BofA Loaned Insiders $624M as Credit Froze Up

By Neal Colgrass,  Newser Staff
Posted Mar 22, 2009 8:01 PM CDT
Pedestrians walk past a Bank of America branch bank in midtown Manhattan July 21, 2008 in New York City.   (Getty Images)
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(Newser) – While credit markets were frozen last year, forcing thousands of Americans out of business, Bank of America lent insiders more than $624 million—more than doubling the amount loaned to insiders the previous year, the Charlotte Observer reports. Recipients' names were not disclosed, but most of the money likely went to bank directors or their companies, experts say. At the same time, the feds gave BofA $15 billion, part of a planned $45 billion bailout.

The BofA's $358 million jump was the biggest increase in insider loans in the country— a 135%  hike from a year earlier compared to an average 5.7%. JP Morgan topped the list, with nearly $1.5 billion in insider loans. Advocates say transparency is needed to avoid abuse, but not all agree. "I don't think it matters if the loan is to the bank's board of directors or somebody else," one banking professor tells the Observer.