Bank of America is Freezing Accounts in New Scandal
Bank of America (NYSE:BAC) is either freezing bank accounts or closing accounts linked to Coinbase according to a number of customers in the bank’s latest scandal.
Coinbase CEO Brian Armstrong took conducted a poll after a user said their Bank of America account had been closed for no apparent reason after a 15-year run.
The Bank of America customer stated that they do Coinbase transactions directly from the bank.
“This is a war on Bitcoin & crypto”, they said on Twitter.
At the time of this publication, more than 1,400 users voted to have been affected by a similar or same occurrence.
“Closed my account with them in 2010 after 10yrs. Worst bank I ever had,” said one user.
“Following the recent lawsuits by the U.S. Securities and Exchange Commission (SEC) against major crypto players Binance and Coinbase, banking institutions have grown cautious about engaging with these firms,” says Coinpedia.
But this isn’t Bank of America’s first rodeo in violating its customers.
The Consumer Financial Protection Bureau announced Tuesday that an investigation found that Bank of America harmed hundreds of thousands of customers across multiple product lines over a period of several years through a series of illegal practices.
Bank of America is paying a whopping $250 million fine for double charging insufficient fund fees and opening new accounts without customer’s knowledge or consent.
While not everyone may be experiencing Bank of America freeze or close their bank accounts relating to crypto, it’s undoubtly a mess for those who are.
Related: How to Invest in Cryptocurrency for Beginners
Latest Bank of America News
A new study shows Bank of America is leading in market cap losses compared to its peers this year.
Dow Jones market data shows Bank of America has suffered a -$36.9 billion drop in market capitalization since March 8 of this year.
In second place is U.S. Bancorp with -$20.11 billion, followed by Truist at -$17.49 billion.
Wells Fargo earns fourth place with a market cap loss of -13.91 billion and PNC in fifth with -$8.69 billion in losses.
Regulators have said that the banking system is safe and that deposits have stabilized after record outflows across the system in the first quarter.
Many banks still posted solid first-quarter profits because they were able to charge more interest on loans than they paid to depositors, per WSJ.
However, investors and customers remain on alert.
A report in June showed that Americans pulled $472bn from big banks in the first quarter, more than the $100 billion previously reported.
The $472 billion outflow in deposits outpaced the drop that banks saw following 2008 financial crash shattering a 29-year record,” says Boston Business Journal.
Investors dumped banks after the collapse of Silicon Valley Bank and Signature Bank in March which sparked a crisis of confidence in the system and led short sellers to take advantage of the volatility.
Now banks are bracing for more turmoil heading into the third quarter this year.
Bank of America stock is down more than -11% this year-to-date.
Also Read: Analysts Make Painful Decision to Downgrade Big Banks
Largest US Banks Are Now Seeing Record Plunge in Deposits
The 25 largest US banks are now seeing a record plunge in deposits according to the latest study conducted by the Federal Reserve Economic Data (FRED).
According to the FRED data, between July 5 and the most current reading on July 26, the 25 largest U.S. banks saw a plunge of $174 billion in deposits.
Deposits at the 25-largest domestically-chartered U.S. commercial banks peaked at $11.680 trillion on April 13, 2022, according to the updated H.8 data maintained at the Federal Reserve Economic Database.
As of the most current H.8 data for the week ending on Wednesday, July 26, 2023, deposits stood at $10.709 trillion at those 25 commercial banks, a dollar decline of $970 billion and a percentage decline of 8.3 percent.
In fact, small banks have performed better than big banks in terms of inflow.
Despite all of the misleading news reports about depositors seeking out the perceived safety of the largest banks since the banking crisis in the spring, it’s actually been the smaller banks that have staged a comeback on growing deposits since the week of April 26,” says Wall Street on Parade.
“This breakdown does not give the American people a quick pulse beat on the dangers lurking in the U.S. banking system – a system that imploded in 2008 and was on its way to imploding again this spring until the Fed stepped in with another bailout program. In the span of seven weeks this spring, running from March 10 to May 1, the second, third, and fourth largest bank failures in U.S. history occurred.
In order of size, those were: First Republic Bank (May 1), Silicon Valley Bank (March 10) and Signature Bank (March 12). The largest bank failure in U.S. history, Washington Mutual, occurred in 2008 during the financial crisis.
Because there are only four domestically-chartered commercial banks in the U.S. with more than $1 trillion in deposits – JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup’s Citibank – it behooves Americans to closely monitor what is happening at these four banks, which hold such a highly concentrated share of the banking system’s deposits and assets.
That is especially true given that one of those four banks, Citigroup, blew itself up in 2008 and received the largest Fed and Treasury bailout in U.S. banking history.”
Also Read: Money Expert Warns Government May Freeze New Bank Withdrawals
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