Bank of America CEO Brian Moynihan told investors at a conference Tuesday that the impending tax increases and spending cuts known as the fiscal cliff are already having an impact on the banks customers.
Companies the bank interacts with arent putting in as many orders for capital goods, Moynihan said as part of his kickoff to the Charlotte banks conference in New York. Chief financial officers the bank surveys label the fiscal cliff the No. 1 issue facing them.
That uncertainly continues to hold back the economy, Moynihan said. They will not be aggressive in times of this uncertainty.
But Moynihan said he expects lawmakers to come to an agreement to avoid the fiscal cliff during the lame-duck session of Congress, which began Tuesday. The changes are scheduled to go into effect Jan. 1.
Economists have said the U.S. could dive into another recession should lawmakers not reach a compromise on the $600 billion package of tax increases and spending cuts. Middle-income households would see their taxes jump an average of about $2,000 next year, the nonpartisan Tax Policy Center says.
Everyone knows its in the best interest to take care of this matter, Moynihan said Tuesday.
He joins a number of business leaders who have stressed the importance of avoiding the fiscal cliff, which is the product of last years showdown over raising the countrys debt ceiling.
JPMorgan Chase CEO Jamie Dimon, Goldman Sachs CEO Lloyd Blankfein and Citigroup CEO Michael Corbat also have signed a letter to Congress stressing the necessity of finding a solution.
The Financial Services Forum, Business Roundtable and U.S. Chamber of Commerce also have weighed in.
The theme of this years Bank of America conference is Navigating the New Normal, which includes more stringent regulation, higher capital requirements and low interest rates.
Moynihan spent the majority of his time during the conference using that context to describe the slimming and streamlining the bank has done over the past three years.
We faced an uncertain capital and regulatory environment, he said. The only thing we could control was how we would shape our company.
He said Bank of America is still on track to trim $8 billion in annual expenses through Project New BAC, the companywide efficiency program that includes about 30,000 job cuts.
Moynihan said that excluding recent increased costs from litigation and delinquent mortgage servicing, the bank already has knocked off $1 billion in quarterly expenses.
He also said the bank has no plans to make any acquisitions. The Associated Press contributed.