Investing
Bank of America’s Wrong-Way Rate Bet Hurts Moynihan’s Growth Pledge
- Old bets on long-dated, low-interest bonds drag on profit
- The bank is stuck with holdings that yield 2.4% in a 5% world
Brian Moynihan
Photographer: Jason Alden/BloombergThis article is for subscribers only.
For years, Brian Moynihan told investors his bank would be a big winner when interest rates eventually, finally, one day went up. Bank of America Corp. had built a massive deposit base that would allow profits to soar when the Federal Reserve changed course.
Rates have indeed shot up — and BofA is the biggest laggard among the US banking giants. Its investments earn less than its closest rivals, and the stock is the group’s worst performer by far.