RI Needs a Strong Economy to Keep Bank of America

In his Sunday Providence Journal column (not online), John Kostrzewa worries that Rhode Island officials aren’t doing enough to ensure that looming cuts in Bank of America’s workforce don’t come out of our local economy. He suggests that they’re waiting for a more opportune time and insists that they can’t afford to do so.
But the persuasion that he suggests is built upon a big threat:

… the state kept an average bank balance of more than $35 million at Bank of America during the fiscal year that ended June 30. Some federal receipts flow into a general fund account at the bank. And Bank of America is a senior bond underwriter for the state and assists in the marketing and sale of state bonds.
All of that work doesn’t have to go to Bank of America. It could go to other institutions that make commitments to add jobs.

Rhode Island may or may not have the financial leverage to bully the bank. Considering that BoA is looking to save $5 billion per year in personnel costs, the numbers in play may be out of Little Rhody’s league, even with the combined threat of lost business and promise of the state’s famous big-shot handouts.
Just under two years ago, the Bank of America branch on Main Rd. in Tiverton closed down. A manager, there, told me that the branch was profitable, but that the lack of small-business prospects in the town erased the justification for maintaining a presence here. Although the scale is much smaller, Tiverton’s experience suggests a better way forward for Rhode Island.
My mind turns to a CNBC analysis from June of this year, in which Rhode Island managed to be dead last on a list of Top States for Business. In three of the ten subrankings — workforce, technology & innovation, and access to capital — the state stood right on that middle line of mediocrity. It did a little bit better in education and a little bit worse in quality of life. That’s half of the rating’s factors. With the other half, we’re bottom ten material: cost of doing business, infrastructure & transportation, economy, business friendliness, and cost of living.
If Rhode Island wants to halt its slide into backwater and change its status as the Northeast’s Mississippi, the government is going to have to focus on making the state a more attractive place to do business. Rather than one-time giveaways, the state has to lighten up on its taxes and regulations and improve its infrastructure — while decreasing the cost of living and doing business.
Evidence that Rhode Island is serious about turning itself around — and fast — would do more to persuade BoA CEO Brian Moynihan that it’s worth staying here than would threatening letters from every single elected and appointed official from local water authority up to Speaker of the House. Unfortunately, our current governor and General Assembly, Providence’s current mayor, and (all evidence indicates) the state’s electorate, itself, lack the will to do what’s necessary.

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justanotherjoe57
justanotherjoe57
10 years ago

Once again Rhode Island waits to react rather than act to help businesses in the state.

Monique
Editor
10 years ago

” its status as the Northeast’s Mississippi”
Except that our business climate is worse than Mississippi’s. How do our elected officials explain that to their constituents?

stuckhereinri
stuckhereinri
10 years ago

“How do our elected officials explain that to their constituents?”
Monique, unfortunately they don’t have to.
We will continue to elect the same (type) of politicians regardless of what they do or don’t do.
I think one of the biggest underlying issues is that most folks in RI consider themselves Dems/liberals even when they have many conservative views.
It’s a culture thing, and a conversation for another day.
Things will need to get MUCH MUCH worse before have a chance of turning things around.

Gary
Gary
10 years ago

What?
Bank of America is a criminal organization that has robbed the taxpayers of billions and stolen houses from people who never had a mortgage with them.
They made billions in bad loans, took billions from
the taxpayers practically at gunpoint and then gave it out as bonuses to the incompetents and the crooks
that got them into trouble in the first place.
Let them die!
Moynahan should be hanged!

Max Diesel
Max Diesel
10 years ago

@Gary
zzZZZzzzZZZZzzzZZZZzzzzZZZZzzzZZZZ

Max Diesel
Max Diesel
10 years ago

Fear not!!! Chafee will put together another entourage for one of his patented road trips. This time they will tour Charlotte and convince Moynahan that Phil’s oyster farm is the wave of the future. They’ll never leave the state once they hear that pitch.

Dan
Dan
10 years ago

Phil’s nameless, faceless, location-less oyster farm.

Phil
Phil
10 years ago

Max
Bank of America cut my credit limit in half two years ago leaving me scrambling to make the kind of investment I had hoped to make. My product takes at least two years to make it to market so the effect of that action has delayed my plans of expansion. Taxes and regulations exist and need to be dealt with, but the growth I had planned was more effected by their actions. That does not only effect me but it effects those who I would have hired.

Max Diesel
Max Diesel
10 years ago

Phil,
On a serious note, wouldn’t you agree that BOA’s action is pretty much the industry wide standard at this point? The whole bail out argument aside, aren’t we paying for the sins of the past?

Warrington Faust
Warrington Faust
10 years ago

The Bank of America, first let’s understand that there seems to be little credibility in the long held theory that it is controlled by the Society of Jesus. It seems to be established that the Jesuits provided some capital to begin it, and Giannini was a Knight of Malta. There is little evidence that they continue to hold an interest. It is true that Bush 1’s father controlled it for several years.
Now, let’s think about B of A “pulling out” of Rhode Island. Those who recall the “Savings and Loan crisis” will remember how this is done. The branches are not shuttered, they are sold to another bank. Usually, the sign changes, but the employees remain the same. Particularly since their ill advised decision to acquire CountryWide Financial (they practically invented “toxic loans”) BofA has liquidity problems. They have to raise cash, it is doubtful that RI is in any position to aid in that, or alter the situation.
As to competing with Charlotte, I think we are late for the game. Charlotte is well established as the “Wall Street of the South”. If my memory serves, it has tripled its population since 1995, largely owing to the financial business. As well as BofA, a number of the credit card companies are headquartered there. How was this done? Probably a number of things. North Carolina is hard charging about attracting business, has/had a relatively low wage scale, a well educated population, a good educational system with a well established state university system with excellent credentials and a wide variety of recreational facilities. (they also have schools to kill that Southern accent, although it is losing its derogatory connotation)

Warrington Faust
Warrington Faust
10 years ago

As to “business climate”, I have wondered why RI does not offer Wi-Fi in the same manner that we offer roads. Cost should be minimal, as compared to roads, or schools. Of course, the state might be taken over by the lap top drones at Starbucks.

David P
David P
10 years ago

There is no truth to the rumor that Del’s Lemonade is owned by the Bilderbergers.

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