Bank of America’s Moynihan starts job as new CEO
RALEIGH, N.C. (AP) — Bank of America Corp.’s new CEO Brian Moynihan said Monday his company is continuing to recover from the financial crisis but will remain cautious even as it expects to grow in 2010.
“Recovering from an (economic downturn) cycle, you have to be mindful of what got you here,” said Moynihan during an interview with The Associated Press on his first official working day in his new job. “That’s where you have to be careful that you don’t grow too fast and take on excessive risk, which is a lesson that we and everyone else learned.”
Speaking later in a speech at an annual economic forecast forum in Raleigh, N.C., Moynihan added: “We as an industry cannot avoid the simple fact that we caused a lot of damage, and we have to help make sure it doesn’t happen again.”
Moynihan also said in the speech that he expects unemployment to stay “stubbornly high.” The forum he was speaking at was sponsored by the North Carolina Bankers Association and the state’s Chamber of Commerce.
Investors will get the latest reading on unemployment on Friday when the Labor Department releases its monthly jobs report. Wall Street economists expect that the unemployment rate ticked up to 10.1 percent in December from 10 percent in November.
Any movement in the jobless rate will create an “ongoing drag on consumer spending and growth, and that will create misery for far too many of our friends and neighbors,” Moynihan said.
Moynihan takes over at time when the bank faces continued loan losses in the billions of dollars. It lost more than $2.2 billion in the third quarter as bad debt kept rising with consumers still struggling to pay their bills. Investors will hear if there’s been any improvement when the bank reports its fourth-quarter earnings on Jan. 20.
While credit delinquencies remain at historic highs, Moynihan said that the losses “do appear to be stabilizing.”
Bank of America has about 53 million relationships with customers, including individual consumers and businesses. That breadth helps make BofA particularly vulnerable to high unemployment.
Moynihan told the bankers that the economy has bottomed and that the bank is forecasting global growth of more than 4 percent in 2010. Growth in U.S. gross domestic product will be above 3 percent, he said.
“It’s just great to be in the year 2010,” Moynihan said. “Actually, it is great to be anywhere other than where we were as a company a year ago.”
Moynihan, 50, became CEO of the Charlotte, N.C-based bank on New Year’s Day, after Ken Lewis retired. Moynihan joined Bank of America as part of its 2004 purchase of FleetBoston Financial Corp., where he led global wealth and investment management. Over the past year he held a number of short-term stints throughout BofA, including general counsel, head of global corporate and investment banking and consumer banking chief.
As CEO, Moynihan has a tough job ahead. He will have to cool relations with regulators, overcome skeptics in Congress, handle investigations into the bank’s purchase of Merrill Lynch, restore fractured morale and deal with cultural divides between the bank’s several centers of power.
“We have a lot of work to do, and I’m ready,” Moynihan said in the earlier interview.