WASHINGTON: Bank of America CEO Brian Moynihan has warned to prepare for a US debt default and a recession that will drag down corporate earnings.
In an interview with CNN on Monday, Brian Moynihan, the head of the second-largest US bank said he hoped the government wouldn’t slip into default on its debt. But it’s a possibility, he warned, one which could rattle markets and the economy.
He said “we have to be prepared for that, not only in this country but in other countries around the world,” Moynihan warned. “You hope it doesn’t happen, but hope is not a strategy – so you prepare for it.”
Moynihan noted the US has needed to borrow more in recent years due to extraordinary circumstances, like the COVID-19 crisis, but he shot down suggestions made by other commentators that the US government should scrap the debt ceiling completely.
“[T]here’s got to be an argument about how we make sure we live within our means as a country,” the executive said in the interview.
Moynihan added that Bank of America is still expecting a mild recession to hit the economy, as inflation and high interest rates are still a huge concern. Central bankers have raised rates 450 basis-points to lower high prices, but rates that high could drag on corporate earnings and send the economy into a downturn, Bank of America previously warned.
