Apparently Bank of America has totally given up on winning hearts and minds.Because according the L.A. Times, the embattled bank is cutting off credit to small businesses in droves — maybe even in the hundreds of thousands.
Take, for instance, Babak Zahabizadeh, the owner of a Burbank, California messaging service. He was told in a letter that he needed to pay off his $96,000 loan by January 25th or (another option) he could pay it off in 2 years at a 12% interest rate. That would make his payment 10 times his current payment.
“I was like, ‘Dude, you’re calling a guy who’s barely surviving!’ ” said Zahabizadeh. “My final word was that I can double my payment — but not triple or quadruple it. I told them if they apply too much pressure they’re going to push me into bankruptcy.”
Zahabizadeh said he was not notified beforehand of the changes to his loan. Bank of America, on the other hand, said they started informing affected customers as early as 2010.
Bank analysts told the L.A. Times that Bank of America’s move was a strange one as most of its peers are pushing loans to small businesses. They posit that this is because Bank of America was slower than others to begin tightening lending standards immediately after the financial crises.
All that aside, this story simply looks awful. And it looks even worse in the midst of a series of recent Bank of America fails:
- There was that story about BofA harassing a little old lady about her deceased husband’s debt.
- There was the $335 million they agreed to pay out to settle a Department of Justice suit against Countrywide (Countrywide was discriminating against black and Latino clients by forcing them to pay higher rates).
- And, of course, the 22 year old who protested BofA’s proposed debit card fees by cutting up her card on video.