Bank of America CEO Brian Moynihan warned Monday that tightening U.S. immigration restrictions in an already tight labor market could undermine some of the gains from federal tax cuts.

Less population growth means less economic growth, and immigration delivers a faster boost to labor and consumption than waiting for the current populace to produce more kids.

“People miss that nuance when they talk about how we’re going to grow,” Moynihan said at the Risk Management Association’s annual conference in Boston, where he addressed a number of economic and regulatory challenges that lie ahead. “If you look at other countries in the world that struggle with growth in developed economies, they have one thing in common, and their populations aren’t growing.”

On tax reform, Moynihan said congressional efforts have been promising and the possibility of a lower corporate tax rate has been good for business sentiment.

Brian Moynihan, CEO of Bank of America
Cautionary tales?
“If you look at other countries in the world that struggle with growth in developed economies, they have one thing in common, and their populations aren’t growing,” B of A CEO Brian Moynihan says. Bloomberg News

However, he also acknowledged the tough realities of making tax reform happen, especially from a fiscal perspective.

“Now the question’s going to be, how do you balance all the constituencies? If you think about it from a corporate America standpoint, it’s good,” he said. But “at the end of the day, if you lower rates, you’re going to have less [federal] revenue and that makes the [budget-related] trade-offs tough.”

On the international front, he pointedly criticized Brexit, saying that the fallout is “just not good.”

“There’s not one customer who’s going to get something better or more important because of Brexit,” Moynihan said. “It’s a lot of work that will take a long time to figure out and there are no rules. It’s never been done before, so nobody knows what the rules are. At the end of the day, the citizens of Europe and the U.K. are not going to get any benefit out of this.”

Moynihan also devoted a good portion of his remarks to the lessons Bank of America had learned since the financial crisis. Before the recession, he said, B of A’s portfolio was around 70% consumer business, and of that about half was unsecured. Today, the $2.2 trillion-asset company has shifted to a mix that’s closer to 50-50 and its consumer portfolio is now primarily secured.

Yet he said that no matter how balanced a bank’s portfolio, eventually “you’re gonna get bitten by something.” Underlying economic fundamentals may be solid right now, but Moynihan said that Bank of America now plans as if a “100-year flood” could happen tomorrow.

“The reality is, we’re in the longest recovery we’ve ever had, or one of the longest recoveries, but it hasn’t been as robust. If you look at the statistics in customer base today, they’re stronger this year than they were last year or the year before,” he said. “The cycle’s out there. It would be naïve and unwise to think it isn’t a cycle.”

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