It was a rough start to earnings season for America's big banks, and Bank of America ended the day with a problem of a different kind. The U.S. government fined the lender $1.2 billion for failing to properly police suspicious activity, a penalty tied to weaknesses in its anti-money-laundering and sanctions controls. Bank of America shares slid on the news.
The fine adds a hefty price tag to compliance problems that regulators have been flagging for a while. Back in December 2024, the Office of the Comptroller of the Currency issued a cease-and-desist order against the bank over deficiencies in its Bank Secrecy Act and sanctions compliance programs. That order cited failures to file suspicious activity reports on time and to fix previously identified gaps in customer due diligence, along with weaknesses in internal controls, governance, testing and training. It required the bank to bring in an independent consultant and review past activity to make sure suspicious transactions were properly reported. Earlier this year, Bank of America's Merrill Lynch unit also agreed to pay $7.5 million to the SEC over suspicious activity reporting lapses.
The penalty landed on a day when bank stocks were already struggling to impress. JPMorgan Chase, Citigroup, Wells Fargo and Goldman Sachs all reported on Tuesday, alongside Johnson & Johnson and UnitedHealth, and all six were trading lower at one point during the session. JPMorgan posted a rare miss on both earnings and revenue, as bond trading and dealmaking slowed. Goldman Sachs beat on both lines, but that wasn't enough to lift its stock.
There were bright spots underneath. JPMorgan, Citigroup and Wells Fargo all reported record net interest income, a reminder that higher interest rates continue to boost what banks earn on loans. But investors seem focused on what comes next: guidance, valuations, slowing capital markets activity and the drag that elevated energy costs and borrowing rates could have on the economy. With the 10-year Treasury yield above 5.2%, worries about credit quality and loan demand are never far away.
The broader market was choppy too. The Dow swung between a gain of more than 460 points and a loss of about 260 points before closing down around 0.35% at 51,675. The S&P 500 ended essentially flat near 7,805 as chip stocks dragged on tech.
For Bank of America specifically, the $1.2 billion fine is manageable relative to its size, but it keeps the spotlight on compliance at a time when regulators are watching closely. The bank is due to report its own quarterly results this week, and investors will be listening for any comment on the penalty, the cost of remediation and whether further regulatory action is possible. Goldman Sachs CEO David Solomon is also set to speak on CNBC on Wednesday, which could offer fresh insight on dealmaking and trading conditions.