Massachusetts’ state government will withdraw more than $243 million worth of state funds from their Bank of America Corp. (NYSE: BAC), Wells Fargo & Co (NYSE: WFC) and Citigroup Inc (NYSE: C) accounts because the three banks refuse to cap credit card interest rates at 18%, according to a new report from Business Week.
Bank of America will be hit worst by the decision, which currently has more than $231 million of Massachusetts state funds on deposit. Citigroup holds $9 million of Massachusetts state funds and Wells Fargo has $3 million of state funds which will be withdrawn and moved to other banks that comply with Massachusetts’ cap on credit card interest rates.
The decision was made following a meeting in the Greater Boston Interfaith Organization held with Bank of America, where the state asked the lender to comply with the its usury law, which caps rates at 18 percent. When Bank of America refused, the state said it would invest its funds with banks and other companies that are willing to follow the rate limits.
“I understand everyone has got to make money, but I think 18 percent is very reasonable, especially when that’s the state law,” said State Treasurer Timothy Cahill in an interview with Business Week.
The decision to move Massachusetts’ money out of Bank of America was announced on Wednesday at a Metro Industrial Areas Foundation rally. The Metro Industrial Areas Foundation is a coalition of 450 religious congregations, community groups and unions. The organization supports establishing a national 15% rate cap for lending.
