Investors may disagree, but BB&T Corp. Chairman and Chief Executive Kelly King believes that a slowing economy is not necessarily a bad thing for U.S. banks.
In an interview on CNBC Friday, King said that the economy simply grew too fast over the last couple of decades for banks to keep pace and that a slowdown would give a banks a chance to streamline their "bloated" balance sheets and force them to operate more efficiently.
"In all honesty, a slow period of growth would be a good thing," King said. "We'd all have to adjust our standards of living [and banks] would have to focus more on cost control." He added that employees would have to "work smarter and harder" and that "productivity would become a driver of efficiency."
Bank investors, of course, are hardly enthused about the prospect of a prolonged economic slump. Bank stocks have been hammered of late by a barrage of disheartening economic news and a sustained period of slow loan growth is likely to punish stocks even more.
Still, King believes that the recent sell-off of bank stocks is not necessarily indicative of banks' overall health.
A stock price "does not inherently tell you anything about the fundamentals of a company," he said in the CNBC interview.
For his part, King blames much of the economic uncertainty on what he called the "negative leadership" coming out of Washington. He said that businesses have the capital to invest, but are not confident in lawmakers' ability to fix the country's fiscal problems.
"These problems are solvable, but we need good leadership," King said. "It's not hard conceptually to know what to do."
