BofA Chief Parries Political Criticism of Wall Street
Bank of America (BAC) - Get Report CEO Brian Moynihan would like to assure you that his bank's nose is clean.
And that's the key for all of Wall Street, he said, if the industry is to ditch what one analyst called its status as a "whipping boy" for candidates like socialist Bernie Sanders and conservative hardliner Ted Cruz.
"The criticism is that we do things for ourselves, not for the real economy," he said to investors during a conference at the St. Regis hotel in New York, "and that our compensation schemes were not aligned with long-term value."
But much has changed since the financial crisis of 2008, Moynihan argued, parrying some of the recent criticisms. "[Our] company's assets and capabilities are used for the real economy," he stressed. "And our capital 10 years ago was one third the size it is today."
Bailouts of big banks seven years ago still loom large in the public memory, he said in response to a question about what banks should do to make themselves a less easy target for White House hopefuls. The situation "is completely understandable," he added. "What we have to do is what we're doing, and we just have to keep after it."
In Charlotte, N.C.-based Bank of America's case, Moynihan emphasized liquidity provisions, which he placed at "$400 to $500 billion of a $2.2 trillion balance sheet." A requirement for increased capital reserves was part of the Dodd-Frank regulatory legislation prompted by the crisis.
He also drew attention to the "stress tests" that banks now must undergo to ensure their solvency during crises, reviews that were mandated by Dodd-Frank and administered by the Federal Reserve.
Despite the wide-ranging regulatory reforms, the power of the banks has still proved to be a rhetorical pressure point in early presidential debates.
During the last Republican debate, Ohio Gov. John Kasich received boos from the crowd in Milwaukee when he said he would once again bail out the major financial institutions rather than let them fail, which could lead to economic collapse. Cruz, a Republican senator from Texas, curried favor with the same crowd by saying he wouldn't use any public money to save them.
Sanders, an independent senator from Vermont who's seeking the Democratic nomination, has repeatedly voiced support for not just regulating the big banks but breaking them up entirely, saying that if they're too big to fail, they're too big to exist.
"We must break up these behemoths because of the incredible economic power they exert through their concentration of ownership," Sanders' website says. "It is simply not acceptable that a small handful of giant financial entities can exert such enormous influence over the economic well being of hundreds of millions of Americans."
His criticisms invoked the 2008 crisis, in which the subprime mortgage bubble's collapse precipitated the bankruptcy of investment firm Lehman Brothers and government bailouts of companies including Bank of America and Citigroup.
Changing that negative perception will take time, Moynihan said, but it can be done. "It's just going to take us continuing to keep our noses clean," he said, "enforcing that cultural change that we brought to the industry and driving out people who were doing the wrong things."