TEXT D

Bank of America, holding company for the San Francisco-based Bank of America, was once unchallenged as the nation’s biggest banking organization. At its peak, it had more branches hi California, 1,100 more than the U.S. Postal Service. It was also a highly profitable enterprise. But since 1980, Bank of America’s earnings have been down or flat. From March 1985 to March 1986, for example, earnings per share dropped 50.8 percent. Samuel H. Armacost, president and CEO, has confessed that he doesn’t expect a turnaround soon. Some of Bank of America’s old magic seems to have rubbed off on New York’s Citibank, perennial rival for top banking honors. Thanks to aggressive growth policies, Citicorp’s assets topped Bank of America’s for the first time in 1983 and by a healthy margin. Citibank has also been generating profits at a fast clip, enabling it to spend lavishly on campaigns to enter new markets--notably Bank of America’s turf in California. The bad times Bank of America is currently facing are partly the result of the good times the bank enjoyed earlier. Based in a large and populous state and operating in a regulated environment, Bank of America thrived. Before deregulation, banks could not compete by offering savers a higher return, so they competed with convenience. With a branch at every crossroads, Bank of America was able to attract 40 percent of the California deposit market--a source of high earnings while the legal maximum payable to depositors was much lower than the interest on loans. The progressive deregulation of banking forced Bank of America to fight for its customers by offering them competitive rates. But how could this mammoth bureancracy, with its expensive overhead, offer rates as attractive as its loaner competitors Pruning the establishment was foremost in the minds of Bank of America policymakers. But cutbacks have proceeded slowly. Although the bank is planning to consolidate by offering full services only in key branches, so far only about 40 branches have been closed. Cutbacks through attrition have reduced the work force from 83,000 to fewer than 73,000; wholesale layoffs, it seems, would not fit the tradition of the organization. And they would intensify the morale problems that already threaten the institution.

The phrase "mammoth bureaucracy" in Line 2, Paragraph 4 refers to ______.