BofA’s Moynihan Says Trump Should Focus on Cutting Taxes, RulesBy and
Concern about U.S. deficit affects stimulus plan, CEO says
Protectionism seen also affecting midsize U.S. firms
Bank of America Corp. Chief Executive Officer Brian Moynihan said President Donald Trump should focus on lowering the tax and regulatory burden on U.S. companies.
“We’ve got to figure out our tax code,” Moynihan, 57, said Wednesday at the Council on Foreign Relations in New York during a wide-ranging discussion about politics and the economy. “We have two basic issues -- the repatriation question and the fundamental tax-code question," which he said are causing businesses to behave in “strange” ways.
Trump has begun offering details on his plans to create jobs and persuade U.S. companies to keep their operations in the U.S. since taking over on Jan. 20. It’s remained unclear since the November election which campaign promises Trump would immediately pursue, including which regulations from the financial crisis he and the Republication-led Congress might ease. Banking executives have mostly refrained from discussing potential impacts until more details emerge.
Moynihan said Trump should continue his efforts to create an environment that encourages optimism and growth. He’s been “out there leading it and driving it,” said Moynihan, who’s overseen the Charlotte, North Carolina-based company since 2010. “So I think keep up that.”
The CEO of the nation’s second-largest bank said the new president should pay attention to how much debt he’ll add to the nation’s borrowing load while he attempts to promote job growth and stimulate the economy.
“Are we going to spend a little bit to start the engine again?” Moynihan said. “The question is, are you afraid of that or not? Because that feeds into what you can do in terms of tax reform or what you can do in infrastructure.”
Moynihan, who said he hasn’t yet met with Trump personally, cautioned that the president’s push to renegotiate international trade agreements will affect even midsize U.S. companies -- whether the president’s policies spark trade wars or not. He said U.S. firms’ operations are woven into the global supply chain and flow of capital.
Fresh off a week co-chairing the World Economic Forum meeting in Davos, Switzerland, Moynihan spoke at length about banking regulation. He said while bank executives aren’t clamoring to roll back all the rules introduced after the financial crisis, they are examining how they could reduce the cost of complying with them. Bank regulators should work to apply a more standard set of rules across the globe, especially on European firms that now operate with fewer capital strictures compared with their American peers, Moynihan said.
He said Bank of America had ended proprietary trading in 2010 and agreed that banks shouldn’t be allowed to warehouse loads of securities the way they did a decade ago. Moynihan said Wednesday that prop trading wasn’t “a wise use of our capital.”
Bank of America expects Europe’s economy to grow in 2017 and markets to remain largely stable, as they did last year despite political shocks from Britain’s referendum on European Union membership and a banking crisis in Italy, he said.
"The markets are saying, ‘OK, life goes on.’ That’s the power of just stability in all of these big economies," Moynihan said.