Bank of America Flag Controversy Begins to Cost It Accounts

Last week, a Bank of America branch in Gaffney, SC removed American flags from an adjacent sidewalk, concerned, Branch Manager Brandy Tate said, that some might be offended by the flags. The flags were placed there as part of a funeral procession for Marine Lance Cpl. Chris Fowlkes. Fowlkes died Sept. 10th in a German hospital of injuries suffered in Afghanistan the previous week from an IED.

The first thing I'd have to say about the Bank of America flag scandal is that, if the display of an American flag would offend people living in America, that is a sad state of affairs as far as I am concerned. The bank, located at 1602 West Floyd Baker Blvd. in Gaffney, returned the flags for an initial funeral procession on last Wednesday, then again for the actual funeral that Friday.

In the wake of the furor over that Bank of America branch removing the flaqs, the Cherokee County Council has decided to close its accounts with Bank of America. B of A earlier said that the removal of the flags occurred due to a "breakdown in communications," but that reasoning didn't fly (no pun intended) with the Council.

One has to wonder what the communications were. Perhaps there is some overarching policy about flags in front of Bank of America branches, but these were American flags. This could be the result of the branch manager being overzealous in following a particular B of A policy. Here's where some common sense would need to be used (ahem).

With regards to the Bank of America flag controversy, the company issued an apology last week, saying “We want to ensure the community knows how deeply proud we are of the men and women who have sacrificed so much in service to our country. The bank does fly the American Flag at our locations throughout the country and flags were displayed in front of our banking center in Gaffney the evening prior to our dedicated Marine returning home. We deeply apologize for any misunderstandings.“

It's obvious the Bank of America flag controversy isn't going to die out anytime soon. Bank of America isn't on my list of favorite banks simply because its fees are higher and they offer less than smaller banks do. This just adds still more reason to avoid the corporate giant.

Irony: FDIC Needs a Bailout, From Banks

How's this for irony? The Federal Deposit Insurance Corporation, which comes into play when a bank fails and insures the funds of the customers of said bank, may be requesting its own bailout, from banks.

The New York Times says that the FDIC is running out of cash, because of the wave of bank failures since the recession began. According to the report, regulators are seriously considering a plan to have the nation’s healthy banks lend them billions.

The FDIC normally gets its funds from assessments on insured banks, and interest on U.S. Government securities it holds. Those funds are running out because of the sheer number of bank failures, however.

The alternatives for the FDIC are tapping an existing $100 billion credit line to the Treasury, which they need no approval to do, or another across-the-board emergency assessment on banks, as opposed to the loaned funds.

However, relations between the FDIC and the Treasury are strained, at best, so analysts believe the likelihood of accessing the credit line to be slim to none.

The current tally shows that since January the FDIC has had to seize 94 failing banks. Its cash balance now stands at about $10 billion, or about 1/3 its size at the start of the year. That's despite a special assessment imposed on banks a few months ago to keep the fund afloat.

A 1991 law during the prior "Savings and Loan" crisis is what would enable this sort of borrowing from healthy banks. The banks receive bonds from the government at an interest rate that would be set by the Treasury secretary and ultimately would be paid by the rest of the industry; those bonds are able to be listed an asset on the financials of the lending banks.