Capital requirements: A worker on the floor of the New York Stock Exchange watches Fed chairman Jerome Powell on TV. Banking executives say the Fed’s and other regulators’ proposals would harm the economy and low-income borrowers most of all. — AP
NEW YORK: Bank of America Corp chief executive officer (CEO) Brian Moynihan says regulators need to re-assess and relax rules they set for banks in what could be the biggest change for the industry under a Trump administration.
“Our industry needs to have a sober look at the right regulation,” Moynihan, 65, said in an interview with Bloomberg Television.
Ratcheting up capital requirements – the money banks are required to set aside as a cushion against unexpected losses and financial shocks – makes it harder for firms to spend money and lend, according to the CEO, who’s about to start his 15th year as head of the second-largest US bank.
“The idea of bringing that regulation back in the middle, and for the good of the industry, getting it to settle someplace so we can build a model around it” will be key, Moynihan said.
The comments echo executives across Wall Street calling for less regulation and more business-friendly policies.
The Federal Reserve (Fed) and other regulators unveiled new, stricter capital requirements in 2023, unleashing an unprecedented lobbying campaign from Wall Street.
Banking executives have argued that the proposals to hike their capital requirements would harm the economy and low-income borrowers most of all.
“The economic atmosphere of deregulation and how it applies to us more generally” will be the biggest change coming with the transition to Trump’s administration, Moynihan said.
On the economy, the CEO said he sees no sign it’s overheating and dismissed the idea that some sort of stimulus might be necessary.
“Between interest rates being cut a little bit, between the enthusiasm around the election, the markets being up, consumers are spending more, and they tell us they will spend more for the holidays, which is good for the general economy,” Moynihan said. “Everything’s steady and fine now.”
One potential obstacle would be an increase in unemployment, Moynihan said, but he added that such a rise isn’t expected. With the coming Trump administration, Wall Street executives are also expecting a boost to dealmaking and trading fees on the back of lighter regulation.
Still, the Fed’s future interest rate decisions will affect the rate of borrowing and the pace of mergers and acquisitions. — Bloomberg
