'…Add That to Our Code of Conduct': Bank of America Stock (NYSE:BAC) Notches Up After Rule Change
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A New York Post report noted that Bank of America has turned its back on a rule that allowed businesses and charities to be 'debanked.' There was a rule known as the 'reputational risk clause' built into some key federal banking regulations, which allowed banks to deny services to certain groups that engaged in behaviors that could damage the reputation of the institution providing them with banking services.
Indeed, in some cases, a supplementary rule that focused on 'religious viewpoint' was also brought into play, which hit organizations from both sides. But many banks ultimately pulled the plug on reputational risk and the viewpoint rule, believing that the rule itself was illegal. And now, Bank of America is one of those. Bank of America reps noted, 'While we have been very clear that politics is not a factor in our decisions, we received thoughtful input from a range of stakeholders and agreed it is best to explicitly add that to our Code of Conduct. Religious views are not a factor in any account closing decision. Bank of America is proud to provide services to about 120,000 non-profits associated with religious organizations around the country.'
Knock One Down, Another Takes its Place
The legal hydra that Bank of America is left to face, meanwhile, continues to fight. While Bank of America may have settled the viewpoint rule, a new problem has emerged. Western District of North Carolina federal judge Max Cogburn Jr. dismissed a motion from Bank of America to dismiss a lawsuit against it alleging that it used '…forfeited retirement plan assets to offset its own contributions.'
Cogburn noted that, while courts previously have '…come to different conclusions…' about what actually qualifies as a 'fiduciary breach' under the Employee Retirement Income Security Act, the plaintiffs in the suit had '…adequately alleged the bank breached their fiduciary duties by using Plan assets to lower new employee contributions.'
Is Bank of America a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BAC stock based on 17 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 21.04% rally in its share price over the past year, the average BAC price target of $52.60 per share implies 10.85% upside potential.
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