B of A’s Moynihan: Big banks are 'fine' with Dodd-Frank
WASHINGTON — While small and regional banks are pushing for a rollback of the Dodd-Frank Act, big banks are largely supportive of the 2010 financial reform law, Bank of America CEO Brian Moynihan said Thursday.
“Dodd-Frank is fine,” Moynihan said at the Economic Club of Washington. “None of us are trying to touch it.”
Moynihan said Dodd-Frank has made the financial system safer, which in turn has strengthened the financial footing of the industry-funded Federal Deposit Insurance Corp. Since a bank's FDIC premiums are calculated by the size of its deposit base, large banks have the most incentive to protect the FDIC, Moynihan said.
“The FDIC gets filled up by the banking system. So the large banks have the highest interest in getting the regime right,” he said.
However, he suggested there could be some adjustments to the regulatory dials.
“With anything that happens, you swing a pendulum and the idea is to get it back to the middle," Moynihan said. He added that large banks "are trying to say, ‘Let’s get this thing back in the middle.' ”
For instance, during his discussion with a moderator at the Economic Club, he called for lowering Basel III capital requirements. Lowering the capital ratios from 10.5% to 9.5% would mean that banks would have more money to deploy to businesses, he said.
“For us, we can make $160 billion more loans if you say 9.5 instead of 10.5,” Moynihan said.
But he reiterated that, broadly speaking, capital and liquidity requirements, mandatory stress testing and resolution planning have all been good reforms.
“All these things are very important things that we don’t want to touch,” he said.
He added that he thinks Wall Street's reputation is improving. "We are more popular than people say,” he said.
According to research B of A conducts on its reputation, he said, “The brand is in the best condition [it] has ever been."
Moynihan said that, while the public still associates big banks with the financial crisis, sound regulation and good behavior can help banks break through the stigma. Banks need to be seen as strengthening the economy rather than being the cause of a collapse.
On the rise of fintech, he said that, rather than being fearful of nonbank companies infringing on traditional banking services, B of A is looking to “drive” advancing technology.
“It can’t be a problem for us, because we got to face it down,” Moynihan said.
Notably, he said that it was taking the bank 20 days to underwrite small-business loans and online lenders were doing it much more quickly. While he said the bank wouldn’t underwrite a loan in 20 minutes “because we don’t think that’s wise,” it was able to reduce the time it took to underwrite a small-business loan.
He called the anonymity enabled by cryptocurrencies a “very difficult” policy question, though Bank of America has welcomed blockchain technology and already has 40 patents.
However, while Bank of America has increased its digital offerings, brick-and-mortar bank branches are still a critical part of the business, the CEO said.
“As people talk about digital and mobile and everything at the same time … 800,000 people come through our branches every day,” he said. He added that 70% of the banks sales are still done face to face.