October 13, 2011
“The Purpose of Banking”
…as prepared for delivery…
…introduction given by Geri Thomas, Bank of America Global Diversity and Inclusion executive and Georgia market president…
Thank you, Geri. I appreciate your kind words… your leadership here in Georgia… and all you do to help me keep diversity at the heart of everything we do.
I also want to recognize all of my Bank of America teammates in the room this morning. The job they do in this community makes me proud.
It’s great to be here this morning with all of you. I just want to recognize again the hard work of Linda Glass who helped my team in so many ways to prepare for this great event. How about the Walker School Jazz Band? Thanks for being here and not at school today!
I’d like to recognize all the leaders and members of the Atlanta Rotary Club who do so much to drive economic growth in this city and region… for supporting a business culture that demands the highest standards of integrity from its members… and for inviting me to share this morning with you. It’s an honor.
I also want to mention briefly how important it is that Bank of America is a part of this community. We have partnerships with so many of the companies represented in this room and we value as customers many of you here today.
We are proud to have some 7,000 teammates in the metro area. We have extended nearly $3 billion in loans to companies across this state, and made another $1 billion in loan commitments to state and local governments, schools, transit and other public institutions.
Our history in this state extends back more than a hundred years… to the founding of the Citizens and Southern Bank of Georgia in 1906 by Mills B. Lane. Mr. Lane’s commitment to serving customers… building a strong business for shareholders… and supporting the communities his bank served… is an important part of the legacy on which Bank of America stands today.
So while I am pleased to be here as a guest of your city, Bank of America is right at home here in Atlanta.
We’re here this morning for fellowship… for making new friendships, and renewing old ones… and to talk about how the foundations of faith… our purpose, our values, our sense of moral integrity… shape our approach to doing business.
After the worst economic crisis and recession in generations… and with an economy that is still slowly recovering, and that is leaving far too many Americans behind… it’s a good time to ask… and to try to answer… the most important questions about why we do what we do. Let me frame some of these questions in terms of the roles played by a public company — a financial services company in particular — in our society and the purposes they fulfill.
I’ll start with a comment from a man well-known in this community certainly; in many respects a global icon, Roberto Goizueta of Coca Cola. At a gathering in Chicago some years back, Roberto spoke of the role of business in society in simple terms:
“We, in business, do have a calling. We have a calling to reward the confidence of those who have hired us and to build something lasting and good in the process.”
That simple formula is not a bad code to adopt. Today, I will build on that idea and address the following issues:
What is the purpose of financial services?
What core values should drive the financial services industry?
How can we provide these vital services in ways that simultaneously serve the needs of customers, shareholders and the general economic recovery?
The economic crisis of a few years ago and its aftermath have brought wrenching change to a financial services industry that badly needed it. Financial services firms across the country have had to adjust. For the survivors, fundamental changes in the needs of customers and the competitive and regulatory environment have forced a close look at how we answer these important questions.
The most simple and clarifying question we can ask of ourselves may be the most important, and the hardest to answer: What is the right thing to do?
This is what I’d like to talk about this morning. For the many challenges we face, what is the right thing to do? What purpose and values guide us in trying to discern the right path, the right business decision, the right balance for all our stakeholders?
We are attempting to answer these questions, re-shape our company and support all those we serve by going back to the core values and defining purpose that have provided a strong foundation for our company and industry for more than 200 years. We have accomplished much, and have much more to do… and we are working hand in hand with customers, business partners and local leaders here in Atlanta to achieve these important, shared goals.
Purpose and Core Values
The values that I grew up in a Catholic family with were reinforced at Brown and Notre Dame, where I went to school… and by the businesspeople who were my mentors early in my career.
One of the most important lessons was that difficult decisions must be grounded within the broader ramifications that those decisions will have in the world around us. That the best decisions are the ones that go beyond our own narrow self-interest. That we have to be responsible for the full effects of our decisions and the influence they have on people, the economy and society.
This is all about values and ethics… and the fact that they are important… not just one day a week, buy every day, in all we do, in business and in life.
I remember a professor at Notre Dame, where I went to law school… Bill Rhodes. Professor Rhodes taught jurisprudence. He’d have us debate all the expected legal issues related to a subject. But he also would press us to reduce complexity of legal rights and wrongs to the simple notion of what’s the right thing to do. He would urge us to not let sophisticated legal theories cloud our common sense. He encouraged us to balance legal judgments with moral and ethical judgments. That’s an important skill to have in today’s world. Maybe the most important skill.
When I became CEO of Bank of America, one of the first things I thought we needed to do was to put a renewed focus on the core purpose and values of the company. We were embarking on a transformation — our goal was (and is) to make our company less complex, to sharpen our focus on customers and clients and get out of activities that could distract from that. We want every ounce of capital, talent and energy to be directed toward helping customers realize their opportunities. I thought it was important that we re-affirmed as a team what we were all working for… what we were trying to accomplish and why… and what were the core values that that formed the foundation on which we would build.
So the purpose of our company is this: “To make opportunity possible for our customers and clients at every stage of their financial lives.” What we have built is a company that can do that better than anyone else. It’s simple and clear and cuts right to the heart of what we’re all about, every day.
We also tried to be very simple and clear in identifying the core values that guide our work and decisions. Certainly, many companies represented here today have a similar set of values. Ours are:
Deliver for our customers, clients and shareholders
Trust in our team
Embrace the power of our people
These are the values and the purpose that guide and shape every debate and decision we have about how to run our company, pursue opportunities or face up to challenges in the business.
Doing the right thing for our customers
Laying out a corporate purpose and core values is the easy part — just write it down. But how do you live those values? Applying them in a way that balances the needs of all your stakeholders requires leadership and commitment throughout the company.
Consider how we serve individual customers. The most important guiding principle we have is to be simple, clear, and transparent in what we do.
We have more than 58 million retail customers; ours is a relationship and service business. We pay close attention to what customers tell us.
What they tell us is that they want us to be predictable, clear, and transparent with them. And they want to be in control. They want choice. That is our fundamental approach to the customer: predictability, transparency, and choice.
So we spend a lot of time and thought on simplifying our products… making them easier for customers to understand and use… and providing one-page statements for many of our most common products that we call “Clarity Commitments.” These statements summarize briefly, in easy to understand plain English, the features and obligations of the product or service… be it a checking or savings account, credit card or home loan.
We have demonstrated our commitment to choice and transparency in several other ways. That’s why we were an industry leader in ending debit card overdraft fees. Customers felt that they were losing control over their own funds by the way those fees were charged, leading to the so-called $35 cup of coffee. We agreed. So we stopped — before the government took action across the industry. If a customer needs emergency access to cash, we offer that service at the ATM. The customer chooses to pay the fee on the spot, and the fee is clear at the ATM.
Our recent debit card decision is based on the same principles of simplicity, transparency and choice.
Customers who have a broader relationship with us will be able to use their debit cards without paying the fee. Examples include customers who have a mortgage or investments with us, those who work with a Merrill Lynch or U.S. Trust financial advisor, and many others. Customers also can choose to pay for purchases by using cash from an ATM, a check or a credit card.
We believe, again, that being transparent, fair, and keeping the customer in control is the way our customers want to do business.
Doing the right thing for the local community and economy
Beyond treating individual customers fairly, a bank has a fundamental obligation to help make opportunity possible in the communities it serves. We are doing this here in Atlanta, and across Georgia. I’ll be brief here, but I want to share with you just a sampling of what we’ve been up to in this community.
More than $4 billion last year in lending for small businesses, affordable housing, consumer lending and economic development
17,000 hours of volunteer service in Georgia communities in the first half of the year
$9 million in support to Georgia non-profits…
Over the past several years, we have provided significant support to some of the city’s most important anchor institutions… The National Center for Civil and Human Rights, The United Way of Metropolitan Atlanta, Grady Hospital, the East Lake Foundation and The Woodruff Arts Center.
This represents just a small sampling of the work that our teammates here in Atlanta are doing in this community every day to help drive economic growth and make opportunity possible for neighbors and communities. This is important work. It is the reason we’re here.
I want to say a few words in particular about the work we’re doing to rebuild the mortgage markets, and to help resolve the foreclosure crisis that is so challenging here in Georgia and across the country. The problem of delinquent mortgages and home values is a stubborn economic problem our country faces today, and has a tremendously damaging impact on families and communities. Helping to solve it is on of our top priorities.
We are making progress. U.S. banks have completed about 4 million mortgage modifications since 2008 to help customers remain in their homes. More than 900,000 of those are Bank of America’s, and we are now making about one in three modifications in the country. We have modified 37,000 home loans right here in Georgia.
We understand that homeowners across America are having a hard time, but they want to honor their commitments to the best of their ability. We’re working hard to help those families restructure their loans in a way that enables them to do that.
Earlier this month, we announced our plans to expand our community outreach for distressed homeowners across the country. This year, we will open four more Regional Customers Assistance Centers, including one in downtown Atlanta this fall, where distressed mortgage customers can meet face to face with bank employees who will get them started in the loan modification process. We will host dozens of Partnership Outreach events with nonprofit partners such as HOPE Now and the Neighborhood Assistance Corporation of America. And we will host more Home Preservation events, like the one we had last month at the Georgia World Congress Center and back in April at AmericasMart. We need partners throughout the community to work with us to create solutions.
Helping customers remain in their homes where possible is our goal. When that is not enough, however, we have a difficult job to do for investors — the GSEs, the asset management funds, the pension funds investing our money. We have to take possession and resell the property. The majority of initial volume and backlog of customers seeking solutions have been evaluated for the many available programs. We’re reaching a point where some customers will be dealing with the reality that despite the myriad programs and our best efforts, foreclosure is unavoidable.
Foreclosure is not only the worst outcome for a customer, it’s also the worst financial outcome for the servicer and the owner of the mortgage, and is always the option of last resort. When a sustainable modification is not possible, we work to help the customer make a dignified transition to new housing.
It is important to our economic recovery that the housing market stabilize. That will require moving through the modification and foreclosure process quickly, clearing vacant properties, helping those who need assistance in transition, and moving forward.
We are now five years into the housing downturn… prices peaked in the second half of 2006… the worst is behind us, but we know that we still have a long way to go before the U.S. housing market fully recovers… we know that in many areas of the country, like this one, the pain is still very acute. Our goal — and my commitment to you — is that we will work hard, devote resources, and lead with energy and creativity to be a part of the solution for this community… and others all over America.
Strong banks, strong economies
Let me close with this thought. One of the most important obligations of a bank is to maintain its financial strength and stability, so that it is in a position to do business, lend money, create opportunity and help the economy around it grow. In other words, a strong economy requires strong banks. You can’t have one without the other.
Like every public company — including the many great ones represented in this room today — we work hard to balance the interests of our customers, the shareholders, the communities where we live and work, and our own employees. That’s what we are doing in Atlanta, across Georgia, and around the country and beyond. It is my strong belief that we can serve all those stakeholders well by providing great service to customers, which my thousands of teammates in Georgia and hundreds of thousands around the world do every single day. Great service generates a good return for those who choose to invest in our company; we can then use our earnings to build a strong capital base that we can both return to our shareholders and put to work for our customers and clients. That is our responsibility and our purpose, and we work very hard to achieve it.
The financial services industry helps make it possible for companies to raise capital… employ people… create opportunity. We help municipalities improve schools and build hospitals. We advise families on how to save wisely, and invest for tomorrow.
It is the solemn responsibility of everyone in our industry… just as in all business endeavors… to do our business the right way. To balance the needs of all our stakeholders with fairness and transparency… and to act according to the purpose and values that drive us.
It is up to all of us in financial services to help restore the public’s confidence in our ability to serve the core needs of our customers and our economy… to show that we believe in what we do for the right reasons… to continue to return to our profession a culture of moderation… of humility… and of service to all our customers and clients.
I was at an event in Boston earlier this week, and heard a performance by the Irish tenor, Ronan Tynan. He sang a song called “Isle of Hope.” He said that whenever he sings that song, people think he is singing about Ireland. But in fact, he said, he is singing about America — about the hope and opportunity that we have in this country to build a better future together.
Our role at Bank of America is to help make that opportunity possible… for our customers, our shareholders and the communities we serve.
And that is what we pledge to do.
I’d like to thank you for your kind attention this morning.
Published on BRAND PR WIRE
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