(Bank of America employees speak out about their employer and the bank's practices.)
(BofA CEO to step down. Sept. 30: Bank of America CEO Ken Lewis has notified his board of directors that he will step down by the end of the year.)
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(MSNBC host David Shuster called out Bank of America during the "Hypocrisy Watch" segment of his show.)
Charlotte leaders working to keep Bank of America's headquarters
As Bank of America's directors search for a chief to replace Ken Lewis, local leaders wonder if the new CEO will have any ties to the Carolinas - and what it will mean for Charlotte if not.
Some bank insiders worry that the new commander might be less committed to keeping the base here. They fear that the corporate offices could be uprooted to New York or Boston or another city, perhaps because the new CEO wants to make a dramatic statement of change - or because the person simply doesn't want to live here.
Charlotte and state leaders say they're determined to keep the hometown bank in its hometown, especially after losing Wachovia's headquarters last year. Gov. Bev Perdue has been talking with bank officials, shareholders and community leaders about the bank's future since Lewis announced two weeks ago that he plans to retire by year's end, Perdue spokeswoman Chrissy Pearson said.
Perdue has "let it be known that North Carolina will welcome its new leader with open arms," Pearson said.
Bank of America is one of the most important engines driving Charlotte's economy, employing 15,000 workers and supporting a raft of smaller businesses. It is the sole reason that Charlotte can still claim to be the country's No. 2 banking center, a title that has defined it for years.
If the headquarters were to shift, experts expect that the bank would keep a substantial presence and number of workers here, and that just a handful of top executives would move to the new base. But the city would lose prestige and decision-making power.
U.S. Rep. Mel Watt, a Charlotte Democrat and member of the House Financial Services Committee, said he hasn't heard anything about Bank of America leaving beyond the concerns of local city leaders - worries he attributed to insecurities from the Queen City.
He said the concerns might say more about Charlotte than about Bank of America.
"It's a reflection of how we sometimes view ourselves as a city - the poor little Southern victim," he said. "We forget the advantages Charlotte has. ... We just have to get over the victim mentality."
For most of this decade, Charlotte has worried that the bank would move to New York, the home to most of its big-bank peers. In 1998, the concern was over a switch to the West Coast, when the bank - then called NationsBank - bought BankAmerica in San Francisco.
CEO Lewis, born in Mississippi and educated in Georgia, has said multiple times that the headquarters wouldn't move under his watch - including the day last fall when he bought New York-based Merrill Lynch.
In 2006, when he unveiled plans for the bank's new tower across the street from its 60-story corporate center, he said the building would make it "much harder for the next CEO to move the headquarters."
At the start of Lewis' tenure as CEO in 2001, he took steps to bring a number of top lieutenants to Charlotte, but that management team has spread out again in recent months. In the latest structure, five of 11 top executives are based in Charlotte, including Lewis. Before the Merrill deal, five of nine were here.
Some experts said that a new Bank of America CEO might want to move the headquarters to make a statement - perhaps to signal that the bank is shutting the door on a troubled year and a half. Or the new leader might want to signal that the bank is not just a consumer bank, but a bona fide Wall Street firm, especially after its Jan. 1 purchase of Merrill Lynch.
The question now is whether the headquarters location is even an issue for the board of directors.
Recently revamped under the government's watch, the board has more financial expertise and no members with strong Carolinas ties except Lewis. Three of the current 15 are holdovers from Boston-based FleetBoston Financial, which the bank bought in 2004.
Directors have not returned calls for comment.
Boston could be in the running because one of the front-runners for the CEO job, Brian Moynihan, is based there, and came to Bank of America when it bought FleetBoston. In August, when he was named head of the bank's consumer banking unit, he stayed in Boston even though the unit is based in Charlotte.
But New York, where the bank's One Bryant Park tower looms near Times Square, is also a possibility. Some observers say the bank will have to go there to find the talent to run such a large and complex financial firm.
"There's only a few places you can go to find people with the breadth and depth of experience that the board may be looking for," said James Post, who teaches corporate governance at Boston University. "...You have to go to New York."
On Tuesday night, The Wall Street Journal reported that the bank had hired search firm Russell Reynolds Associates Inc. to assist in the CEO search - which could be a signal that the new leader is more likely to come from outside the bank.
From her conversations with bank and community leaders, Perdue has heard that the four items the bank is focused on are searching for a new leader, boosting profitability, repaying the federal government $45 billion in aid and "focusing on its enterprise," Pearson said.
Bank of America spokesman Bob Stickler said last week, "As of now, it's here and there are no plans to move," noting the bank's just-opened Ritz-Carlton hotel and other commercial developments.
"The people here are very proud of the fact that we grew up a Southern bank," Stickler said. "The hotel just opened. Our new office building and the new Founders Hall will be opened in the next year."
But if the new CEO did want to move, the paperwork wouldn't be too onerous. The bank would probably notify the N.C. Secretary of State that it had changed its "principal office street address" at the time of its next annual report. It would also have to change the address listed on its filings with the Securities and Exchange Commission, but wouldn't need to make a special filing about the move.
Behind-the-scenes campaign
There's been no public campaign to keep the bank headquarters here. But local officials say they're working hard behind the scenes, and state leaders say they've been brainstorming the issue since the financial meltdown struck last year.
Everyone's main objective: Make it as easy as possible to do business in Charlotte, they said.
"We've got a good team of people working together to ensure that we're supporting Bank of America," Mayor Pat McCrory said. He declined to provide further details, other than to describe it as a public-private effort that involves a combination of strategies.
McCrory said officials would be in contact with the bank's new CEO as soon as the new leader is announced, and that they would "strive for continuing investment" from the bank.
In the meantime, he said, local leaders are trying to give Bank of America time to work through the process. McCrory said he feels confident that the bank will remain a strong presence in Charlotte.
N.C. Sen. Bob Rucho of Matthews said he's worried that other states could try to lure Bank of America with tax incentives and other breaks. When it comes time to make a decision about headquarters, Rucho said he hopes the bank will approach legislators with any concerns and give them a chance to address them.
"In essence, we need to be brought up to speed," he said. "We need them to let us know what their status is."
Congressman Watt, asked about the possibility the bank could move to Boston, said he didn't think there was "any rationale for them moving to Boston."
"I'd be more concerned about them evaluating the merits of New York than Boston," he added.
Job losses insignificant
It's difficult to predict the effects of such a move, because there aren't a lot of exact comparisons. But most examples indicate that the effect on rank-and-file workers is negligible.
When Charlotte lost Wachovia's headquarters last year, it was a slap in the face to a city that defines itself by banking. The job cuts, however, have netted about 500, leaving about 19,500 Charlotte positions. Wells Fargo, which bought the bank, has even said it expects to add jobs here.
But that change wasn't strictly a headquarters move; that was one company being bought by another.
One of the best-known examples of uprooting headquarters is Boeing, which moved from Seattle to Chicago in 2001. The company wanted to make a statement about how it had expanded beyond just building airplanes and into fields like aerospace. It also wanted to be in a location that was more central to all of its divisions, after spreading across the country.
A net of about 150 employees, all in corporate functions, were moved, said spokesman John Dern. An additional 70,000 remained in the Seattle area.
Another manufacturer, Goodrich, decided to move its headquarters from Richfield, Ohio, to Charlotte in 1998, though that decision came only after Goodrich bought a Charlotte-based company. At the time, Goodrich said that about 150 jobs would be lost as the companies consolidated headquarters - a tiny fraction of the combined 27,000 total workers at the time. The Ohio-based manufacturing employees were not affected.
But the move to Charlotte was "very emotional," spokeswoman Laurie Tardif said. Goodrich was founded in nearby Akron, Ohio, in 1870 and was "a source of pride."
There was also an effect on company philanthropy in the Akron/Richfield area.
"With our headquarters moving here, our community involvement was now focused here as well," Tardif said.
Tax hit would be small
Although the bank contributes a major portion of local property tax revenues, Mecklenburg County tax officials say they're not that worried. Even if Bank of America declared a new home base, it would still contribute millions in property taxes because its buildings would still be here.
A chorus of local officials see Bank of America entrenched here because of its vast business operations, deep talent pool and relatively low cost of doing business
The bank occupies about 5.5million square feet of office space in the Charlotte area, predominantly in buildings it owns, said Peter Conway, managing partner at Trinity Partners, which handles leasing for Bank of America Plaza.
For the year ending June 30, the bank paid about $8.3 million in property taxes, making it the county's No. 2 taxpayer behind Duke Energy, whose taxes come to is $14.6 million, county tax collector Neal Dixon said.
The buildings Bank of America owns, valued at $979 million, could be assessed for less if they sat vacant, which is unlikely, Dixon said. The county could lose some revenue from business personal property if the bank moves some employees, although that isn't likely to be significant, Dixon said.
He said not much has changed since Charlotte lost the Wachovia headquarters last year. That bank was still the No. 3 taxpayer last fiscal year at $7.3 million, Dixon said.
The financial-services sector accounts for the largest chunk of Mecklenburg's private-sector payroll, paying nearly $5.2 billion to almost 52,000 employees last year, government data show.
Bank of America makes up almost 30 percent of the sector's workforce. It's unclear how much of the payroll the bank dominates, but if it's proportional, it would be almost $1.5 billion.
Bank of America also pays corporate income taxes, state taxes based on how much a company earns. The N.C. Department of Revenue declined to disclose the amount the bank pays.
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Sources: McClatchy Newspapers, Charlotte Observer, WCNC, MSNBC, Wall Street Journal, Huffington Post, Google Maps
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