BackBank of America posts massive loss on card rule change
Bank of America posts massive loss on card rule change
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Washington: Bank of America on Tuesday reported a loss of $7.3 billion, as a result of changes to bank card transaction fees.
The company took on a goodwill impairment charge of $10.4 billion as a result of changes to card rules, wiping out what would have been a $3.1 billion profit.
Legislation recently signed by President Barack Obama including rules on the amount banks can charge firms to swipe their cards and pay for goods.
“The charge results from the limits to be placed on debit interchange fees under the financial reform legislation enacted in July 2010, which will reduce future revenues in the global card services business," the firm said.
“This change moves away from a dependence on penalty fees, which the industry had adopted over the years, and provides the customer with a better banking experience."
But the company’s CEO was upbeat, as other business areas continued to recover.
“Our results this quarter demonstrate continued traction with each customer group - consumers, businesses, and institutional investors," said chief executive officer Brian Moynihan. “Our strategy is to leave nothing to chance in our goal of doing everything we can for each of our customers."
The earnings compare to a $1billion loss in the same period last year.
Bank of America was among the hardest hit during the credit crisis. It received $45 billion in bailout funds from the federal government, and repaid the money last year.
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