Tuesday, May 22, 2012

Moynihan: Bank of America not 'too big to manage'

When asked to defend the universal bank model Monday, Bank of America CEO Brian Moynihan said that the Charlotte bank is not "too big to manage," thanks in part to the streamlining the company has done over the past few years.

"Originally, the dialogue was about "too big to fail," Moynihan said at the Deutsche Bank Global Financial Services Investor Conference in New York City. "That's been taken out in terms of what Dodd-Frank says and the resolution plans we have."

Thus, the discussion has shifted as to whether the nation's huge full-service banks, like JPMorgan Chase and Citigroup, are too big to effectively oversee.

Moynihan said the bank has slimmed down, from nearly $2.37 trillion in assets in 2010 to now $2.18 trillion. That has involved sales of stakes in BlackRock, China Construction Bank and Santander.

"It's a narrower business," he said. "It's a safer enterprise."

He said the reason the bank is in the businesses it is in now is because customers want them to be, whether that be consumers, small and medium-sized businesses or global corporations.

Moynihan gave a similar answer when asked whether Bank of America could find itself in the position of JPMorgan Chase, which disclosed it lost at least $2 billion in risky bets in its corporate investment office.

Moynihan pointed out that BofA has nearly 90 percent of its money invested in government-guaranteed mortgage-backed securities or Treasuries, and very little in corporate debt -- which the bank is "very comfortable with." He also said the bank does not use  "macro positions" to hedge like the ones that got JPM in trouble.