Bank of America Corp. (BAC:US) Chief Executive Officer Brian T. Moynihan said the “underlying fundamentals” of the U.S. economy are still improving and bankers have plenty of funds to lend.
Banks have excess liquidity as money sits idle and borrowers hesitate, Moynihan said today during a panel discussion at the World Economic Forum in Davos, Switzerland. The Charlotte, North Carolina-based company ranks second by assets among U.S. lenders.
“The money’s there, and I think it really is going to come down to the fundamental economy putting more demand in it than the simple statement” that banks should make more loans, Moynihan said.
Moynihan, 53, has spent his first three years at the helm cleaning up after his predecessor’s takeovers of Countrywide Financial Corp. and Merrill Lynch & Co., divesting more than $60 billion of assets in the process. He also scaled back mortgage lending to shift resources to servicing overdue borrowers.
“Credit was restricted for a while, but in things like the mortgage area in the United States it had to be restricted because this is what helped open the problem up,” Moynihan said. Lowering mortgage standards isn’t a good idea, he said.
In commercial lending, there has “never been more competition” to offer loans to middle-market firms, he said.
While central banks have been providing support with low rates, the more fundamental issue for nations is to regain their competitiveness, Moynihan said, a sentiment voiced by other leaders during the session.
“We’ve got to take the burden off our central bankers’ shoulders and really governments and business leaders need to pick up that slack,” Deutsche Bank AG (DBK) co-CEO Anshu Jain said.
Bank of America told investors (BAC:US) earlier this month it’s counting on what it calls “a slow-growth but healthy economy” for the coming year.
The firm announced an $11.7 billion deal to end disputes with Fannie Mae on bad home loans this month and joined an $8.5 billion industry settlement of improper foreclosures.
To contact the reporter on this story: Hugh Son in New York at email@example.com Elizabeth Bunn in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Rick Green at email@example.com