Wall Street Wobbles as Occupy Wall Street Marches On

With the Occupy Wall Street movement now one month old and continuing to rattle workers in the financial industry around the world, a few big financial brands are being rattled independent of placard-carrying protesters in their midst.

Goldman Sachs lost $428 million in its latest quarterly earnings report, its second quarterly loss ever.

Citigroup has agreed to pay $285 million to settle SEC charges that it misled investors related to its mortgage businesses.

And Bank of America can't bank on being Number 1 anymore, as BofA cedes top spot to JPMorgan Chase this week.

While Citi is happy to put the mortgage mess behind it by paying a fine, Goldman's wobble and Bank of America's slide are raising eyebrows.

Maybe it signals the end of the "bigger is better" era. Or maybe it just means that even banks need to eat their humble pie once in a while.

Based on reporting assets of $2.22 trillion on Tuesday, Bank of America executives are no doubt dismayed to drop to second place behind JPMorgan Chase, with $2.29 trillion in assets. The bank also lags behind JPMorgan Chase in its total deposits and the number of branches, according to the New York Times.

Mike Mayo, a bank analyst with Credit Agricole Securities, told the New York Times that there is more to the Bank of America numbers than meets the eye. "There's been a huge philosophical change in who they want to be. This is a milestone that marks the end of a two-decade-long period during which they aspired and eventually became the largest bank." 

Indeed, analysts seemed to agree that the numbers reflect a different strategy honed by Bank of America's CEO, Brian T. Moynihan, who took over from Ken Lewis in January 2010. Lewis famously grew the bank through such acquisitions as Countrywide Financial and Merrill Lynch, only to see it fall prey to the financial meltdown. Bank of America, in fact, needed two federal bailouts to remain afloat.

While downsizing may make financial sense, it still appears to be a tumble from grace for a brand that arguably became the best-known bank in the world. After all, with a name like Bank of America, and a stylized version of the American flag for a logo, this is a brand that had a certain dominant presence. Bank of America ATMs seemed to pop up on every street corner as the bank touted its technological advantage of envelope-free deposits and pioneered savings through "rounding up" debit card purchases.

But expansion created a drain on the bank. Most of its lines of businesses, all except wealth management, have declined from a year ago and it has been selling off assets instead of making acquisitions. The Countrywide Financial acquisition is still an albatross around the bank's neck and its mortgage lending operation is in trouble. Bank of America announced it is eliminating at least 30,000 jobs over the next three years. The bank's market capitalization is less than JPMorgan Chase, Citigroup, and Wells Fargo.

Most recently, Bank of America was subject to bad press, consumer anger and even ridicule when it became the first major bank to announce it would levy a fee on its customers' debit card usage. A U.S. senator even urged Bank of America customers to switch banks. While other banks said they would consider a similar move, Bank of America took the brunt of the criticism.

So today, Bank of America is shrinking, and as it drops more assets, it will become smaller still. Bruce R. Thompson, the bank's CFO, told the Times, "We're not focused on the size of the balance sheet, what we're focused on is getting the balance sheet that's best for our customers and best for us." 

Executives at Wall Street's other venerable brands including Goldman and Citigroup are not only occupied, but preoccupied with how to keep their brands' value from suffering any more damage. From Main Street to Wall Street, clearly, a change is going to keep coming.

[Image via Scott Lynch/Flickr]