Tuesday, March 21, 2023
HomeMarketBank of America CEO Wants All Financial Players, Including Crypto, Regulated Alike

Bank of America CEO Wants All Financial Players, Including Crypto, Regulated Alike

- Advertisement -

Financial firms are on an uneven regulatory playing field and that should change, according to
Bank of America
chief executive Brian Moynihan.

In the years since the financial crisis of 2008-09, banks have faced a wave of regulations to limit the risks they can take in terms of trading and lending. But that onslaught of regulations, including 2010’s Dodd-Frank Act, hasn’t meant that speculation and risky lending have ceased to exist. It just means that those activities have migrated to the so-called shadow banking industry, a catchall term for hedge funds, private equity, nonbank lenders, and a host of other financial companies. Not to mention crypto-exchanges, many of which, like FTX, went belly-up over the past year.

The trouble is, many of these organizations engage in banking-like activities even though they aren’t subject to the same rules as banks. That can spell trouble for consumers and the financial system at large if things go awry.

Right now, Moynihan figures the banking industry is only doing about half the lending. “The question of how that 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 that perform similar functions should be regulated the same way, even if those companies claim to be different from banks because of the technologies they use.

“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 has to be regulated 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 got to make sure we get straight.”

When asked by Barron’s if that standard should apply to collapsed crypto exchange FTX, Moynihan demurred, invoking banking regulations dating back to the 1800s.

“The National Bank Act and things like that were created to standardize and make sure that 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 guys write about it, but I think it’s obvious.”

Moynihan’s comments come as banks are trying to ramp up their technology to better compete with payments companies like
(PYPL), Block (SQ), and even to some extent,
(AAPL), which runs Apple Pay. Last month Bank of America and six other banks were reported to be working on a digital wallet that their customers can use when shopping online.

Write to Carleton English at carleton.english@dowjones.com

Credit: marketwatch.com

- Advertisment -

Most Popular