Brian Moynihan, Bank of America's new CEO, may not oppose the creation of a federal consumer-protection agency, the Wall Street Journal reports this morning.
As the centerpiece of the Obama administration's financial regulatory overhaul, the agency, which would be charged with overseeing credit card regulations and lending practices, has been subject to myriad criticisms from business groups. But not even a month into his tenure at BofA, Moynihan has indicated that he may yield to federal regulators. Here's the WSJ:
"Mr. Moynihan's only substantial concern with creation of a new consumer-protection agency, according to people familiar with his remarks, is that the White House's demand for large banks to abide by federal and state laws would result in a logistical nightmare of more than 50 sets of rules."
Moynihan's apparent willingness to waive his opposition to the consumer-protection agency is a departure from the industry's chief advocacy groups, including the U.S. Chamber of Commerce, the American Financial Services Association and the American Bankers Association, which oppose the agency's creation on the grounds that it will clog the credit process and ultimately result in higher costs for consumers.
In some ways, Moynihan's approach to management is markedly different from that of his predecessors. Almost immediately upon assuming his position as head of Bank of America, and in stark contrast to former BofA CEO Ken Lewis, Moynihan went to Washington to meet with a litany of policymakers that included Federal Reserve Chairman Ben Bernanke, Treasury Secretary Tim Geithner and top Obama adviser Valerie Jarrett. And unlike Lewis, who never appeared in Davos, Moynihan participated in last week's World Economic Forum, where he discussed regulatory proposals with global banking officials.
The bank's pursuit of better relations with policymakers may go a long way toward softening its public image. Last year, the bank -- which took $45 billion in taxpayer bailout funds -- announced its aim to improve its reputation so that it comes to be seen as "a force for positive change in key issues affecting the U.S. economy and consumers." To that end, the company is highlighting the link between its performance and the health of the wider economy: "Brian wants Bank of America to be a part of the solution to the economic challenges facing the country," Bank of America spokesperson James Mahoney told the WSJ. "If the economy grows, we grow."
But Moynihan wasn't entirely conciliatory. In Davos last week, he denied claims that Bank of America is "too big" and argued that the services clients demand necessitate the bank's size:
"Bank of America is not too big. We think that what we can do is provide incredible things for our clients.I think the role that government is trying to play is to make sure the institutions remain stable through all kinds of crises and I think that's an absolutely appropriate role for the government to play. Big by definition is not the question, it's a question of how you conduct your activities, how you manage activities and how you manage risk."
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