Bank of America’s New CEO Urges Change, More Lending

RALEIGH, N.C. — Brian Moynihan used his first public address as chief executive of Bank of America Corp. to call for changes in how the banking industry does business and for more lending.

Speaking Monday to a near-capacity crowd at the North Carolina Bankers Association’s annual economic forecast luncheon, Moynihan outlined several challenges facing the banking industry and portrayed B of A as being on the forefront of confronting them.

He cast so-called clarity commitments for the company’s credit card, mortgage and deposit products as a way of better describing terms and fees to ­customers.

In capital markets, Moynihan called for reforms in areas such as derivatives trading, securitizations, compensation and rating agencies.

Though he offered no specific plans, he emphasized a need to “balance safety and soundness with innovation.” Finally, he said the banking industry must accept higher capital and liquidity requirements.

“The key lesson here is 'never again,’ ” Moynihan said, referring to the near-meltdown in 2008 that led the government to infuse billions of dollars into Bank of America and other financial companies. (B of A repaid its $45 billion in funds from the Troubled Asset Relief Program last month.) “We can never again get our company or our industry in this position.”

Yet he argued that big banks should be kept intact.

“The ability to combine a commercial banking business with global investment banking and capital markets capabilities is important to us for one specific reason: It’s important to our clients,” he said. “The more capital-raising options we bring to the table for clients, the better solutions we can provide to help them grow.”

Moynihan, who succeeded Kenneth Lewis on Friday, briefly discussed industrywide declines in lending and called reports that banks are not lending “upsetting.”

He touted B of A’s commitment to increase lending to small businesses by $5 billion this year as an important move for the company and the economy.

“We will have to take more risk to do this, but it is the right thing to do,” he said.

Federal Reserve Board governor Elizabeth Duke also said during her remarks that recent conversations with bankers made her optimistic that lending would rise later this year.

“Nearly all the bankers with whom I have talked report that their business plans for 2010 are based on achieving increases in loan volumes,” Duke said.

“Most are expecting that loan losses will peak later this year, as the bottoming of the housing market becomes clearer and the economic recovery takes firmer hold,” she said. “And a few bankers are beginning to report renewed competition for new loans.”

Moynihan’s appearance came less than three weeks after he was picked to replace Lewis, who in late September unexpectedly announced plans to retire at the end of 2009.

There had been some doubt at one point in the search process as to whether Moynihan would get the nod, after several high-profile outsiders were mentioned as possible contenders.

Once he was named to the post, some wondered if the Bostonian would entertain the notion of moving B of A’s headquarters to the Northeast.

The new CEO attempted to squash such speculation on Monday, saying he shared the same vision for the $2.3 trillion-asset Charlotte company as his predecessors.

“Our bank has thrived as a North Carolina company for 135 years and will continue to do so,” Moynihan said, later adding that he plans “to build on the heritage that got us here.”

On the economic front, Moynihan said he sees some signs of a recovery, albeit one that will test bankers and their customers for some time to come.

“We continue to be worried about the fragility of the economy,” he said, particularly with internal projections that national unemployment will average 9.8% this year.

“This leads us to forecast a long, slow recovery,” Moynihan said. “The ­economic hole we’re climbing out of is very deep, with greater household ­leverage and more aggressive speculation than we’d seen in decades. Getting out will not be easy, and it will take time.”

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