BAC-WT - Bank of America Warrants

[PlanMaestro]

In summary:

 

You need to make a purchase if you come in to use the restroom.

 

Man, they just charged me extra in McDonalds for switching to water instead of Coke in my combo.

[ERICOPOLY]

In summary:

 

You need to make a purchase if you come in to use the restroom.

 

Man, they just charged me extra in McDonalds for switching to water instead of Coke in my combo.

 

What!  You mean you have to pay money for food???  That's exploitation, I mean you are going to DIE if you don't get that basic service.  What's next, are we going to have to pay for checking accounts too? 

[onyx1]

In summary:

 

You need to make a purchase if you come in to use the restroom.

 

Man, they just charged me extra in McDonalds for switching to water instead of Coke in my combo.

 

What!  You mean you have to pay money for food???  That's exploitation, I mean you are going to DIE if you don't get that basic service.  What's next, are we going to have to pay for checking accounts too?

 

Haha, very Funny! 

Sadly, America is becoming a country of entitlement.

[ERICOPOLY]

Where did this guy come from?

 

Time to unload Bank of America:

http://www.marketwatch.com/story/time-to-unload-bank-of-america-2012-02-29

 

He writes:

eco­nomic earn­ings fell $10 bil­lion to -$46.6 bil­lion in 2011 from -$36.6 bil­lion in 2010

 

At $8.12/share, the cur­rent val­u­a­tion of BAC implies 20% com­pounded annual rev­enue growth for 18 years

Wow, really?

 

Then today he reiterates that the bank is desperate (uses the fee hike as an excuse to put out the second bearish report in two days):

http://www.marketwatch.com/story/raising-fees-at-bofa-is-a-desperate-move-2012-03-01?siteid=yhoof2

 

 

[Guest misterstockwell]

I could get in my car right now and find 50 different banks in a half hour. No problem. A great many of them would PAY me to move my deposits to their bank. I get those offers all the time in the mail. There is no cost involved in switching banks. You can profit on the switch. I don't see the stickiness, and I do see my clients leaving their bank all the time when they pimp them with fees. There is no reason to pay for banking.

[rmitz]

What!  You mean you have to pay money for food???  That's exploitation, I mean you are going to DIE if you don't get that basic service.  What's next, are we going to have to pay for checking accounts too?

 

Actually, that's pretty accurate, since coca-cola doesn't really qualify very well as food.

[Guest Hester]

http://www.youtube.com/watch?v=Hjqy2lJ5yoU

[Santayana]

I could get in my car right now and find 50 different banks in a half hour. No problem. A great many of them would PAY me to move my deposits to their bank. I get those offers all the time in the mail. There is no cost involved in switching banks. You can profit on the switch. I don't see the stickiness, and I do see my clients leaving their bank all the time when they pimp them with fees. There is no reason to pay for banking.

 

I'm guessing that you have a lot more leverage in switching banks than many people do, specifically those that can't keep a balance above a couple of hundred dollars.    And really, 50 banks in 30 minutes?  Where do you live?  It seems like anyplace that dense, traffic would keep you from getting around so fast.

 

I completely understand why they would want to raise fees, and don't have a problem with it.  But we should recognize that it is a legitimate hardship for many people out there given the near necessity of having a bank account these days.

[Guest misterstockwell]

I should up my number. Bing maps with my zip code and the word "bank" got me 25 different companies within 15 minute drive before I stopped counting. That doesn't include thrifts or credit unions. That is in typical suburbia.

[Junto]

I could get in my car right now and find 50 different banks in a half hour. No problem. A great many of them would PAY me to move my deposits to their bank. I get those offers all the time in the mail. There is no cost involved in switching banks. You can profit on the switch. I don't see the stickiness, and I do see my clients leaving their bank all the time when they pimp them with fees. There is no reason to pay for banking.

 

I'm guessing that you have a lot more leverage in switching banks than many people do, specifically those that can't keep a balance above a couple of hundred dollars.    And really, 50 banks in 30 minutes?  Where do you live?  It seems like anyplace that dense, traffic would keep you from getting around so fast.

 

I completely understand why they would want to raise fees, and don't have a problem with it.  But we should recognize that it is a legitimate hardship for many people out there given the near necessity of having a bank account these days.

 

It is driving the growth in prepaid cards for the people who don't qualify for bank accounts. Effectively, prepaids can do everything a checking account can do these days (direct deposit, atm access, online viewing); they just are more expensive and don't allow overdrafts. If bank's are hampered on their ability to limit risk with overdrafts among other things, lower dollar accounts should be pushed out like any other non-performing/higher risk customer at a non-financial institution.

 

I think misterstockwell is embellishing a little bit there. The facts remain that most people do not change banks regularly and the people that do are not the ideal customer of the bank. There is always some risk but with margins on the low dollar deposit accounts decreasing with low interest rates, low debit card fees, etc... these accounts may be attractive to other banks or credit unions.

 

BAC is trying to focus on its core customer base and not being all things to all people.

[ERICOPOLY]

I should up my number. Bing maps with my zip code and the word "bank" got me 25 different companies within 15 minute drive before I stopped counting. That doesn't include thrifts or credit unions. That is in typical suburbia.

 

How many of them pay more on deposits than BofA?

 

If you tell me "most of them", then it undermines your argument that there is no pricing power in banking.

 

[Santayana]

I should up my number. Bing maps with my zip code and the word "bank" got me 25 different companies within 15 minute drive before I stopped counting. That doesn't include thrifts or credit unions. That is in typical suburbia.

 

Are you sure you're not counting multiple branches of the same bank?  Or that your suburbia is really typical?

[Guest misterstockwell]

I have no idea what they pay on deposits.

 

I was counting unique bank companies, not branches. I am not sure about other suburbs, but it is typical for this area  ;D

[onyx1]

Sen. Richard Durbin (D. IL) sounds none too pleased to pick up this morning’s Wall Street Journal and read that Bank of America is nearing the end of tests that might implement new fee structures for many checking-account customers.

 

Durbin, an important senator for the banking world and critic of the biggest banks, took issues with the bank’s efforts to restructure the basic checking account relationship.

 

“Here we go again,” Durbin said in a statement. “Four months to the day after Bank of America rolled back plans to squeeze their customers instead of serving them, they are at it again. This brazen return to new monthly fees is a challenge that cannot go unanswered.”

 

http://blogs.wsj.com/deals/2012/03/01/bofas-fee-plan-durbin-will-have-none-of-it/

 

 

[Uccmal]

Jeez, If you hold any account in Canada that does transactions you need to keep a minimum amount or pay a fee beyond a certain number of transactions.  It has always been thus for checking type accounts. 

 

There are switching costs to changing banks that are somewhat intangible:

1) Adjusting automatic withdrawal plans.

2) Stress

3) Ending up with different accounts for different things (confusion).

4) convenience - as in what you are used to.  I know I can go to that ATM because it is near where I buy my groceries, and smokes. People like routine.

5) Convenience - bundling

6) convenience - people want stuff they hate dealing with to be easy to do - how else can you explain the Trillions in mutual funds that cant beat any index fund.

 

People are creatures of habit.  This is what Buffett knows. 

 

Mrstockwell, when did you last take one of these competitors up on their offers? 

[hyten1]

strange i actually think switching for banks  is not very high but not trivial either

 

i guess it depends on what type of accounts and how many accounts you have.

 

i would tend to change my behavior first before i decide to switch bank

 

i live in manhattan there are many choice

 

but the hassle or switching is pretty high.

 

maybe its just me, i am lazy

[hyten1]

for me the bank i use raise their minimum etc and started charging recently if you don't

 

i simplely raise the amount to meet the minimum etc.

 

unless bank did something extremely diff i won't be switching, or some other bank that is offering something considerably better

[Uccmal]

strange i actually think switching for banks  is not very high but not trivial either

 

i guess it depends on what type of accounts and how many accounts you have.

 

i would tend to change my behavior first before i decide to switch bank

 

i live in manhattan there are many choice

 

but the hassle or switching is pretty high.

 

maybe its just me, i am lazy

 

 

I just changed my behaviour and keep my accounts above the 1500 threshold most of the time. 

 

I dont equate hassle avoidance with laziness.  In this day and age all of us need to run some of our lives on autopilot.

[ERICOPOLY]

I have only ever had one account -- opened in 1984 with Wells Fargo.  I've since lived in six different cities in three different states.  I've never had trouble finding a branch near where I live.

 

And they don't charge me any fees to have my account.  Why would I ever leave for a local bank that won't exist in my next city?

 

 

[ERICOPOLY]

Sen. Richard Durbin (D. IL) sounds none too pleased to pick up this morning’s Wall Street Journal and read that Bank of America is nearing the end of tests that might implement new fee structures for many checking-account customers.

 

Durbin, an important senator for the banking world and critic of the biggest banks, took issues with the bank’s efforts to restructure the basic checking account relationship.

 

“Here we go again,” Durbin said in a statement. “Four months to the day after Bank of America rolled back plans to squeeze their customers instead of serving them, they are at it again. This brazen return to new monthly fees is a challenge that cannot go unanswered.”

 

http://blogs.wsj.com/deals/2012/03/01/bofas-fee-plan-durbin-will-have-none-of-it/

 

 

The strange thing about this is we're talking about accounts that actually cost the bank money.  It's like they (Durbin and others) are trying to argue that banking is an essential utility, yet if you don't pay your water bill the municipality shuts it off.  If you don't pay your electric bill you are shut off.  So is it a utility or isn't it, and why can't BofA behave like one and ask people to pay for their service?

[alertmeipp]

because wallstreet = evil & bank = wallstreet.

[JSArbitrage]

Sen. Richard Durbin (D. IL) sounds none too pleased to pick up this morning’s Wall Street Journal and read that Bank of America is nearing the end of tests that might implement new fee structures for many checking-account customers.

 

Durbin, an important senator for the banking world and critic of the biggest banks, took issues with the bank’s efforts to restructure the basic checking account relationship.

 

“Here we go again,” Durbin said in a statement. “Four months to the day after Bank of America rolled back plans to squeeze their customers instead of serving them, they are at it again. This brazen return to new monthly fees is a challenge that cannot go unanswered.”

 

http://blogs.wsj.com/deals/2012/03/01/bofas-fee-plan-durbin-will-have-none-of-it/

 

 

The strange thing about this is we're talking about accounts that actually cost the bank money.  It's like they (Durbin and others) are trying to argue that banking is an essential utility, yet if you don't pay your water bill the municipality shuts it off.  If you don't pay your electric bill you are shut off.  So is it a utility or isn't it, and why can't BofA behave like one and ask people to pay for their service?

 

Bank of America customers are doing BoA a favor.  They are technically creditors; they have loaned the bank money.  Are you suggesting we should actually PAY for the "privilege" of loaning a bank money? The first bank to charge people fees just to have an account will lose big time. 

 

It's so dumb.  Just like the $5 fee was dumb. If a bank can't make money borrowing for free then they don't belong in business. 

 

And the idea that small accounts should be charged because they are just too small to be profitable is short-term thinking.  I have a Wells Fargo account because my parents banked there and I opened my first account with my birthday money.  I probably had sub $750  in my account for a decade.

 

If they had charged me money, I would have gone elsewhere.  And they wouldn't have my much larger account today including credit cards and CDs.  They wouldn't have my fiance's account. 

 

I double dare the first bank to make that move. 

[ERICOPOLY]

Sen. Richard Durbin (D. IL) sounds none too pleased to pick up this morning’s Wall Street Journal and read that Bank of America is nearing the end of tests that might implement new fee structures for many checking-account customers.

 

Durbin, an important senator for the banking world and critic of the biggest banks, took issues with the bank’s efforts to restructure the basic checking account relationship.

 

“Here we go again,” Durbin said in a statement. “Four months to the day after Bank of America rolled back plans to squeeze their customers instead of serving them, they are at it again. This brazen return to new monthly fees is a challenge that cannot go unanswered.”

 

http://blogs.wsj.com/deals/2012/03/01/bofas-fee-plan-durbin-will-have-none-of-it/

 

 

The strange thing about this is we're talking about accounts that actually cost the bank money.  It's like they (Durbin and others) are trying to argue that banking is an essential utility, yet if you don't pay your water bill the municipality shuts it off.  If you don't pay your electric bill you are shut off.  So is it a utility or isn't it, and why can't BofA behave like one and ask people to pay for their service?

 

Bank of America customers are doing BoA a favor.  They are technically creditors; they have loaned the bank money.  Are you suggesting we should actually PAY for the "privilege" of loaning a bank money? The first bank to charge people fees just to have an account will lose big time. 

 

It's so dumb.  Just like the $5 fee was dumb. If a bank can't make money borrowing for free then they don't belong in business. 

 

And the idea that small accounts should be charged because they are just too small to be profitable is short-term thinking.  I have a Wells Fargo account because my parents banked there and I opened my first account with my birthday money.  I probably had sub $750  in my account for a decade.

 

If they had charged me money, I would have gone elsewhere.  And they wouldn't have my much larger account today including credit cards and CDs.  They wouldn't have my fiance's account. 

 

I double dare the first bank to make that move.

 

Might I ask if you are in your 20s?  The term "free checking" is used because there was a time when it wasn't free.

 

You really think they are going to make money on an account balance of $100 when you use their ATM for free, take up time at the teller window, and get all those statements mailed to you?

 

First there were upfront fees, then "hidden fees" replaced them (the dawn of free checking), and now hidden fees are being reigned in by government.  So a new era of upfront fees is born.

 

My account with Wells Fargo initially had a fee for my checking account -- then it was eliminated when I added more services, like direct deposit, or perhaps it was a larger account balance.  I don't remember when.  But yes there was a time in the 1980s/1990s when my monthly fee was eliminated for my checking account.

[ERICOPOLY]

Bank of America customers are doing BoA a favor.  They are technically creditors; they have loaned the bank money.  Are you suggesting we should actually PAY for the "privilege" of loaning a bank money? The first bank to charge people fees just to have an account will lose big time. 

 

Actually the customers who make money for the bank for the reason you describe are not going to be charged anything.  The deposit has to be of a large enough size before it becomes a profitable "loan" to the bank -- they have overhead costs. 

 

I could loan you $50 for free interest rate and it would be a "favor" to you, but then what if I asked you to mail me a monthly statement and used up so much of your time on the phone and knocking on your door every day that you just figured it wasn't really a "free" loan anymore.

 

 

[rranjan]

One form or another, the banks are going to collect fee. Earlier it was hidden but due to regulations now it will be more visible. Banks don't want to have too many small accounts even though some of the smaller accounts might become profitable in future. I don't know if it's true but JPM said any account less than 100K is not profitable,

 

http://www.bloomberg.com/news/2012-02-28/jpmorgan-views-clients-with-less-than-100-000-to-invest-as-unprofitable.html

 

Now, any bank will have tons of accounts less than 100K? It's true that some of them might use other services and some of them might have more than 100K in future. But majority of them will remain less than 100K in size and not use any other services as well. Banks are better off by letting go these customers. Yes, they might lose some future profitable accounts but over all they are still better off by not keeping these unprofitable accounts.

 

I don't know if 100K is right figure here. We can use 30K or 50K figure but the argument is still same. Personally, I am never going to keep 100K in bank account. I will always be unprofitable customer if this figure is correct.