A Domini-sponsored resolution asking Bank of America’s Board of Directors to assess the extent to which the Bank uses predatory credit card practices gained a preliminary vote of 33.38% at the company’s annual meeting. The Sisters of St. Francis of Philadelphia joined Domini as co-lead sponsors of the proposal.
Peter Skillern, executive director of the Community Reinvestment Association of North Carolina presented the proposal at the meeting and read a statement on Domini’s behalf:
Credit cards offer important benefits to society. For entrepreneurs with little or no collateral, credit cards offer a way to finance the start up of a small business. They can allow young consumers to build a credit history, making possible a mortgage one day. But somewhere along the road, something has gone terribly wrong.
Credit cards are now viewed as the enemy, locking consumers into ever-deepening cycles of debt through excessive penalties, usurious interest rates and fine-print terms that even educated consumers cannot understand.
The Bank’s recent decision to raise rates on good customers that carry a balance is indicative of the problem. [Read Domini’s full statement.]
Among other suggestions, the statement called on Bank of America to put an immediate end to non-default repricing of existing balances, the practice of raising interest rates on customers that have not been delinquent in their payments.
The proposal was supported by RiskMetrics, the largest proxy advisory firm, noting that the bank’s credit card segment “may be at higher risk of charge-offs and increases in delinquency rates” and a lack of sufficient disclosure on how the bank will address future regulation.
Domini opposed the reelection of Bank of America CEO Kenneth Lewis, and supported a union-sponsored proposal to separate the role of chairman and CEO. Lewis was forced to step down as chairman of the board after this proposal passed by 50.34% of the vote. This was the first time that a company in the S&P 500 has been forced by shareholders to strip a CEO of chairman duties, according to RiskMetrics. Lewis has come under fire for failing to reveal losses at Merrill Lynch before Bank of America acquired Merrill. Domini has a standing policy to vote against all non-independent Board chairs. (View a database of our current proxy votes.)
Domini also filed a proposal on this topic with American Express, but withdrew the proposal after productive in-depth meetings with company management. Domini is part of a larger shareholder campaign to address predatory credit card practices led by MMA Praxis and other members of the Interfaith Center on Corporate Responsibility.
As of December 31, 2008, Bank of America represented 1.05% and American Express represented 0.79% of the Domini Social Equity Fund’s portfolio. The composition of the Fund’s portfolio is subject to change. View the Fund’s most recent Semi-annual report to view a complete listing of the Fund’s portfolio.