Banking is getting boring again. And after the last few years—when high-flying traders and financial alchemists drove the global economy into a massive ditch—that’s quite a relief.
The latest evidence emerged from Bank of America’s post-earnings conference call, in which BofA chief executive Brian Moynihan mentioned that the second-largest US bank by assets is hiring mortgage makers at a faster clip than it expected. The bank is trying to capitalize on the mini-refinancing boom that the Federal Reserve has set off with its latest round of cash creation and bond-buying, QE3. According to a transcript of the analyst call from FactSet, Moynihan said:
On the origination side you can see the volumes coming up, but we’ve added 3,000 more people during this year than we thought we’d have on the underwriting fulfillment side or the good mortgage side to help us get the volumes going … Like a lot of our colleagues, you know, the volume levels have been high and our capacity to get them closed with the underwriting standards has been a lot of work, and so we’ve added 3,000 or 4,000 people at this point than where we thought we’d be this year, and we’ll continue to do that to capture the revenue you spoke about.
This is good news for a few reasons. For one thing, it suggests that banks are going to start get more competitive on making loans which should benefit consumers via lower mortgage rates. It also is just a sign of hiring, and any hiring is heartening with US unemployment still at a stubbornly high 7.8%. On the other hand, Bank of America is still shrinking its headcount overall. As The Wall Street Journal recently reported, the bank has had a target of shedding 16,000 more jobs before the end of the year. And some might even argue that hiring related to mortgages—BofA rival Wells Fargo said it was adding people for mortgage origination earlier this week—might make many around the world leery. After all, wasn’t it a frothing mortgage market that set off the financial crisis to begin with?
Perhaps. But with Europe still a basket case and emerging market giants such as China decelerating, members of the global economy are going to have to take growth where they can find it. And from that perspective, signs of strength in a crucial sector of the world’s largest economy are most welcome.