We already tagged the now infamous $5 debit card fee as one of worst screw ups in finance in 2011.
We saw an elevated level of account closings in the quarter, elevated from last year fourth quarter, but frankly, by, I’d say, 20% versus last year fourth quarter ’10 to ’11. But from ’09, it’s actually still down in the fourth quarter of ’11 versus fourth quarter of ’09 by 20-odd percent. So you saw that, so there’s no question, and that’s why we pulled it back. And once we pulled it back, you saw that mitigate, and that will carry us in the first quarter. [emphasis added]
Moynihan went on to say, “yes, we had some impact from the $5 debit fee. That’s why we made a decision to reverse it.”
The proposed fee led to a 20% year-over-year increase in the number of account closings. Ouch.
During the fourth quarter, Bank Of America was also a target of increased criticism from Occupy Wall Street, which also could have led to the increase in closures. But Moynihan does indicate that the rate of account closing stabilized once the firm reversed its plans for the fee.
Interestingly, he notes that the rate of closures in Q4 2011 was still lower than it was in Q4 2009. That sound good.
But if you remember back to Q4, that was when BofA was in the thick of legal investigations surrounding its acquisition of Merrill Lynch, leading to the eventual resignation of Ken Lewis on December 31, 2009.
So Moynihan is saying things might have been bad, but not as bad as when the things that led to the resignation of his predecessor were going on? That kind of thinking you want to hear from your CEO.
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