Bank of America CEO Brian Moynihan on Friday defended large banking companies, arguing they are needed to help multinational companies based here and the U.S. economy in general.
"While I may understand why people might question the value of large institutions these days, it seems misplaced," he said, according to prepared text, in a speech before the National Press Club. "Companies across our industry, my own included, made poor business judgments that certainly affected our economy, our customers, and the communities where we live and work. However, U.S. global financial services companies remain vital to the success of our customers and.in fact. to the success in the countries we operate.including and especially the United States."
The speech also reiterated Moynihan's concerns about the "headwinds" bearing down on the U.S. economy and offered his take on financial reform. Although Moynihan was expected to receive questions about foreclosure-documentation problems, the speech made no direct mention of the broadening controversy.
However, a Dow Jones report just hours before the speech said B of A plans to place a moratorium on all foreclosure proceedings and sales across the U.S. The company would be the first financial institution to stop all foreclosure actions due to revelations that the banking industry had used "robo-signers" — people who sign hundreds of documents a day without reviewing their contents — when foreclosing on homes, the report said. B of A, JPMorgan Chase & Co. and Ally Financial Inc. last week postponed foreclosures in 23 states.
In his prepared remarks, Moynihan devoted a considerable portion to the "critical role" of large financial institutions. He said that "large national franchises with global reach" are needed to provide U.S. companies such as Coca-Cola Co. the financing to operate globally; back the expansion efforts of middle market companies that have global aspirations; serve as an intermediary that brings "pools of capital" from investors to clients; fund domestic consumers and small businesses; afford investment in innovations like mobile baking; maintain the "largely invisible" infrastructure at the heart of the financial system and the economy; and promote America's global leadership.
"We help people realize the opportunity life presents for them. And we do it well," he said in the prepared remarks. "While there will always be a place for banks of all sizes. and we believe firmly that no institution should be too big to fail..I am proud that large financial services providers help people seize the opportunities they see."
In discussing the economy, Moynihan pointed to positive signs, including stabilizing jobless claims and increased spending by consumers on their debit and credit cards. However, he reiterated his concerns about factors that could impede growth such as persistent high unemployment, overextended mortgage borrowers and rising government debt.
"In the end, we have a slow recovery ahead," he said.
Regarding financial reform, he said the Dodd-Frank act addressed some causes of the financial crisis and that the 7% Tier 1 capital requirement in Basel III is "reasonable."
However, he said the efforts at implementing regulations needed to be carefully handled.
"There is much work ahead to get that right, but recent reforms, if properly implemented, should contribute to future stability of the financial system," he said. "However, there is no substitute for management's core responsibility to run the company correctly, balancing short and long term risk and reward."