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Bank Of America's Brian Moynihan Says Universal Banking Model Isn't Dead

This article is more than 10 years old.

There's been a lot of talk about the return of Glass Steagall but Bank of America CEO Brian Moynihan thinks the universal banking model is crucial for his business.

Brian T. Moynihan, President and Chief Executive Officer, Bank of America

This afternoon Moynihan was asked to defend the universal banking model which marries retail banking with investment banking. The CEO of the nation's second largest bank said the model is the "most important" model there is because it gives consumers access to global information, capital markets, investment advice and basic banking all in one place.

"We can't be competitive if we can't provide all those services to our consumers," he says.

Moynihan argued that the dialogue on banking has gone from concerns about "too big to fail to too big to manage." He noted that regulations brought forth by Dodd-Frank have addressed the former and added that BofA has dramatically narrowed down the scope of its business  to address the later.

"Three years ago when we merged [with Merrill Lynch] our balance sheet was $2.7 billion. Now we are down to a $2.18 billion balance sheet, and we've doubled liquidity and capital," he says.

He pointed out that the bank no longer has a private equity business and that it wound down  its prop trading business in the second quarter of last year.

Moynihan acknowledged the heat he faced from investors and analysts about BofA's capital levels. "You guys would ask about our capital levels and I knew we'd be able to get there by downsizing," he remarked.

Asked about JPMorgan's trading loss and trading risks in the market Moynihan said, "Jamie has the skill to get out of it. The loss concerned the market but did not disrupt it."

BofA shares took a hit today closing down 2.7% to $6.86. Year-todate shares are up 23%.

Big banks including BofA, JPM, Morgan Stanley, Citi and Goldman Sachs are facing potential downgrades on their credit rating from Moody's in the next few weeks.