BofA chief Moynihan says fiscal cliff already hurts economy
Bank of America Corp.s commercial customers are already reacting to the fiscal cliff looming over the U.S. budget by putting off purchases, Chief Executive Officer Brian T. Moynihan said.
Businesses are holding back on buying capital goods until the outcome of negotiations in Washington becomes clear, Moynihan said today at a New York investor conference sponsored by Bank of America. Tax increases and spending cuts could equal as much as 4 percent of gross domestic product, Moynihan said.
The impacts of the potential cliff are already being felt, Moynihan said. In the banks survey of chief financial officers, the number one issue they see is the fiscal cliff. They tell us its affecting their business plan. That uncertainty continues to hold back the recovery. Simply put, our clients tell us they will not be aggressive in times of uncertainty.
Moynihan, 53, is trimming staff and operations to reduce costs after revenue was regulated away by new legislation affecting consumer accounts, cards and trading at investment banks. Hes sold more than $60 billion in assets through 30 deals since taking over as CEO in 2010 to streamline the company and build capital.
Moynihans bank ranks second by assets in the U.S. and is based in Charlotte, North Carolina. The Tier 1 common capital ratio under the latest rules rose to 9 percent in the third quarter from 8 percent a year earlier.
Weve gone from lagging the industry to leading the industry, Moynihan said.
Macroeconomic signals are mixed and unemployment remains high even with the most recent improvement, he said.