Bank Of America's Back Is Against The Wall

After the Great San Francisco Earthquake of 1906, BankAmerica Corp. founder A.P. Giannini personally lent cash to victims, asking only for a handshake as collateral. Ever since then, the state's largest bank has worked hard to be a model corporate citizen, sponsoring cultural events, boosting minority hiring, and forging close ties with California's political elite. One of the many payoffs has been BofA's role as chief banker for hundreds of cities and counties along the coast.

But now, many of the bank's longtime government customers are accusing the economic and political powerhouse of thievery. In April, State Attorney General Daniel E. Lundgren, the city of San Francisco, and 250 other political subdivisions will go to state Superior Court in a suit charging the bank with defrauding taxpayers of hundreds of millions of dollars while it managed municipal bonds for them from 1978 to 1993. As the trial draws closer, elected officials are giving the nation's fifth-largest bank a drubbing--one that threatens to drive away some of the bank's valuable clients. "The bank is so entrenched that it felt it was above scrutiny and above the law," says Riverside County Supervisor Bob Buster, one of the plaintiffs.