Controller’s Bank Ads

I would like to respond to the letter (May 27) regarding my public awareness effort to inform consumers about a recent landmark case involving the controller’s office and Bank of America.

In 1975, my predecessor sued 15 banks for the illegal practice of service charging inactive accounts and ceasing to pay interest on those which were interest-bearing. Fourteen banks settled; only Bank of America insisted on going to trial.

After an extensive trial and subsequent appeal by Bank of America, at a cost of nearly $2 million to taxpayers, the courts ruled that the bank was engaged in “unlawful activity” for, among other things, service charging nearly 700,000 schoolchildren’s savings accounts out of existence.

During the trial it became clear that the bank had encouraged children to deposit their nickels and dimes every week, starting in the early 1940s. After the children stopped making deposits, however, the bank, without notice, service charged those accounts $1 per month. In a relatively short time, the bank wiped out nearly all of the 700,000 accounts.

Since the bank acknowledged it had lost or misplaced 90% of the names and addresses of those account holders, the court ordered the controller to make an advertisement. The purpose of the ad was to notify all of the affected Bank of America customers that they were entitled to a refund.

This ad was produced at no cost to taxpayers or the state. Instead, the court ordered that it be paid by the interest earned on the funds recovered from Bank of America.

One of the major jobs of the state controller is to recover money or property that was lost, forgotten, or abandoned and to try to give it back to the rightful owner. I take this obligation very seriously. This money belongs to Californians and they are entitled to get it back.

The Bank of America has made many contributions to California’s growth and economy for which it deserves recognition. It has done a number of good things over the years, but taking money from 700,000 schoolchildren was not one of them.

GRAY DAVIS

Controller

Sacramento