BofA's Darnell talks about trade-offs of financial regulations

As regulators continue to develop new mortgage rules at the same time as policymakers want to broaden access to credit, Bank of America Co-Chief Operating Officer David Darnell said Friday that all sides need to recognize that one impacts the other.

"We all have to understand that there are trade-offs," he said. "As we evaluate the mortgage industry ... the impact on the accessibly, affordability, is just something we're going to have to mange through. It will have an impact."

Darnell spoke of the industry's response to the CARD Act in 2009, which limited banks' ability to increase credit card rates on existing balances. That meant, Darnell said, that banks had to factor in the portfolio's risk ahead of time, increasing up-front costs and restricting availability.

As the CFPB finishes its qualified mortgage rules, Darnell said they need to be broad enough to give banks room to operate and have a range of products. He said the banking industry also needs to have the chance to point out potential unintended consequences of new regulations.

"The objective is a good one," he said. "The process is something we need to be thoughtful about."

Darnell was speaking as part of a panel at the Federal Reserve's Charlotte office during its annual credit markets symposium that draws bankers and regulators from around the region. Darnell spoke alongside UConn law professor Patricia McCoy and Consumer Financial Protection Bureau associate director David Silberman.

The latter's inclusion on the panel led to a few interesting moments, particularly when Darnell was asked what advice he'd give regulators working with his bank. He said he wished all the different regulatory bodies would coordinate better as they do their work since they often ask for the same information. Silberman didn't have any comment on that.

Darnell also spoke of an increasing emphasis on consumer research and education, at a time Bank of America is trying to make the consumer bank more profitable.

He said the bank has followed customers around for a day to see how they interact with the bank's products and talked with them about what kinds of things they would want.

Earlier this month, the bank inked a deal with online learning nonprofit Khan Academy to launch BetterMoneyHabits.org.