BofA Chief Says Existing Business Model Is ‘Best We Can Bring’
“Whether it’s our rising market shares in mortgage or investment-banking market shares around the world, the current business model is the best business model we can bring,” Moynihan said today in a Bloomberg Television “Market Makers” interview with Erik Schatzker and Stephanie Ruhle. “The model works, the stock has improved. For us it’s a matter of getting the legacy issues behind us and have the earnings come back.”
Wall Street banks have resisted calls to break up by critics such as former Citigroup Inc. CEO Sanford “Sandy” Weill, who say the firms are too big to manage and put taxpayers at risk. Bank of America and Citigroup have seen their stock prices rebound this year, helping to defuse calls for structural changes. Bank of America has surged 70 percent in 2012, the best showing in the Dow Jones Industrial Average.
“We’ve streamlined our company dramatically by getting out of a lot of things that weren’t core,” Moynihan said. Assets (BAC) have been trimmed to about $2.2 trillion from as high as $2.7 trillion, he said. Bank of America ranks second by assets in the U.S. behind JPMorgan Chase & Co. and is based in Charlotte, North Carolina.
Moynihan, 53, said he’s encouraged by the tone of discussions in Washington designed to avert the so-called fiscal cliff.
“People are taking this very seriously,” the CEO said. “It makes me optimistic, because at the end of the day it takes difficult negotiations, but it has to be done quickly.”
Moynihan told investors this month that businesses have delayed capital spending until the outcome of the fiscal cliff negotiations becomes clear. The term refers to a package of tax increases and spending cuts that begin taking effect in January unless Congress comes up with a new budget plan.
For his own employees, Moynihan said that compensation this year will be tied to individual results.
“We’re a pay-for-performance company,” the CEO said. “If you had a good year, you’ll get paid for it, and we’ll work out that over the next few weeks as we finish up the year.”
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