The 2008 monetary emergency had a devastating consequence on Bank of America
Stakes of the bank were exchanged for as low as $2.53 ,in 2009 and net revenue lowered from an ecstasy of $21 billion in 2006, to just $4 billion in 2008.
“Bank of America was one reason why much of the investing public and consumers and government lost faith and trust in banking,” recollected Mike Mayo, a bank analyst at Wells Fargo. “If the government did not intervene for Bank of America and the other banks, Bank of America would have failed.”
Fast forward to today, BofA is prospering despite problems over inflation and the dangers of a feasible recession. The bank documented a net revenue of $31.9 billion in 2021, described in relation with just $4 billion in 2008.
“As the rates have gone up and if the recession is shallow, then we’re going to see widening spreads and the ability of Bank of America to have significant earnings from net interest income,” declared Kenneth Leon, a research director from CFRA Research. “This is unique to the banking industry and Bank of America being one of the largest banks, stands to benefit the most.”
The hard-learned lessons from the economic situation have also led BofA to experience substantial differences, authorizing it to achieve its job as the bank with the second-largest total aid in the United States. JP Morgan is still comfortably forward as the biggest bank in the U.S. based on total assets.
“The big change at Bank of America is that they have gone from irresponsible growth to responsible growth,” said Mayo.
A more conventional lending criterion is just one illustration of the bank’s purpose for bearable development.
“One key aspect of Bank of America’s responsible growth is to say no and no more often,” explained Mayo. “So that when they say yes, it results in a lot more growth that’s sustainable, responsible and better for reputation.”