By Tara Steele of AGBeat
As Bank of America is named as the bank with the most borrower complaints, their CEO sees a 70 percent increase in his pay in the last year – what is going on here?
Bank of America – most complained about lender
According to the U.S. Consumer Finance Protection Bureau (CFPB), Bank of America had the most consumer complaints of all banks in a recent report. Bank of America services roughly 15 percent of all u.S. loans, yet accounted for 30 percent of all mortgage complaints, primarily regarding their handling of loan modifications, debt collection and foreclosures, and customer service.
The bank and several analysts point to their acquisition of Countrywide to their demise, as the leader of subprime loans, and they also point out that the CFPB reveals that 98 percent of complaints have been resolved.
Conversely, Wells Fargo ranked as the least complained about lender, accounting for only 16 percent of all mortgage complaints, meanwhile servicing 21.5 percent of all American loans. Most of their complaints involved loan modifications and foreclosures, as did the majority of other banks with flailing brand reputations.
Meanwhile CEO gets a 70 percent pay increase?
Since the 2008 acquisition of Countrywide, the bank has lost tens of billions of dollars on those loans and has had to foreclose on many, many homes for nonpayment. Many point to Countrywide as the bane of Bank of America’s existence, but even so, the overall brand has had 15,136 complaints recorded by the CFPB since December 2011.
Meanwhile, according to The Charlotte Observer, Bank of America CEO Brian Moynihan was awarded $12 million in base salary, stock awards and other compensation for his 2012 performance, representing a 70 percent jump from the year prior when he was awarded $7 million in total compensation.
In a filing with the Securities and Exchange Commission (SEC), the increase is based on improved profit margins and progress toward resolving mortgage-related problems. In other words, Bank of America’s books are improving, so Moynihan is paid based on performance.
Interestingly, he’s not even the top paid executive at the bank, as Co-Chief Operating Officer Thomas Montag, was paid $14.5 million in total compensation in 2012. Additionally, he’s not even the top paid bank CEO, as The Observer reports that Wells Fargo CEO John Stumpf made $22.8 million and JPMorgan Chase’s Jamie Dimon made $18.7 million, while Citigroup CEO Michael Corbat made $12.4 million.
So why the disconnect?
Bank executives are paid more when the bank meets certain targets, and less when they don’t, and customer complaints do not factor in to the equation, even though some believe it should. The CFPB is still a young organization, so the impact of the government more closely monitoring consumer problems may eventually become a part of executives’ pay structure, but right now it is not associated.