BankAmerica Corp. has suffered stunning losses for 1985, a failure of management that is compounded by violations of federal banking regulations. Confidence can be restored only by the complete candor of the board and the executives.
The economic turbulence of recent years has created other sensational losses in American business. But the volatility evident in new technologies and import-affected industries, the dislocations in agriculture and exports, the painfully slow recovery of debt-encumbered Third World nations do not justify the $337-million loss for BankAmerica. That is the third-highest deficit in U.S. banking history. Yet on the very day on which those losses were made public, five other bank companies--including Citicorp, the only one larger than BankAmerica--were announcing increased earnings.
Two weeks before the bad news was released, American business leaders and analysts already had judged the management of BankAmerica, and judged it harshly. In the annual survey conducted by Fortune magazine of the nation's most admired and least admired corporations, BankAmerica ranked eighth on the list of the least admired. In the same survey, BankAmerica ranked at the bottom of the commercial-banking category regarding corporate performance. As to management quality, BankAmerica ranked 292nd among the 292 corporations cited.
There is comfort, of course, that the solvency of this vast institution is not in doubt. This is not the Great Depression, and appropriate federally-protected insurance protects most depositors. The management of the bank anticipates a turnaround this year, with a profitable performance enhanced by further sales of property. That is reassuring. The effect of failed performance of an institution of this magnitude reaches far beyond the board room and the automated teller.