Bank of America reported six major borrowers for each of the last five quarters. At The Charlotte Observer's request, the bank had to name the three who are executives. They are mortgage head Barbara Desoer, chief financial officer Joe Price and Keith Banks, head of global wealth and investment management.
Insider loans to executives are much more limited than those to directors, their companies and shareholders with more than 10 percent of the stock, who can borrow hundreds of millions or more. Executives can borrow for their homes and to pay tuition for their children. Beyond that, their loans are limited to $100,000.
However, executives can borrow far more to fund other businesses they own. In those cases, they're subject to the same limits of other insider loans. Experts and regulators said it is unusual but not unheard of for top bank executives to run a side business.
Bank of America wouldn't say whether Desoer, Price and Banks have other business interests. A check of public records found no businesses, but ownership is often not readily apparent in those records.
JPMorgan, the only firm near the size of Bank of America, volunteered that its four executives with disclosable loans held a total of less than $4 million in home loans, all at least five years old. Its other three major borrowers are directors or their companies. In federal filings, JPMorgan names directors and companies to whom it makes loans but doesn't reveal the terms.
Bank of America wouldn't say which of its insider borrowers accounted for the $358.6 million leap last year. Experts said it was probably directors or their companies.
"The bulk of (insider) loans are to directors, not management," said Tony Plath, a University of North Carolina-Charlotte banking professor, who has worked for banks. "It's corporate borrowing."
Directors may have found that business financing dried up elsewhere, or that they could legitimately get a better rate by consolidating loans with the bank they serve, Plath said. However, he added, "It's incumbent on the bank to make sure in this environment, you're not providing credit to an insider that you wouldn't provide to a non-insider."
UNC professor Broome said the bank's insider lending might have grown because directors brought their financing needs to the bank as a show of support.
"Like the CEO of Bank of America publicly saying I'm buying more stock," she said of Ken Lewis' recent purchases of 400,000 shares.