In the wake of the current economic crisis Bank of America released its comprehensive plan this week to track the bank's business activity to help revive the economy. The initiative tracks 10 areas, which was presented on Wednesday to the board of directors. Ken Lewis, the chairman and chief executive officer of Bank of America, followed up on a pledge to provide greater transparency into the company's lending and investing efforts throughout the company.
At the meeting Lewis said, "These are extraordinarily difficult economic times." He also said, "AS America's largest bank, Bank of America must play a leading role in providing the capital and liquidity that will help revitalize the U.S economy. That's why we're pulling together our lending and investing initiatives under this umbrella to provide greater clarity into the support we're providing to families, businesses and communities across the country. All 10 of these areas are important tot he future economic growth of our nation and our company."
Bank of America in the fourth quarter alone extended more than $115 billion in new credit to consumers, large and small businesses, governments and other entities. Bank of America also recognizes the economic importance of extending credit to communities that have traditionally have experienced difficulty gaining access to financial services. Bank of America is under taking a 10 year, $1.5 trillion community development lending and investing goal focused on delivering capital to low to moderate income and minority communities across the country.
Lewis will be receiving reports on a regular basis on economic trends for each of the segments under the banks Lending and Investing initiative. The bank will then provide quarterly updates on activity to the public.
Here is what Bank of America's 10 Lending and Investing initiative includes:
1.CONSUMER LENDING: Bank of America serves one out of every two households in the United States and is uniquely positioned to work with consumers to address their borrowing needs. Bank of America , through its mortgage unit lent $45 billion ($11.3
billion of that to low and moderate income borrowers), in turn helping more than 200,000 Americans purchase a home or save money on the home they already own in the fourth quarter alone.
2. LOSS MITIGATION: Bank of America has committed to assist at least to 630,000 customers stay in their homes, representing more than $100 billion in mortgage financing. The company modified approximately 230,000 home loans to avoid foreclosure in 2008. Bank of America also modified nearly 700,000 credit card loans for borrowers experiencing financial hardship last year as well.
3. REAL ESTATE OWNED PROPERTIES: Communities throughout the United States, mostly in low to moderate income areas, are suffering from growing numbers of abandoned bank owned or bank serviced properties. Bank of America is working with community stakeholders and city and state grantees that received funding under the Neighborhood stabilization Program administered by the U.S. Department of Housing and Urban Development to re-purpose these properties responsibility, which helps fight declining property values and neighborhood blight.
4. SMALL BUSINESS LENDING: This area is a critical driver of the U.S economy and Bank of America will continue to serve this important sector. Bank of America extended about $4.8 billion in new credit to alms 250,000 small business customers in 2008. During the fourth quarter alone, nearly $1 billion in new credit was extended to more than 47,000 new small business customers.
5. COMMERCIAL LENDING: As the predominant middle market bank in the United States, serving companies with annual revenues between $2.5 million and $2 billion as well as not for profit organizations and governments. Bank of America is well situated to deliver financial services to this critical segment of the economy. Bank of America extended around $49 billion in commercial non real estate lending credit and nearly $7 billion in real estate lending during the fourth quarter.
6. GREEN BUILDING: One of the many ways Bank of America works to address global climate change and build new business opportunities is by financing the construction and retrofitting of commercial properties to meet or exceed green certified building standards. Bank of America delivered almost $2 billion in "green" commercial real estate debt and equity transactions throughout the end of October 2008.
7. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS (CDFI's): Thee play an important role in providing credit to families, small businesses, multicultural organizations, community facilities and nonprofits serving low to moderate income communities that might not otherwise qualify under more traditional credit criteria. Bank of America and Merrill Lynch delivered more than $450 million in loans and investments to CDFI's in 2008.
8. SOCIALLY RESPONSIBLE PRIVATE EQUITY: Bank of America routinely facilitates the flow of capital from institutional investors to under served small businesses, such as those that are owned and managed by women or ethnic minorities. AS of 2008, Bank of America managed and advised on more than $677 million in capital to small businesses in this category that may not have otherwise been able to gain access to these funds.
9. NON-PROFIT SUPPORT: Non-profit organizations are critical to the vitality of neighborhoods across the United States and are key to the country's economic recovery. These organizations address the most pressing needs in the communities they serve and Bank of America is supporting their efforts through lending and philanthropy. The Bank of America Charitable Foundation this year initiated a 10 year, $2 billion philanthropic giving goal and extended $200 million in grants in 2008.
10. MORTGAGED BACKED SECURITIES: The secondary market created though mortgage backed securities provides liquidity in the housing market, enabling lenders to provide credit to home buyers. Bank of America had net purchases of $20 billion in mortgage backed securities in the fourth quarter.
I am looking forward to reading the reports on the progress of this initiative and how exactly it helps the economy. It's good see Bank of America throwing their hat into the ring to get the economy going.
What else could other companies do? What do you think you can do to get the economy going again? Let's hear from you.
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