Accounting mistake precedes Bank of America meeting

Accounting mistake precedes Bank of America meeting

Print
Email
|

by RAD BERKY / NBC Charlotte

Bio | Email | Follow: @RadBerkywcnc

WCNC.com

Posted on April 30, 2014 at 4:55 PM

Updated Wednesday, Apr 30 at 7:13 PM

CHARLOTTE, N.C. – Bank of America, the country’s second largest bank, is scheduled to hold its annual meeting in Charlotte next week and it is likely the investors who come will not be all that happy.

The bank was all set to increase its quarterly dividend to 5 cents.  It has been at a penny since the banking crisis of 2009.
 
However, earlier this week, Bank of America admitted it had made a $4 billion dollar miscalculation.
 
Dr. John Connaughton is an investor in the bank and teaches economics at UNC-Charlotte.
 
He says, “What they did was slightly skew their capital requirements.  In other words, they indicated they had more capital than they really did.”
 
Bank of America is required by federal regulators to keep a cushion of cash and the error meant Bank of America had fallen short of the required amount.
 
“The fed said, ‘wait a minute.  Hold off.  We’re not sure that this is the only mistake on your balance sheet,’” Connaughton said.
 
Connaughton believes the bank will resubmit a request to reinstate the higher dividend.
 
“We don’t know when they will be able to do it.  It’s when the Feds are comfortable that there are no more skeletons in the B of A accounting,” he said.
 
Connaughton said whether a person is an investor or not, what happened to the Charlotte-based bank is important to everyone.
 
“When Bank of America is healthy and they are hiring, and they are doing well, a lot of folks that aren’t directly employed by B of A, they do well in addition,” said Connaughton.
 
The bank’s annual shareholder meeting is next Wednesday.
 

Print
Email
|