The Two Souls of Bank of America

Explore how Bank of America grew from a community bank for immigrants into a global powerhouse, surviving the 1906 earthquake and the 2008 financial crisis.[INTRO]ALEX: In 1933, a struggling filmmaker named Walt Disney needed a massive loan to produce the world’s first full-length animated movie, Snow White. Every bank in Hollywood turned him down, except for one that took a 300,000-dollar gamble on a cartoon.JORDAN: Wait, are you saying the massive, corporate Bank of America is the reason we have Mickey Mouse and the Seven Dwarfs?ALEX: Exactly. But the road from helping Disney to becoming the second-largest bank in the United States is a wild ride of immigrant ambition, massive egos, and a 16-billion-dollar legal bill.JORDAN: So it’s not all fairy tales and magic kingdoms? I had a feeling there was a catch.[CHAPTER 1 - Origin]ALEX: The story actually starts in a converted saloon in San Francisco back in 1904. A man named Amadeo Pietro Giannini founded the Bank of Italy because he was tired of seeing big banks discriminate against working-class immigrants.JORDAN: A bank for the 'little guy' starting in a bar? That’s definitely not the vibe I get when I walk into a branch today.ALEX: It gets better. Two years later, the 1906 San Francisco earthquake levels the city. While every other bank’s vault was buried under rubble or too hot to open, Giannini rescued his gold, hid it under a pile of vegetables in a wagon, and drove it to the docks.JORDAN: The original 'bank run,' but with produce. Did he just start handing out cash?ALEX: Pretty much. He set up a desk made of two barrels and a wooden plank on the pier and started lending money to people to rebuild the city when no one else would. This made him a hero and set the stage for he called 'branch banking'—taking the bank to the people instead of making them come to a marble palace.JORDAN: So how does the 'Bank of Italy' become 'Bank of America'? ALEX: Giannini started gobbling up smaller banks across California, eventually merging with a Los Angeles bank in 1928. By 1930, they slapped the 'Bank of America' name on the door and began funding everything from the Golden Gate Bridge to the film industry.[CHAPTER 2 - Core Story]JORDAN: Okay, so they own California. But they’re headquartered in North Carolina now, right? How did they jump the fence to the East Coast?ALEX: That’s where the second 'soul' of the bank comes in. Fast forward to the 1980s and 90s, where a former Marine named Hugh McColl Jr. is running NationsBank in Charlotte. McColl was an acquisition machine.JORDAN: Aggressive growth, late-night deals, the whole 80s 'Wall Street' vibe?ALEX: Exactly. In 1998, McColl’s NationsBank pulled off a 62-billion-dollar 'reverse merger' with the San Francisco-based Bank of America. It was the largest bank deal in history at the time.JORDAN: Why call it a reverse merger if NationsBank was the one buying?ALEX: Because Bank of America had the better brand name, but McColl kept the power. He moved the headquarters to Charlotte and effectively turned a community-focused legend into a global corporate behemoth.JORDAN: So they were on top of the world. What could possibly go wrong?ALEX: Two words: Countrywide Financial. In 2008, as the housing market was imploding, the bank's next CEO, Ken Lewis, decided to buy the nation's largest subprime mortgage lender for 4 billion dollars.JORDAN: Let me guess—that 'bargain' wasn't actually a bargain.ALEX: It was a disaster. That one deal inherited a mountain of toxic debt and led to years of lawsuits. Then, in the same year, they bought the investment giant Merrill Lynch in a frantic weekend deal brokered by the government to stop a total economic collapse.JORDAN: That sounds like they were just collecting every fire in the neighborhood and putting them in their own basement.ALEX: That’s a perfect description. The bank nearly went under and eventually had to pay a historic 16.6-billion-dollar settlement to the Justice Department for its role in the mortgage crisis. It’s still one of the largest corporate payouts in U.S. history.[CHAPTER 3 - Why It Matters]JORDAN: Man, from a plank on the docks to a sixteen-billion-dollar fine. Where do they stand now? Are they still cleaning up the mess?ALEX: Mostly, they've moved on. A new CEO named Brian Moynihan took over in 2010 and spent a decade just stabilizing the ship. He focused on what he calls 'responsible growth' and poured billions into digital banking.JORDAN: Is that why their app is everywhere now?ALEX: Exactly. By 2022, nearly 75% of their customers were banking digitally. They’ve pivoted from being an aggressive acquirer to being a tech-focused giant that manages over a trillion dollars in assets through Merrill Lynch.JORDAN: So the 'little guy' bank is officially a member of the elite 'Big Four'. Does Giannini’s spirit still exist in there somewhere?ALEX: It’s the ultimate tension. They still market themselves as a community partner, but they are also a 'systemically important financial institution'—basically, they're 'Too Big to Fail'.JORDAN: Which basically means if they go down, we all go down.ALEX: Precisely. They are integrated into almost 10 percent of all American bank deposits.[OUTRO]JORDAN: What’s the one thing to remember about Bank of America?ALEX: It is a company with two identities: a visionary bank started for immigrants that eventually grew into an empire through the most aggressive corporate mergers in history. JORDAN: That’s Wikipodia — every story, on demand. 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