Bank of America’s CEO wants all financial players, including crypto, regulated in the same way
Financial companies are on an uneven regulatory playing field, and that should change, according to Bank of America CEO Brian Moynihan.
In the years following the financial crisis in 2008-09, banks have faced a wave of regulations to limit the risks they can take when it comes to trading and lending. But that onslaught of regulations, including the Dodd-Frank Act of 2010, has not meant that speculation and risky lending have ceased to exist. It just means that these activities have migrated to the so-called shadow banking industry, an umbrella term for hedge funds, private equity, non-bank lenders and a variety of other financial companies. Not to mention crypto exchanges, many of which, like FTX, went up in the last year.
The problem is that many of these organizations engage in banking-like activities even though they are not subject to the same rules as banks. It can cause problems for consumers and the financial system in general if things go wrong.
Right now, Moynihan reckons that the banking industry only does about half of the lending. “The question of how the other half behaves is still up in the air,” Moynihan said in an interview with Barron’s. “The banking system tends to be more consistent.”
In his view, companies performing similar functions should be regulated in the same way, even if these companies claim to be different from banks because of the technologies they use.
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“If it’s a deposit, it’s a deposit, I don’t care where it comes from. If it’s a loan, it’s a loan, I don’t care. It must be regulated in the same way.” Moynihan said. “And the idea of, ‘I’m going to do it with technology or do it differently,’ never made any sense, and that’s what we have to make sure we get right.
Asked by Barrons whether this standard should apply to collapsed crypto exchange FTX, Moynihan responded by invoking banking regulations dating back to the 1800s.
“The National Bank Act and things like that were created to standardize and make sure there’s stability in the core system of the fiduciary thing of taking people’s money and holding it and making loans. So I’ll let you write about that, but I think it’s obvious. »
Moynihan’s comments come as banks try to ramp up their technology to better compete with payments companies like PayPal ( PYPL ), Block ( SQ ) and even, to some extent, Apple
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(AAPL), which runs Apple Pay. Last month, Bank of America and six other banks were reported to be working on a digital wallet for their customers to use when shopping online.
Write to Carleton English at [email protected]
