 Bank of America will continue a controversial pilot program in Los Angeles that markets credit cards to customers without Social Security numbers despite a national uproar, the bank said Thursday.
"We know some will find this unacceptable," the bank's chairman and CEO, Kenneth D. Lewis, wrote in an editorial in the Wall Street Journal. The program is in full compliance with U.S. laws and the Patriot Act and is intended to help customers build a credit history, Lewis said.
Topics: Illegal Immigration, Bank of America, Los Angeles, Kenneth Lewis, Wall Street Journal, Patriot Act, credit cards, boycott, national security, William Gheen, National Illegal Immigration Boycott Coalition
Feb 23, 2007
LESLIE A. PAPPAS
The News Journal
delawareonline.com
"First, the program is not about illegal immigrants, and it never was," said Lewis. "Second, we believe we have an obligation to serve all those in our country who are legally eligible to receive services. To do less would be discriminatory and unfair."
The program is just one of a string of new initiatives the bank has tried recently to grow its business. "They're needing to come up with other ways to expand," says Bill Hardekopf, CEO of LowCards.com, a Web site that compares credit card rates. "Most of the recent expansion in the industry has been vertically through acquisition. Here's a way for them to grow by tapping an untapped market." Through four years of gobbling up smaller rivals, the Charlotte, N.C.-based bank -- which employs about 10,000 people in Delaware, mostly in its credit card division -- has grown to be the nation's largest retail bank and largest credit card issuer. But after nearing a federal cap that bars any U.S. bank from holding more than 10 percent of the nation's deposits, the company said this week it would shift strategies toward more organic growth. "We don't need another U.S. acquisition," Lewis told Bloomberg News in an interview Tuesday. Instead, Bank of America is trying to figure out how to tap new markets and squeeze money out of existing customers. Some of those customers, such at Mort Kaplan, 75, of Dover, say they've paid the price for the bank's rapid growth. Kaplan purchased dozens of long-term CDs at MBNA, but since the Wilmington-based bank merged with Bank of America, he has moved his CD money to other banks because of what he describes as terrible customer service. "Their growth is not due to service, it is due to buying others." he said. "They didn't earn it, they bought it." Analysts say they'll be listening closely for acquisition murmurs when executives speak at the bank's investor conference next week. Jefferson Harralson, a bank analyst at Keefe, Bruyette & Woods, suspects Bank of America may be more ready for an acquisition than they're letting on. After a year of unaggressively pricing CDs, the bank's deposit share has dropped to around 9.2 percent, giving the bank some wiggle room to buy a small bank, he said. The company has also been building up tangible capital, and recently declared the MBNA acquisition complete. "If you add all three of those together, they're ready," Harralson said. Bank of America "traditionally will downplay its appetite for acquisitions, but they've been very aggressive over time." The bank says growing from within is the natural next step after four years of rapid expansion. In 2003, Bank of America had 24 million customers, 4,200 branches and 13,000 ATMs, said bank spokesman Joe Goode. Today, after acquiring FleetBoston Financial in 2004 and MBNA last year, the bank serves 55 million people through 5,700 branches and 17,000 ATMs, Goode said. Now the bank wants those customers to think beyond their basic checking or credit card accounts. The company announced Thursday it would launch a new national advertising campaign during Sunday's Academy Awards telecast to attract customers to other bank services, such as home and business loans or retirement planning. "Our marketing and branding strategy is about supporting and accelerating the growth prospects with our company," said Goode. "We are evolving Bank of America from a brand everyone knows to a destination brand that everyone visits and uses repeatedly." Not every trial balloon has gone over well. Critics said the pilot program in Los Angeles offering credit cards to people without Social Security numbers targets illegal immigrants and could be a threat to national security. One Web site (bankofamerica boycott.com) called for a boycott in response to the program, and has generated almost 12,000 signatures since it was set up a week ago. Lewis' announcement Thursday that the program would continue didn't go over well with William Gheen, director of the National Illegal Immigration Boycott Coalition, the group that created the Web site. "He just gave the whole country the finger," Gheen said. Currently, there are no plans to expand the program in Los Angeles or to Delaware, bank spokeswoman Betsy Weinberger said. Contact Leslie A. Pappas at 324-2880 or lpappas@delawareonline.com. Bank of America's investor conference next week will highlight the company's growth |
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