Bank of America history

California bank founded by A. P. Giannini (1870–1949) in San Francisco in 1904 as the Bank of Italy. The son of Italian immigrants, he established the bank with $150,000 in borrowed money in order to serve the retail immigrant community in the city. His reputation was enhanced quickly when he managed to stay open during the great earthquake and fire that struck the city in 1906, by rescuing the bank’s money, loading it in a horse-drawn vegetable cart, and taking it home with him. When other bankers refused to open their institutions after the quake, Giannini insisted on opening and extended credit to customers based on a handshake and a signature.

Not to be confused with a New York bank having the same name in the earlier part of the century, the bank remained primarily a California institution. In 1919, Giannini changed the name of the institution to BancItaly Corp. and again in 1928 put it under the umbrella of a HOLDING COMPANY called the Transamerica Corp. so that it could expand nationally. He then bought the older Bank of America in New York and adopted its name. Because of subsequent laws forbidding interstate branching passed by many states and the MCFADDEN ACT, the bank conducted almost all of its business within California, although it was aided after 1927 by the size of the state, enabling it to have one of the largest branch networks of any bank in the country. But other subsidiaries did operate on a national basis, although most of Transamerica’s activities were concentrated in western states. Giannini’s fame spread in California after making loans to the wine industry and the new MOTION PICTURE INDUSTRY in the 1920s.

Prior to World War II, the bank made great inroads into consumer lending especially, being one of the first banks to offer customers consumer loans at relatively low rates when compared to other lenders. He was among the first bankers to offer auto loans and consumer loans to small customers.

After World War II, the bank began to expand into other financial services and international banking. In the late 1940s, it was the largest bank in the country. But Transamerica was the target of many antitrust inquiries, and when the BANK HOLDING COMPANY ACT was passed in 1956 the empire was restricted to operations in California. In the mid-1960s, the Bank of America developed the Visa card, a credit card that extended revolving credit to customers, unlike the established CREDIT CARDS that demanded full payment upon billing. The bank’s forays into international banking were less successful, and it was significantly exposed by many loans to less-developed countries in the late 1970s and 1980s, becoming one of the largest single lenders to Mexico before its debt crises began. It suffered a financial and organizational crisis as a result and had to have new management installed.

In 1998, the bank agreed to merge with NationsBank of North Carolina to create the first coast-to-coast banking operation in the country. The name Bank of America remained although the merger was actually a takeover by Nations- Bank. In 2004, Bank of America acquired Fleet- Boston, creating the third-largest financial institution in the United States.