BofA CEO: 'The worst is over.'
The worst of the credit crisis is over, according to the nation's biggest lender. Bank of America reported a first quarter profit of $2.83 billion today, after preferred dividend payments. And CEO Brian Moynihan touted the economic recovery in a speech to regulators. CEOs are prone to overstating the importance of their own companies in the economy, but Brian Moynihan has more of a reason to do so than most. Bank of America is the biggest bank in the country and makes more mortgage loans than any of its U.S. competitors. So Moynihan says Bank of America's 28 cents per-share profit last quarter is a good sign for the entire economy. "I think what you can read in our results is actually something good," said Moynihan. "You can see that the recovery is real." In particular, Moynihan says fewer people are defaulting on their loans. As a result, Bank of America gave itself a smaller cushion to cover bad loans last quarter - setting aside $9.8 billion, as opposed to a buffer of more than $13 billion a year ago. Moynihan also says Bank of America's customers are relying less on credit and loans, preferring instead to save their money. That's not as good for the bank's bottom line, since it makes money charging interest on debt. But Moynihan says it's good for the economy as a whole, especially when you consider what caused the credit crisis to begin with. "Too much leverage is what I put at the heart of it," says Moynihan. "Easy money for a lot of people given in ways they didn't handle it well - and I'd say that's both for individuals and companies." Moynihan spoke in his characteristically clipped tones this afternoon at a Federal Reserve Bank symposium for regulators and banking insiders. He said small businesses are still having a very difficult time getting loans, but that mid-sized and large companies have plenty of access to money. The problem for now, he added, is few companies are drawing on that credit because they don't yet feel secure enough with the economic recovery to start spending again.