Businesses Are Friskier After Trump Victory, BofA’s Moynihan Saysby
Mid-sized companies are tapping credit, CEO says in interview
If lawmakers erase Volcker Rule, bank wouldn’t change, he says
Bank of America Corp. doesn’t expect Donald Trump’s election to jolt the U.S. economy next year, but its corporate customers are enthusiastic and already seeking funds to expand, according to Chief Executive Officer Brian Moynihan.
Mid-sized companies “are friskier, they’re more active,” Moynihan, 57, said in an interview with Bloomberg Television’s David Westin for broadcast Thursday. Recently, some have been drawing down credit lines to invest in operations, he said. “They feel better about the prospects of the regulatory environment and their businesses. They feel better about the possibility of final demand.”
Moynihan, who runs the second-largest U.S. lender, said it may take a while for Trump’s initiatives as president to play out in the economy, which already was benefiting from rising consumer spending. The bank has forecast about 2 percent growth next year, he said -- up from the 1.6 percent that economists estimate for 2016.
While Republicans will control the executive branch and both chambers of Congress, they still have to hammer out details of legislation, Moynihan said. And corporate America may postpone some decisions while waiting to see how Trump’s promised tax reforms are carried out. Executives who act too early, risk missing advantages.
“These things get harder when you get down to the brass tacks,” Moynihan said. “They’re never easy.”
Bank of America’s stock has surged 33 percent since the Nov. 8 election, leading the nation’s largest lenders higher. Some investors are betting Republicans may roll back regulations that sought to make the industry safer after the 2008 financial crisis. One potential target is the Volcker Rule, which restricts banks from betting on markets through trading and other investments -- activities that once fueled epic profits.
Moynihan, who has spent years cleaning up costly mistakes made by predecessors, said he isn’t eager to return to such risk-taking.
“If you took Volcker out tomorrow morning, we wouldn’t change what we do,” he said. “If our shareholders want to invest in private equity funds, they can go invest in private equity funds.”
Still, he didn’t defend the rule, which has forced large Wall Street banks to bolster their compliance departments and scrutinize trading desks.
“The question then is how much work does it take to comply with a rule like that?” Moynihan said. “Are we over-engineering a solution?”