BofA's Moynihan: We need big banks to help grow the economy

Key Points
  • BofA CEO Brian Moynihan defended big banks as being key to the U.S. economy.
  • He also expressed support for some of the regulatory changes coming out of the Trump administration.
BofA CEO: Real question is how does banking system help economies grow
BofA CEO: Real question is how does banking system help economies grow

Bank of America CEO Brian Moynihan sees his company's biggest mission as helping the economy to grow. To make that happen, he said, the bank needs to stay big.

In an interview Thursday with CNBC, Moynihan said some of the measures being contemplated now to loosen up the financial system make sense.

But he also said other discussions about reinstituting a law that would separate commercial banking from investment banking are counterproductive.

"That, to me, is a bad policy decision, because you need large institutions to support your large companies and your large economies," he said. "The reason why the U.S. banks are larger is because our economy is 30 to 40 percent (larger) than the next biggest. And by the way, the banks (that) are bigger than the U.S. banks in the world are the Chinese banks, because their economy's big."

BofA is the second-largest bank in the U.S. by assets and part of a cadre of big Wall Street institutions targeted by Washington politicians after the financial crisis. The interconnected nature of big financials helped exacerbate the crisis as liquidity issues spread through the system.

Brian Moynihan, CEO, Bank of America
Source: CNBC

However, Moynihan said investment banks like Lehman Brothers and Bear Stearns would have been better off if they had had access to the larger capital bases provided by bigger institutions.

"I'd rather have that structure, especially as a person, at the end of the day, that has to pay for the cleanup," he said.

Moynihan also expressed some confidence that the U.S. economy can break out of the sub-2 percent growth post-crisis pattern in which it has been locked. He cited consumer strength and said that tax reform also would help spur growth.

"If you have too stringent rules around capital and liquidity that requires to hold too much in reserve versus the risk, then you can slow down growth," he said. "We're for a safe and sound banking system. We're for a balancing and looking at regulation to think about getting the risk-reward right and helping. But you're doing that to help promote the growth that we need in the economy."