Bank of America CEO Brian Moynihan said although he is relieved lawmakers reached a resolution for the debt ceiling, it is “not good for the United States to go through this.”
The resolution “provided momentary momentum in the markets and allows us to face the real economic issues and real debt level issues ahead of us,” Moynihan told CBS’ “Face the Nation” on Sunday.
Getting rid of the debt ceiling altogether is a “political question,” Moynihan said.
“At the end of the day, we need to have a serious discussion about how much debt we can have in this country, how much we could afford and how it’s spent,” said Moynihan, emphasizing the impact the financial health of the United States has on the rest of the world.
The Fed’s biggest challenge remains “the power of the US consumer,” Moynihan said.
“They were earning more money and they were spending it, what you’re seeing is that’s dipping down,” Moynihan said.
But the Fed “has won that battle,” he said.
Regarding predictions of a mild recession, Moynihan said the Fed’s tightening policies has “had its effects.” Consumer spending for Bank of America customers is slowing down year-to-date.
“That level is more consistent with a 2% growth economy and a 2% inflation economy, not a 4% inflation level economy,” Moynihan said.
Though Friday’s strong jobs report sends “some confusing and ambiguous messages,” the reality is consumer activity is aligning with the Fed’s goals, Moynihan said.
Other factors, such as bank failures, Treasury funding and the wider environment have slowed the economy down, he said.
“The question is, is inflation under control?” Moynihan said.
Despite credit tightening up, Moynihan said Bank of America does not “really change lending standards that much given different types of cycle,” but that “consumer credit quality in our industry is very strong.”
Moynihan said the bank is slowing down hiring – last May Bank of America hired 3,000 people, and this year it hired just 700.
The bank is not laying off, Moynihan said, but the attrition rate slowed and it needs to trim headcount.