How Bank of America found itself facing repeated backlash for its coronavirus response even as banks try to paint themselves as heroes of the crisis

• Bank of America has found itself in the middle of not one, but two, social media storms in recent weeks as the novel coronavirus has swept across the US.
• The second-largest US bank by customer assets has also had to deal with employees upset by the firm's handling of communications related to roles and responsibilities during the pandemic.
• And a CNBC report Wednesday evening suggests senior trading execs pressured traders to come into the office, despite policies that by then allowed them to work from home.
• The dust ups were largely the result of miscommunications that show how tricky it can be for lenders to navigate interests of various stakeholders, according to a person with knowledge of the bank's response.
• Visit BI Prime for more stories.

The largest US banks have spent years trying to erase the public's memory of the 2008 financial crisis, when poor underwriting standards and Wall Street operations run amok brought down the global economy.

The ensuing recession made the banking sector into one almost universally hated by the general public, and spurred lenders to take dramatic steps to improve their reputation. Goldman Sachs started a small business incubator and Citigroup began to take a stand on social issues, to name just two examples.

But over the last few weeks, as the coronavirus pandemic has swept across America and pushed millions of regular people into financial distress, one bank has found that it's not so easy to shake the memory of the financial crisis, or to position itself as a helping hand, despite years of image rehabilitation.

Bank of America has found itself in the middle of not one, but two, social media storms in recent weeks. The second-largest bank in the US by customer assets has also had to deal with employees disgruntled over the firm's handling of work-from-home policies and a decision to transition some staff into roles helping customers navigate financial difficulties.

It's also had to contend with leaked, unfiltered remarks from top trading execs about the firm's working-from-home conditions. On Wednesday, CNBC reported that it obtained a March 25 recording of Fabrizio Gallo, the firm's global head of equities, discussing on a call the stakes for staying home during an unprecedented time for markets.

To be sure, it can be difficult for large companies to quickly adapt to fast-moving events, and Bank of America isn't alone among the big banks in attracting negative attention.

Citigroup isn't offering the small business lending program yet. JPMorgan has received criticism for its trader work-from-home policy after a media report suggested as many as 20 traders had tested positive for the COVID-19 because it had been slow to send people home or to backup sites.

And Goldman Sachs CEO David Solomon has provoked grumbling by taking a 19% raise for his 2019 work in the midst of an unprecedented economic slowdown, and ordering two new private jets for the company.

And yet Bank of America has consistently found itself on the defensive.

The bank became a punching bag after it decided to require applicants for a new government-backed small business lending program to have a loan product with the bank, as well as a small business checking account. That meant that after the bank went live with its website at 9 a.m., some people were getting rejected for the Paycheck Protection Program (PPP).

Dozens of people took to Twitter to complain about its policies, with some hearkening back to the 2008 financial crisis and the bailout money that Bank of America and other banks took (and eventually repaid with interest). It even elicited a post from Florida Senator Marco Rubio.

By early afternoon last Friday, the hashtags #PPPloans and #bankofamerica were trending on Twitter.

Rubio called out the bank on Twitter that day, saying the policy was not part of the law that Congress drafted and subsequently passed.

"They should drop it," he tweeted. "This money is 100% guaranteed by fed govt."

These dust ups were largely the result of miscommunications that show how tricky it can be for banks to navigate competing interests of various stakeholders, according to a person with knowledge of the bank's response.

Opening the floodgates

Bank of America CEO Brian Moynihan had tried to head off the outrage, speaking to CNBC at 10 a.m. that day to explain that the bank was rolling out the program in stages, focusing on borrowers first and then taking on deposit-account customers with no borrowing relationship. He explained the decision in terms of managing the expected influx of applicants, and encouraged entrepreneurs with loans from other banks to try them first.

"We are prioritizing," Moynihan said. "We have a million borrowing customers that we're trying to get through the system first, then our second priority will be the customers who have the core operating account with us but don't borrow anywhere."

He added: "My advice to customers is if you borrow from us, you can apply on the application. If you have all your relationship with us, but don't borrow, the relationship managers will handle that."

Bankers and analysts have justified the policy by saying it was easier and quicker to get loans to existing customers, and also safer in that they already have data on those customers.

And yet many of Bank of America's customers don't watch the business network, or didn't catch the interview. The bank quickly moved to stage two last Saturday and said it would open up the loans to more applicants, regardless of whether they had a prior relationship with the bank. The bank has now received 250,000 applications asking for $40 billion in loans.

The backlash, which made it into news reports, was likely in part because Bank of America was first to go live with the application, making it a target for small business owners who were frustrated with a process that saw the Trump administration give guidance to banks just the day before the program began.

Nonetheless, Bank of America is still excluding some clients from applying for the federal relief.

The Charlotte, North Carolina-based firm said in an email to wealth-management employees that it was working on a process for clients with small business investment, or sweep, accounts to apply to the PPP.

On Saturday, the firm was not yet accepting those applications, but it advised staffers on how to prepare their clients, according to the memo reviewed by Business Insider.

In other words, at the time if those customers only have relationships with the wealth management division and not a deposit account with Bank of America, they were locked out of the process. Those clients can begin applying through the program on April 9, a company spokesperson said.

"These clients meet the criteria of having a deposit account with the company, however because they access these accounts through a different system, additional steps needed to be taken to connect that system to the application process," he said, referring to clients with working-capital management, business investment, or endowment managed accounts opened by February 15.

The spokesperson also said many Merrill Lynch small business owner clients with Bank of America banking relationships have already applied for a loan through its PPP application.

The blowback surrounding the small business program comes after several years of mostly positive reviews for Moynihan's ability to put the bank on solid footing in the post-crisis years.

In January, Moynihan appeared on the main stage at the World Economic Forum in Davos, Switzerland for a panel called "Stakeholder Capitalism: What Is Required from Corporate Leadership?"

His appearance alongside other large US bank chiefs raising their voices in support of sustainable finance initiatives served in using the Davos event to burnish their reputations.

Bank of American has also garnered attention for its leadership in green bonds, among other ESG initiatives. Moynihan also used the CNBC interview to say the firm would not lay off employees this year during the crisis spurred by COVID-19's spread, following Morgan Stanley and Citi in making the pronouncement.

"I think he's showing good leadership," said Wells Fargo analyst Mike Mayo, who initially called for Moynihan's firing in the years after the crisis and opposed a move to give Moynihan the chairman's title, which he ultimately got. "He's being very visible."

Managing the crisis response

In addition to Moynihan, Bank of America's crisis response has been led by other senior members of his management team.

Anne Finucane, the vice chairman who was global strategy and marketing chief coming out of the crisis, runs a government affairs team that has been in contact with the Trump administration and other political leaders around the country. Andrea Smith, Bank of America's chief administrative officer, is leading business continuity efforts and external communications among a host of other responsibilities. Both execs sit on Bank of America's management committee.

But decision-making for the bank's business lines were made at the unit level as opposed to being handed down from the top.

Bank of America's pubic relations foibles haven't been reserved for the small business lending program.

Almost two weeks prior, the bank drew heat after California Governor Gavin Newsom said March 25 that the lender was the only one among dozens that had not agreed to his demands for a 90-day mortgage payment holiday. Newsom's comments sparked a backlash on Twitter, and led the bank to take to the social media platform to clarify its position.

"@JKCorden @yashar we saw your tweets and wanted you to know that we are deferring mortgage payments on a monthly basis until the crisis is over. It could be up to 90 days or longer. We'll defer for the duration," the bank said, tagging the journalist Yashar Ali and comedian James Corden.

That too was the result of a miscommunication. A Bank of America spokesman said the governor was mistaken, echoing a comment the bank shared at the time. The bank's policy is to give 90 days of relief or until the crisis is over. It's now given payment deferrals to more than 700,000 customers of its mortgage, auto, credit card, or small business products.

Working from home, or not

While those are examples of external stumbles, the bank's internal policies have also sparked grumbling from employees who felt that it was moving too slowly, or failing to show the kind of concern they thought was necessary.

The bank was slow to develop a work-from-home policy, waiting until March 18 to communicate a broad stance for its New York office, Business Insider previously reported. The bank eventually told staff they would rotate working remotely in two-week shifts.

Some employees criticized that response, saying changes to protect workers have come too slowly, according to media reports and accounts from insiders at the bank.

Even then, traders and their support staff, the vast majority of which work in the Manhattan headquarters at One Bryant Park, were required to report to work.

That made the bank one of the last holdouts.

It wasn't until March 23 that Bank of America told traders that they would be allowed to execute trades from home. Prior to that, traders could work from home but had to call into the office to execute trades, making it nearly impossible for many traders to avoid the office. The policy began the next day.

Gallo's call came the next day, according to CNBC, which suggests that there was still pressure for traders to come into the office even though they could now execute from home.

"At some point in time, one has to make a decision," Gallo said, according to CNBC's report. "And the reason why it's called critical function is because we have a critical requirement by senior-ups to provide proper and orderly markets."

"Of course, we are going to entertain special cases but not the 'I don't feel comfortable, sorry.' It doesn't work that way over the long term. And we cannot provide proper and orderly markets if 99% of the population decides they don't feel comfortable," he said, according to CNBC.

From managing wealth to answering calls

Bank of America has also irritated some employees in its sprawling wealth management unit, which houses some 17,000 advisers overseeing the wealth of millions of Americans.

The lender took about 3,000 employees, including some 650 financial advisers trainees, and asked them to shift into temporary roles to field an onslaught of calls from confused and worried customers, Business Insider previously reported.

In a statement acknowledging the shift, the bank put a honorable face on the assignment, saying that "their role in supporting our company and clients from other lines of business is admirable." Part of the internal messaging was poorly received as it suggested employees had volunteered for the shift, one adviser told Business Insider.

The firm has seen an "outpouring of positive feedback" from advisers-in-training who were asked to fill those roles temporarily, a company spokesperson said.

"Hundreds of these advisors, who are in the early stages of the Merrill training program, have written in to express how proud they are to play this important role," the spokesperson said. "Several others, who had not been asked to shift to these new responsibilities, have volunteered to do so should additional need arise."

This week, President Donald Trump showered Moynihan with praise from the White House for the firm's role in handling relief for small businesses. The bank chief had been "fantastic," Trump said from the Roosevelt Room, and Bank of America was "incredible."

"We are prioritizing our work to make sure we serve the clients who have a money relationship with us and a deposit relationship with us," Moynihan said in the Tuesday afternoon briefing that other US bank leaders attended. "And that is keeping us plenty busy, but we're here to continue to support this effort."

The requirement that a #SmallBusiness not just have a business account but also a loan or credit card is NOT in the law we wrote & passed or in the regulations.

This is a @BankofAmerica requirement not a govt one.

They should drop it. This money is 100% guaranteed by fed govt. pic.twitter.com/cG2i9eqi7k

- Marco Rubio (@marcorubio) April 3, 2020

@JKCorden @yashar we saw your tweets and wanted you to know that we are deferring mortgage payments on a monthly basis until the crisis is over. It could be up to 90 days or longer. We'll defer for the duration.

- Bank of America News (@BofA_News) March 25, 2020