Financial Times Article Review

After reading “BofA moves closer to payout” by Tom Braithwaite, Shahien Nasiripour and Brooke Masters, the issue of business ethics and the “too big to fail” motto come into serious consideration. This article was about how Bank of America was inching closer to paying out its shareholders in the form of a dividend after the mortgage crisis a few years ago. After the international bank received funds from investors and the federal government, there was pressure from them to return that investment back. In alignment with the stock market theory, the company’s chief officer, Bryan Moynihan argued that “all the capital above that [what is needed to run the bank], when we get the approval to do it, will go back to the shareholders, either as dividends or share repurchases” (Braithwaite et al. 1). Essentially, this means that once the federal government feels as though the bank has enough funds to safely operate without risk of going out of business, it will authorize it to pay back shareholders and investors. 

Another major point that the article brought up was the issue of building back capital. In noting that the bank has spent “two years of building capital and selling assets to reassure regulators and investors…”, it is clear that the federal government was primarily concerned about the operation of the bank (Braithwaite et al. 1). This is an interesting business topic because it ties into the issue of accountability and the notion of “too big to fail.” That is, it is an ethical issue on the grounds that the bank needs to be able to operate without running out of cash, otherwise it will go bankrupt. Since many have raised eyebrows at how the bank handled (and was partly responsible) the financial meltdown, it is under scrutiny to act in favor of the regulators and public in general. Since it was taxpayer money that went into the bailout of them, it is an interesting issue to see how the bank deals with it on a continuing basis that will ensure financial sustainability.

Work Cited

Braithwaite, Tom, et al. "BofA moves closer to payout." Financial Times, 4 Nov. 2012, https://www.ft.com/content/ec4fb098-26a7-11e2-9295-00144feabdc0