Goldman Sachs Group Inc., Morgan Stanley, Citigroup and the other new owners are “keenly attuned to our mission” and “wouldn’t have stepped up” if they didn’t think Carver was worth preserving.

“I understand the optics,” Ms. Wright said in an interview after the shareholder meeting. “But there was no alternative. The amount of capital we needed wasn’t available locally.”

Carver’s clients, who generally live and work in the city’s poorer precincts, have been hit especially hard by the recession. The bank posted a $40 million loss last year, more than wiping out the prior decade’s worth of profits, as seriously delinquent real-estate related loans soared to about $120 million—well in excess of Carver’s $23 million set aside in reserves

Read more at the Root.

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Rep. Peter Welch, D-Vt., and four other Democrats said Thursday that they’ve asked Attorney General Eric Holder to see if big banks violated antitrust laws before announcing the fees.

Welch said the lawmakers have no evidence of collusion. But he said the timing of the fees merits an investigation.

“You don’t have a competitive marketplace,” Welch said at a news conference.

Bank of America said last month that it would charge its customers $5 a month if they use their debit cards for purchases. Customers who use their cards only at ATMs will not have to pay the fee.

Chase and Wells Fargo are also testing $3 monthly debit-card fees in select markets.

The fees have sparked public outrage and helped fuel anti-Wall Street protests. Many have criticized the banks for charging to use debit cards after those same banks received hundreds of billions of dollars in taxpayer-funded bailouts. Bank of America, Chase and Wells Fargo were among the recipients of rescue funds.

Bank of America, the nation’s largest bank, said the monthly charge was necessary because the Federal Reserve this year capped the fees that it can charge merchants for swiping debit cards. Congress directed the Fed cap swipe fees under the financial overhaul law.

On Thursday, representatives for Bank of America and Chase declined to comment on the lawmakers’ request for a probe. A representative for Wells Fargo wasn’t immediately available for comment.

Also requesting the investigation were Democratic Reps. John Conyers of Michigan, Keith Ellison of Minnesota, Mike Honda of California and Raul Grijalva of Arizona.

The lawmakers said statements made by some banks and their trade associations raise questions about possible coordination.

In a letter to Holder, the lawmakers cite an e-mail by the Texas Bankers Association to its members. The e-mail was sent after legislation failed that would have delayed the cap on swipe fees.

The e-mail said: “Now the industry must regroup and each and every one of you must decide how you are going to pay for the use of debit cards. It may be through a monthly fee.”

The Merchants Payments Coalition, an organization of trade groups for a variety of retailers, supported the lawmakers’ move.

Bank of America will start charging the fee early next year. Chase and Wells Fargo haven’t said when they will make a final decision on whether to roll out the debit-card fee more broadly.

In a grassroots effort to get back at these institution, communications firm Fearless Revolution has created a step-by-step guide to leaving your big bank and joining a credit union.

Fearless Revolution reports:

3. Stop using your deposit accounts ASAP. You need to allow everything to clear the accounts completely before you close them. This clearing process takes about two weeks to complete. Keep close tabs online to see which transactions are still outstanding.

If you currently have checking and savings accounts (deposit accounts) with a big bank, the organizers encourage you to remove all of your funds, close your accounts, and place your money in a new deposit account with a not-for-profit credit union.

Read more at fearlessrevolution.com.

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LONDON  — Swiss banking giant UBS said Thursday that a rogue trader has caused it an estimated loss of $2 billion, stunning a beleaguered banking industry that has proven vulnerable to unauthorized trades.

Police in London said they arrested a 31-year-old UBS trader, Kweku Adoboli, in the alleged fraud. UBS declined to confirm his name.

Switzerland’s largest bank warned that it could report a loss for the entire third quarter as a result of the rogue trade, while shares in UBS AG plummeted 8.7 percent to 9.98 francs ($11.41) on the Zurich exchange by mid afternoon.

RELATED: Banker In Rep. Maxine Waters Ethics Case Responds To Critics

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The case immediately evoked memories of Jerome Kerviel, the trader at French bank Societe Generale who secretly gambled away euro4.9 billion ($6.7 billion). The scale of that fraud rocked the global financial industry and prompted banks to tighten oversight rules to ensure such large sums couldn’t be traded unnoticed.

The Swiss banking regulator Finma said it was in contact with UBS about the incident, which was discovered late Wednesday.

“From the scale of this case you can be sure that it’s the biggest we’ve ever seen for a Swiss bank,” Finma spokesman Tobias Lux told The Associated Press.

UBS provided little specific information, saying the incident was still under investigation and no client money was involved. The unauthorized transactions could cost UBS almost as much as the 2 billion Swiss francs ($2.28 billion) the bank hopes to save by cutting 3,500 jobs over the next two years.

It comes as UBS is struggling to restore its reputation after heavy subprime losses during the financial crisis that resulted in a government bailout, and an embarrassing U.S. tax evasion case that blew a hole in Switzerland’s storied tradition of banking secrecy.

Peter Thorne, a London-based equities analyst at Helvea, said the loss was financially manageable for UBS. But he said it was a blow to the reputation of UBS and its management, and will likely add to calls for the bank to slim down its investment banking unit.

According to his profile on professional networking site LinkedIn, Adoboli worked on an equities desk at UBS called Delta One — the same supposedly low risk operation that Kerviel was involved in when he lost $6.7 billion.

In his Delta One role, Adoboli traded in Exchange Traded Funds, which track an underlying asset such as a stock exchange, a sector, or a commodity like gold. They are cheaper than traditional mutual funds, and have given retail investors the chance to get involved in products to which they might not have previously had easy access.

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ETFs have grown massively over the past few years and are thought to be worth over a trillion dollars. Some critics argue that many of the markets that the ETFs are indexed to are too small to absorb this amount of money and that’s pushed up bad, as well as, good assets, as well as exacerbated boom-bust cycles.

The LinkedIn page showed that Adoboli spent the past five years working at UBS’s European Equity Trading division after three years as a trade support analyst for the bank.

He graduated from the University of Nottingham in 2003 with a degree in E-commerce and digital business, the university said.

According to Philip Octave, Adoboli’s former landlord, he lived in an expensive loft on Brune Street for several years before moving out about 4 1/2 months ago. The area is near London’s Brick Lane, a busy street of curry houses, bars and vintage fashion shops only a few blocks from UBS’s U.K. headquarters.

Octave described Adoboli as a well-dressed quiet man who “was not the tidiest” of people but very well spoken.

He fell behind in the rent twice but always paid up in the end, Octave said, adding that his rent was a hefty 4,000 pounds per month (US$6,320). He said he asked him to move out so he could refurbish the apartment.

“He was not a party chap,” Octave said. “I found no problems.”

Adoboli’s profile picture on Facebook showed a black-and-white photograph of a man in his early 30s, with interests including photography, cycling and boutique wines. The profile became unavailable hours after Adoboli’s arrest, indicating that someone with the password had removed it.

Banking observers immediately highlighted the similarities to the Kerviel case, which also involved a trader in his early thirties entrusted with responsibility for vast sums of money.

The debacle that befell Societe Generale, France’s second-largest bank, resulted in Kerviel being convicted in October 2010 on charges of forgery, breach of trust and unauthorized computer use for covering up bets worth nearly euro50 billion ($68 billion) between late 2007 and early 2008. He was ordered to pay the bank back all the money he had lost and banned for life from working in the financial industry. Kerviel has appealed the verdict.

By coincidence, the Swiss parliament began a long-slated debate on the future of the country’s banking industry Thursday.

Lawmakers are being asked to consider proposals to ensure that Switzerland’s two biggest banks — UBS and Credit Suisse Group — are brought under tighter control as they are considered “too big to fail.” Some lawmakers have called for investment banks to be split off from the core business, to ensure they can’t bring down the whole company in case of sudden unexpected losses.

In a terse statement shortly before markets opened Thursday, UBS informed investors that “UBS has discovered a loss due to unauthorized trading by a trader in its investment bank.”

“UBS’s current estimate of the loss on the trades is in the range of $2 billion,” it added. “It is possible that this could lead UBS to report a loss for the third quarter of 2011.”

In a letter sent to its employees, the bank said it regretted that the incident came at a difficult time.

“While the news is distressing, it will not change the fundamental strength of our firm,” the note said. “”We urge you to stay focused on your clients, who are counting on you to guide them through these uncertain times.”

UBS chief executive Oswald Gruebel recently warned that the bank wouldn’t achieve its aim for a pretax profit of 15 billion francs a year by 2014. UBS earned some 2.8 billion francs during the first half of the year, with the investment bank contributing 1.2 billion before tax.

UBS has been pressing to restore its reputation after suffering huge losses relating to toxic debts in the United States and needing a $60 billion bailout from the Swiss government.

“The real issue … over and above the financial impact is the reflection on risk management at UBS,” said Fionna Swaffield, banks analyst at RBC Capital Markets.

“UBS was seen to have recovered significantly from the credit crisis and to have improved its risk management in the investment bank in spite of its struggle to improve returns. This obviously brings this very much into question.”

In other trading debacles, Nick Leeson, a British trader working in Singapore for Barings Bank, made unauthorized futures trades that lost more than $1 billion and led to the venerable bank’s collapse in 1995. The infamous case prompted banks worldwide to tighten their internal checks.

Leeson was released from a Singapore jail in 1998 for good behavior after serving 3 1/2 years of a 6 1/2-year sentence. He claimed he did not make a cent from his disastrous trades but Barings’ liquidators sought the return of 100 million pounds on any of his earnings relating to Barings.

Deborah C. Wright of Carver Federal Savings Bank and Colbert Narcisse of Merrill Lynch. Carver Federal is a top-ranking African American-owned bank.

Since the 19th Century, African-American-owned banks have played a vital role in the economic development of our communities. Between 1888 and 1934, there were more than 130 U.S. banks owned by African-Americans, which is believed to have been the force behind the explosion of African-American businesses, which grew from 4,000 in 1867 to approximately 50,000 by 1917. While the 1960s produced a growing number of African-American banks, by the 1980s, many of them had failed. Today, according to a March 2010 Federal Reserve Board report, only 30 U.S. banks are owned by African-Americans.

The structural exclusion of African-Americans from the mainstream economic sphere led black entrepreneurs to build their own financial infrastructure to support the economic development of our communities, but the dramatic decline in the number of black-owned banks has led many to question the role of African-American-owned banks in revitalizing our neighborhoods today.

According to Dr. Brooks Robinson, economist and director of blackeconomics.org, black banks are critical to creating loans for black businesses. “Black-owned banks in black communities can even draw the traditionally unbanked poor into the formal economy,” Dr. Robinson states. “And [they can] push egregiously exploitative pay-day and check-cashing operations out of business.”

Indeed, African-American owned banks and other opportunity financial institutions, including Community Development Financial Institutions, tend to serve low-income communities and communities of color. Their strength and appeal is that they have the power to alter African-Americans’ relationship with the financial industry, offering a promise of trust and accountability when others are content to exploit or neglect. Their reach is into the neighborhoods — and blocks — where the alternative is often the abusive “pay-day” structure that locks too many of our households into the cycles of economic harm from mounting, uncontrollable debt.

Read entire article at TheGrio.com

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The company said in a statement that Baltimore has claimed racist, predatory lending practices at Wells Fargo (NYSE:WFC) which they say has led to increased foreclosures for a certain demographic.

Read The Whole Story

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Hip hop mogul Russell Simmons seems to feel that banks are not treating the poor in a proper fashion. This week, in a rant on his site, “The Global Grind,” Simmons had this to say:
“They trick customers into doing things that are not good for them through lack of transparency, and surprise them with new fees when they can least afford it. I’m learning an important lesson about ethics or lack of ethics in this industry. In fact, I’m fighting with a bank right now that doesn’t know what kind of ass whipping they are going to get when I expose them for the abusive practices and exuberant fees they are charging the poor. What they are doing is trying to double their already outrageously high fees in exchange for providing absolutely nothing to my customers.”
Simmons went on to try to create a “movement” by adding a call to action:

“Let’s start the biggest public discussion ever about how banks treat us and expose these banks for their unequal treatment and unconscionable conduct. The time is now.”

OK, I like Russell Simmons, so my goal is not to “lay into him.” We had a serious problem a few months ago when The New York Times seemed to feel that I was comparing Russell to a pimp. Yes, I made the pimp analogy, but not because I believe that Russell is necessarily pimping the black community. Instead, I was simply asking whether or not you are truly the hero you claim to be simply because you are offering a better deal than the predator who comes in front of you. A pimp can argue that he gave his “employees” a better life because their old pimp treated them so poorly.

To translate, Russell’s rant on banks may simply be a cloaked request for black America to find a better financial pimp, meaning him. Banks are hurting black folks, and everyone else, we know that. Russell Simmons’ words are accurately and correctly designed to take advantage of the fact that there is a tremendous populist outrage against banks, where many Americans from all walks of life have expressed anger toward the enormous fees charged by these entities.

The next step for Simmons, logically, is to explain to you that if you hate traditional banks, you should then switch over to (surprise!) The Rush Card. The problem for Russell, however, is that many predatory lending experts feel that Russell is one a small set of urban slum lords who use their recognition in urban America as an avenue to offer exploitative banking products. Another two are Montel Williams and Magic Johnson, who are endorsing pay-day loan and rent-to-own companies themselves.
I spoke with Predatory Lending expert Dr. Christopher Richardson about The Rush Card. I had my own perceptions, but I wanted to get his take. After reading through the terms of the contract for the Rush Card, Dr. Richardson said some things that I can’t quite repeat in this article. I agreed with him, to a point: although the Rush Card is not as bad as it could be, it certainly leaves a great deal to be desired.

One of the most interesting aspects of The Rush Card is the $1.00 “Convenience Fee,” charged after every purchase. While the company argues that the fee is capped at $10 dollars per month, it is still disturbing. What’s more interesting is that the company says that it will typically overcharge on the fee if you make more than 10 transactions, then refund the money to you the following month. This allows Russell’s company to bank that cash and earn interest off the money that should be in the hands of the consumer.

After the New York Times incident, Russell’s managers tried to call me to “explain” the benefits of The Rush Card to consumers. I felt that they were trying to convince me that their card was harmless, but they keep forgetting that I’ve taught Finance for the past 17 years. I wasn’t interested in speaking to business managers, and unfortunately for them, they would not speak to my business managers (I’m usually busy from sun up to sun down and just didn’t have the time). I told them that I’d talk to Russell, since I respect him and we have a few mutual friends. But of course, I’d never be the mogul that Russell Simmons is, nor would I ever want to be. Russell never called me back, so I can only write commentary based on what I know about Russell’s card. My goal is to simply tell the truth, since the people need to hear it.

At the end of the day, Russell Simmons might have a product that urban America can use. But his argument that “You should use my card because the overdraft fees at banks are too high,” is inappropriate. If someone wants to eliminate their overdraft fees from banks, they can simply tell the bank to do what The Rush Card does: Not honor any transaction that takes them over their account limit. How banks respond to bounced checks is not within the realm of what Simmons can discuss, since The Rush Card doesn’t offer check cashing services at all. Russell’s argument is that by using a card that doesn’t let you go over the limit or write checks, you will avoid the fees that come from being over the limit and writing checks. The problem is that some people enjoy having the convenience of writing checks or not being embarrassed if they make a transaction that exceeds their account limit. It’s like telling a chubby kid to starve himself in order to avoid gaining weight. Which is worse? Gaining weight or starving? It depends on who you ask, whether the kid enjoys eating and how overeating compares to the pain of starvation.

The bottom line is that we should all be alarmed when a multi-millionaire capitalist tries to start a revolution by pretending to “get gangsta” with banks. Russell Simmons can’t get too gangsta with banks, since he is technically just another banker (since he claims to be offering an alternative to banking services). Some may argue that he is a more benevolent banker than some, but he is certainly not the best option for the African American community. President Obama needs to step in and regulate all bankers (and those who compete with them) to keep them from exploiting African Americans, because right now, we are all stuck with finding the better pimp.

Dr. Boyce Watkins is the founder of the Your Black World Coalition. To have Dr. Boyce commentary delivered to your email, please click here.

From the Huffington Post:

I’m a late learner. Although I have heard about banks robbing the poor for a long time, it’s only recently that I have seen it first hand and have been forced to take a close look into the tragic reality that is unfolding during the most difficult economic time we have seen in years. My research on what is going on has saddened and outraged me. I realize that many banks have no interest whatsoever in addressing under-served communities. I was pained to learn that some only want to rip off the poor, while treating them unequally. No wonder under-served communities remain so distrustful of banks, and choose alternatives to traditional banking!

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What’s clear to me now is that banks are still increasing the cost to the powerless (poor) while they offer everyone else money to open accounts. I’m watching banks hold back features that they and I both know will help people save money and improve their lives. They trick customers into doing things that are not good for them through lack of transparency, and surprise them with new fees when they can least afford it. I’m learning an important lesson about ethics — or lack of ethics — in this industry. In fact, I’m fighting with a bank right now that doesn’t know what kind of ass whipping they are going to get when I expose them for the abusive practices and exuberant fees they are charging the poor. They are trying to double their already outrageously high fees in exchange for providing absolutely nothing to customers. All I want to do is to get the poor a better deal, with more reasonable fees with better services. This bank is intentionally trying to destroy my industry, which is building a platform for under-served communities. And for this, they should be ashamed of themselves.

Click here to read more.

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From the Huffington Post:

Bank of America fired Jackie Ramos after she took a stand against the bank’s $15 “convenience” charges and $39 over-the-limit fees so she could sleep better at night.

“There was something inherently evil about my job,” the 23-year-old said in a YouTube video she uploaded on Nov. 27, two days after her termination.

Ramos, of Fairburn, Ga., worked as a “customer advocate,” which involved calling people who fall behind on credit card payments and either encouraging them to pay or modifying their accounts. But not all customers qualify for modification programs that will help them, and Ramos grew tired of saying no after six months on the job.

“So I stopped denying people,” said Ramos. “I helped people get on programs that they didn’t necessarily qualify for but who definitely needed the help.”

Click here to read more.

Watch the video:

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From Black Enterprise:

Minorities and low-income households are less likely to have a bank account or more likely to use alternative financial services compared to the population as a whole, according a new report by the Federal Deposit Insurance Corp.

Nationally, nearly 20% of lower-income U.S. households — almost 7 million households that earn below $30,000 per year — do not currently have a bank account, reports the FDIC.

The report found that 21.7% of black households are unbanked, compared with 3.3% of white households, and about 31.6% of households are underbanked, compared with 14.9% of whites.

Click here to read more.

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]]> http://newsone.com/370942/fdic-black-families-less-likely-to-use-banks-regularly/feed/ 1 FDIC: Black Families Less Likely To Use Banks Regularly (thumbnail) ionesfontaine BlackFamily http://newsone.com/352157/federal-reserve-cracks-down-on-banks-overdraft-fees/ http://newsone.com/352157/federal-reserve-cracks-down-on-banks-overdraft-fees/#comments Thu, 12 Nov 2009 22:20:12 +0000 Smokey D. Fontaine http://newsone.com/?p=352157 ]]>

In a move that’s sure to delight debit cardholders nationwide, the Federal Reserve today imposed a new rule prohibiting banks from automatically enrolling customers in “overdraft protection” plans, CNN Money reports. These shady programs — which banks have claimed are meant to help customers — allow debit cardholders to spend money they don’t have, then slap them with fees up to $39 each for every transaction that occurs with a negative account balance. Since banks don’t notify customers immediately when their accounts are overdrawn and decline further transactions, people blithely continue using the cards; stories have abounded of people who were hit with $600 and more in overdraft fees before they realized what was going on.

Currently, more than 75% of banks automatically sign customers up for overdraft programs, according to a study by the Federal Deposit Insurance Corp. [SOURCE: CNN Money]

Until now, bank customers were enrolled in overdraft protection programs without their knowledge and with no way to opt out. Thanks to the Federal Reserve’s new rule, banks will be required to inform customers about the plans and allow them to opt in based on their own discretion. This rule will take effect July 1, 2010.

So when your bank offers you overdraft protection next year, be aware that you have the option to decline this “service” and save yourself a few hundred dollars and a lot of aggravation.

Cheers to the Fed for making a change that will have an immediately tangible, positive effect on American citizens’ wallets.

Read more details about the new rules on overdraft protection plans at CNNMoney.com.

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]]> http://newsone.com/352157/federal-reserve-cracks-down-on-banks-overdraft-fees/feed/ 7 Federal Reserve Cracks Down On Banks' Overdraft Fees (thumbnail) ionesfontaine overdraft-fee http://newsone.com/302607/high-income-black-and-latino-borrowers-face-higher-interest-rates-than-whites-and-asians/ http://newsone.com/302607/high-income-black-and-latino-borrowers-face-higher-interest-rates-than-whites-and-asians/#comments Tue, 15 Sep 2009 14:05:15 +0000 Smokey D. Fontaine http://newsone.com/?p=302607 ]]>

From The Root:

What does it take to convince federal watchdogs that mortgage bankers can’t be trusted to make housing loans without discriminating by race and ethnicity?

If they need proof beyond all the obvious observational and circumstantial evidence available to the rest of us, then they should pay attention to a study being released today that was conducted by one of my colleagues at the Center for American Progress. Based on an analysis of 2006 federal mortgage data, researchers found that black and Hispanic borrowers were three times more likely than white borrowers to be saddled with high-priced loans. As defined by the Federal Reserve, a high-priced loan is one having an annual percentage rate at least 3 percent higher than a Treasury security of the same maturity.

“Overall, 17.8 percent of white borrowers were given higher-priced mortgages when borrowing from large banks in 2006, yet 30.9 percent of Hispanics and a staggering 41.5 percent of African-Americans got higher-priced mortgages,” the report said. “Only 11.5 percent of Asians got higher-priced mortgages.”

That, in and of itself, is damnable. But, wait, the data grows more disturbing as you drill deeper into the report.

This study is significant because it focuses on the banks that were “responsible for originating more than 1 of 3 of every higher-priced mortgage in the nation at the height of the housing bubble in 2006.” What’s more, the studied banks “are crucial to restoring the mortgage market to get the housing market back on its feet,” Andrew Jakabovics and Jeff Chapman write.

Click here to read more.

Ken Lewis has lost his role as Bank of America’s chairman, and now he’ll have to prove to shareholders that he should keep his post as the troubled bank’s CEO.

After months of rancor following Bank of America Corp.’s acquisition of troubled investment bank Merrill Lynch & Co., shareholders voted at the company’s annual meeting to separate the jobs of chairman and CEO. Lewis will remain the CEO of the bank, while board member Walter E. Massey, president emeritus of Morehouse College in Atlanta, will become Bank of America chairman.

Some analysts believe Lewis might eventually be forced out altogether.

Gary Townsend, chief executive officer of Hill-Townsend Capital LLC, noted that Wachovia Corp.’s chairman and CEO roles were split last year after shareholders were upset about the performance of that bank, which has since been sold to Wells Fargo & Co.

Then, just weeks after Wachovia CEO Ken Thompson lost his title as chairman, he was ousted as chief executive as well. Stripping Lewis of his role as chairman “can result in significant, rapid changes, depending on what happens the rest of the year,” Townsend said.

Jason O’Donnell, a bank analyst with Boenning & Scattergood Inc., noting that Wachovia had an ill-fated purchase — mortgage lender Golden West Financial Corp. — also likened Thompson’s situation to Lewis’.

“I think the Golden West debacle is one that’s a pretty good analogy for this scenario,” O’Donnell said. “Clearly, Thompson was put under a lot of pressure to step down as a result of that acquisition and pretty much that is what we are seeing here with Lewis and his Merrill Lynch deal.”

The rebuke from the company’s shareholders was a stunning turn of events for Lewis, who a year ago was at the top of the banking industry. His star began to fall soon after the deal to buy Merrill Lynch was completed Jan. 1, as Merrill reported $15 billion in fourth-quarter losses and it was learned that Bank of America had approved the early payout of billions of dollars in bonuses to Merrill employees.

Lewis, 62, who served as chairman and CEO since 2001, has spent much of this year defending his actions — and did so again during the angry four-hour shareholders’ meeting.

Results of the voting were delayed for several hours, and Bank of America Wednesday evening issued a statement that the board of directors had met, elected Massey as chairman and unanimously voted to keep Lewis as CEO.

Big investors including California’s employee pension fund had called for shareholders to oust Lewis and his fellow directors at the meeting, which was attended by more than 2,000 people. But shareholders did vote to retain the entire board.

One of the angry investors, Michael Garland, director of Value Strategies for CtW Investment Group, praised the ouster of Lewis as chairman. Garland’s group handles 33 million BofA shares and works with union-affiliated pension funds.

“It’s huge,” he said. “It’s an enormous victory for shareholders.”

“We’ll have an independent board chairman, and now the CEO will be accountable to a board chaired by an independent director. It’s a critical, critical first step,” Garland said.

At the meeting, Garland openly criticized Lewis, saying bad managment decisions led to a dramatic drop in Bank of America stock.

O’Donnell, the bank analyst, said the vote outcome was not entirely surprising.

“It’s been building up for a while,” he said. “There’s been a lot of investor discontent regarding his decision, particularly, to buy Merrill Lynch.”

Shareholders lined up early in the gathering to speak, with many hurling criticism at Lewis and the Bank of America board for the government-brokered purchase of Merrill Lynch.

“I find it incredible you didn’t have the guts to stand up to the U.S. government,” said Judith Koenick of Chevy Chase, Md., who said she lost thousands of dollars when BofA shares plunged after the Merrill Lynch purchase.

The government pressured Bank of America into buying Merrill Lynch during the same weekend in September that another investment bank, Lehman Brothers Holdings Inc., collapsed, setting off one of the most intense periods of the financial crisis.

In his remarks to shareholders, Lewis defended the acquisitions of Merrill Lynch and another troubled company, mortgage lender Countrywide Financial Corp.

“Countrywide and Merrill Lynch are two of the most important reasons Bank of America is the most profitable financial services company in the United States so far this year,” Lewis said. “Today, I can state without reservation that these acquisitions are not mistakes to be regretted. Both are looking more and more like successes to be celebrated.”

The bank and Lewis have been under intense scrutiny because Bank of America is one of the biggest recipients of government bailout money and because the losses at Merrill Lynch turned out to be much higher than expected.

Shareholders who have called for Lewis to resign or be dismissed as chairman and CEO are also irate over the precipitous drop in the company’s stock price. Bank of America has fallen 42 percent since the beginning of the year, closing at $8.68, up 53 cents, before the shareholder vote was announced.

Lewis said, “I know the Merrill deal has played a role in the decline of our stock price. But I do not believe it is solely responsible for its decline.” He said every major commercial bank in the country is under pressure.

On Tuesday, the California Public Employees’ Retirement System said it would vote against re-electing the board, including Lewis. CalPERS, the largest U.S. public pension fund, holds about one-third of 1 percent the bank’s outstanding shares.

Massey has been on the Bank of America board since 1998. He served as president of Morehouse from 1995 to 2007 and has also served on boards of big corporations including McDonald’s Corp. and Delta Air Lines Inc.

The bank posted a $2.39 billion loss for the three months ended in December, but earned $2.56 billion after preferred dividends for all of 2008, down from $14.80 billion in fiscal 2007.

Bank of America has received $45 billion in government aid as part of the Troubled Asset Relief Program, and additional guarantees backing hundreds of billions more in risky investments after it took over Merrill Lynch in January.