Economy to Stabilize, Jobless Rate to Stay High: BofA CEO
New Bank of America CEO Brian Moynihan told CNBC Monday that he expects the economy to stabilize in 2010, but for unemployment to stay high at around 9 percent.
Moynihan spoke to CNBC before giving a speech at the annual economic forecast forum sponsored by the North Carolina Bankers Association and the state's Chamber of Commerce in Raleigh. That outlook on the economy and jobs were two themes of the speech, he said.
Moynihan also said he would outline his hope for regulatory reform, which is that the rules will apply to everybody equally. For example, if there are regulations regarding mortgage loans, they should apply to all applicants.
"If we do that, then we'll do the social good we want, which is to make sure people have enough money to buy a home," Moynihan said.
Although BofA has struggled with delinquencies on its small business loans — which hit a rate of 17.5 percent in the third quarter — Moynihan said the bank has committed to making 5 billion more small business loans as the economy stabilizes in 2010, saying it can afford to take "just a hair" more risk.
Moynihan also said he hopes to start doling out dividends to shareholders, but in a Dec. 18 interview with CNBC, he said the bank won't be able to do so until it starts earning money. The bank's dividend is currently one cent a share.
Moynihan, who officially succeeded ousted CEO Ken Lewis in the job on New Year's Day, added that his compensation package hasn't yet been decided.
Don't Break Up Big Banks
In his speech in North Carolina Wednesday, Moynihan told business executives that he disagrees with calls to break up investment banks and commercial banks.
Bank of America combined with investment bank and brokerage Merrill Lynch a year ago, but the acquisition forced the largest U.S. bank to take an additional round of bank bailout funds after large losses from Merrill's structured debt holdings.
Moynihan defended the combination of commercial banking with capital markets businesses at Bank of America.
"It represents what our customers need from us as an industry," he told the North Carolina economic forecast forum, hosted by the North Carolina bankers' association and chamber of commerce.
Separately, Moynihan said that while he expected job growth in the United States early this year, he continued to be concerned about the fragile state of the economy, and said unemployment will cause a drag on consumer spending and growth.
"The economic hole we're climbing out of is very deep," he said.
He does, however, expect GDP growth of more than 3 percent in 2010.
Also Monday, the Charlotte Observer Web site ran an open letter by Moynihan, in which he said BofA's job is to "find the sensible middle, where growth and stability meet."
He added that free markets and regulators must work in balance for the banking sector to be healthy.
—Reuters contributed to this report