Banker Urges US to Spend Less

The stimulus program is working, but there's a need for new programs to save America from budget deficit fallout, Bob Kelly, chairman and CEO of BNY Mellon said at a Newsmaker March 11.

“We walked right to the edge of global depression and made it back,” he said. “Most banks are now back and healthy again except a few.”
But he predicted a recession in five to seven years caused by the federal deficit.

Asked if there is a safe proposal to ward off that eventuality, Kelly said, “No. There is no plan yet, and we need a credible plan and budget for our country to avoid that. We are spending too much as a nation.

“Now is the time to deal with budget deficit through cutting spending and not by raising taxes,” Kelly said.
The banker, whose institution operates in 34 countries, also said the U.S. has the “highest corporate tax, and that does not make us competitive.”

On the the positive side, Kelly said, “housing prices are bottoming out now except in some areas like Las Vegas and Tampa,” and the “unemployment rate has more or less peaked.”

But he said the residential housing mortgage system "needs fixing." Roughly 100 million homes worth about $23 trillion are now valued at $16 trillion, he said.

“Out of these, 50 million are paid for while the other 50 million are still in mortgage, and this huge asset class has become a huge problem,” he said.

Kelly urged the Obama administration “to come to realize that foreclosures are avoidable, and there is an urgent need for independent appraisal.”

Kelly called upon Americans to be very conservative in buying homes.