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Missionary Oblates of Mary Immaculate  United States Province

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Strong 39% Vote at Bank of America for Religious Shareholders’ Proxy Resolution Maintains Growing Pressure for More Derivatives Disclosure on Wall Street

April 28th, 2010

Vote at BofA’s Annual Meeting Comes on Heels of 30 Percent Support at Citigroup on Same Resolution; More Disclosure Vital at BofA Given How Mishandling of CDOs Tripped Up BofA’s Merrill Lynch.

bank_of_americaIn the second major 2010 shareholder vote urging more derivatives disclosure, a much higher-than-expected 39 percent of Bank of America (BofA) shares were cast today in support of a resolution sponsored by faith-based institutional investors belonging to the 300-member Interfaith Center on Corporate Responsibility (ICCR). The BofA shareholder vote took place as Congress debates the fate of financial regulatory reform, including increased derivatives disclosure.

The Bank of America shareholder vote improves on a 30 percent support level for the same proxy resolution at Citigroup on April 20, 2010. The ICCR member-sponsored resolution gave Bank of America shareholders an opportunity, as it did at Citigroup, to express their concerns about the lack of transparency in the derivatives market that contributed significantly to the financial crisis.

Subsequent shareholder votes on the derivatives disclosure resolution are set for Goldman Sachs (May 7), and JP Morgan Chase (May 18). Taken together, the resolution targets are four of the five U.S. financial institutions accounting for a reported 96 percent of all derivatives trading in the U.S. The resolutions mark the first time that the banks will face a vote by shareholders on a call to explain their policy on how collateral is secured for the derivatives they use and what their policy is about using their customers’ funds for other speculative activities. (JP Morgan Chase faced a derivatives-related measure with a different focus in 2004.)

ICCR Board Member Rev. Seamus Finn, director, Justice, Peace & Integrity of Creation, Missionary Oblates of Mary Immaculate said: “With major votes in support at both Bank of America and Citigroup, we now have considerable momentum for change. These votes send a strong message to Wall Street that the ‘old ways’ on derivatives and all of the irresponsible risk taking that they introduced into the financial markets is no longer acceptable. In fact, the Bank of America vote may be the most telling among the four votes on our resolution, given the role that irresponsible handling of collateralized debt obligations (CDOs) played in bringing Merrill Lynch to the point that it was sold at fire-sale prices to Bank of America.”

Sr. Barbara Aires, coordinator, Corporate Responsibility, Sisters of Charity of St. Elizabeth, NJ., said: “We consider today’s double-digit vote at Bank of America in favor of the resolution to be a moral victory that tells Wall Street that the obligation to make full disclosure – which is the cornerstone of our open markets – does not suddenly go out the window when it comes to derivatives. Shareholders are saying in a clear voice that it is not acceptable to have one set of rules for the largest market players allowing them to jeopardize not just other market players, but the health of the entire financial system itself.”

Edward Gerardo, director, Community and Social Investments, Bon Secours Health System, Inc., said: “We believe that a big lesson from the financial crisis is that transparency is critical to lowering risk in the marketplace. Having a fair and just financial system that works for all people is both a moral and business imperative. We believe the request for transparency and disclosure in our proposal is an essential element for a fair and just financial system. Clearly, many Bank of America shareholders agree.”

ICCR Executive Director Laura Berry said: “The momentum building behind these resolutions sends a clear message to Americans about the urgent need for reform that recognizes financial security as a basic human right. Over the last 10 years, ICCR members have been ahead of the curve in pressing for greater transparency and responsibility in derivatives trading. While the debate continues on Capitol Hill on legislation that imposes reform from the outside, with this vote, Bank of America shareholders demonstrate how real reform that results in better outcomes for all Americans can happen from the inside.”


The ICCR proxy resolution notes that “the recent financial crisis has resulted in the destruction of trillions of dollars of wealth and untold suffering and hardship across the world” and that “taxpayers in the United States have been forced to extend hundreds of billions of dollars in assistance and guarantees to financial institutions and corporations over the past 18 months.”

The resolution also points out that the “very high degrees of leverage in derivatives transactions contributed to the timing and severity of the financial crisis” and that “concerns have arisen about the practice of rehypothecation: the ability of derivatives dealers to redeploy cash collateral that gets posted by one of its trading partners” and that “the financial system was brought to the brink of collapse by the absence of a system and structure to monitor counterparty risk … (while) numerous experts and the U.S. Treasury Department have called for the appropriate capitalization and collateralization of derivative transactions.”

The resolution asks “that the Board of Directors report to shareholders (at reasonable cost and omitting proprietary information) by December 1, 2010, the firm’s policy concerning the use of initial and variance margin (collateral) on all over the counter derivatives trades and its procedures to ensure that the collateral is maintained in segregated accounts and is not rehypothecated.”

Filers of the resolution at the Bank of America are: Missionary Oblates of Mary Immaculate, Rev. Seamus Finn; Sisters of St. Francis of Philadelphia, Sr. Nora Nash; Sisters of Charity of St. Elizabeth, NJ, Sr. Barbara Aires; Sisters of St. Dominic of Caldwell, NJ, Sr. Patricia Daly, OP; Maryknoll Sisters, Cathy Rowan ; Maryknoll Fathers and Brothers, Rev. Joseph P. LaMar, M.M.; Benedictine Sisters of Mount St. Scholastica, Rose Marie Stallbaumer, OSB; and Monasterio Pan de Vida, Rose Marie Stallbaumer, OSB.

The full text of the Bank of America resolution is available online at


For nearly 40 years the Interfaith Center on Corporate Responsibility (ICCR) has been a leader of the corporate social responsibility movement. ICCR’s membership is an association of 300 faith-based institutional investors, including national denominations, religious communities, pension funds, foundations, hospital corporations, economic development funds, asset management companies, colleges, and unions. Each year ICCR-member religious institutional investors sponsor over 200 shareholder resolutions on major social and environmental issues. For more information, visit

CONTACT: Patrick Mitchell, (703) 276-3266 or

EDITOR’S NOTE: A streaming audio replay of the ICCR news event held on April 20, 2010 in the wake of the Citigroup vote is available on the Web at

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