'Zombie' accounts dead at Bank of America

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

'Zombie' accounts dead at BofA. Bank of America has said it will stop the practice of opening "zombie accounts" for customers when they receive a direct deposit to an account already closed, the Chicago Tribune reports. Consumer advocates say this practice can cause fees to rack up without people realizing it.

Small banks getting into credit cards. Small banks are increasingly ramping up their credit card offerings, pushing back against the larger banks that have dominated the market, the Wall Street Journal says. It's a response to the flood of deposits, low interest rates and new regulations. Bank of America is the country's second-largest credit card lender, with $105 billion outstanding (behind JPMorgan Chase).

Fewer homeowners underwater. The number of homeowners who owe more on their mortgages than their homes are worth fell by 400,000 in the second quarter, according to data from Zillow, a product of slightly increasing home prices and foreclosures, Bloomberg reports.

Programming note. Sadly, banking reporter and Bank Watch co-author Kirsten Pittman has left the Observer to take a consulting job in Charlotte. We wish her the best!