WEBVTT - BofA’s Moynihan Talks Enthusiasm for Deals 0:00:02.759 --> 0:00:07.560 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.160 --> 0:00:10.360 Hey guys, great to be with you day two of 0:00:10.440 --> 0:00:13.720 the World Economic Forum here in Davos, Switzerland. Mine's firmly 0:00:13.720 --> 0:00:16.560 elsewhere in Washington, DC, isn't that right, Lea? So twenty 0:00:16.600 --> 0:00:19.079 four hours of conversations about how great America is and 0:00:19.120 --> 0:00:20.880 how the rest of the world will struggle with the 0:00:20.920 --> 0:00:22.200 incoming president Donald Trump. 0:00:22.239 --> 0:00:25.600 Yeah, every conversation here at Davos has been what's America 0:00:25.640 --> 0:00:28.600 going to do? How can I leverage myself to be 0:00:28.640 --> 0:00:31.160 in the best position possible? And oh yeah, what's the 0:00:31.240 --> 0:00:31.960 latest headline? 0:00:32.040 --> 0:00:35.000 Brom Onehan alongside us, the chairman of CEO at Bank 0:00:35.000 --> 0:00:36.960 for America. We're going to cover all of that through 0:00:36.960 --> 0:00:39.199 the next eight minutes or so. There's an important occasion 0:00:39.200 --> 0:00:41.760 to mark fifteen years at the top of Bank for America. 0:00:41.840 --> 0:00:43.400 Now, it's been an honor to lead to company, and 0:00:43.440 --> 0:00:45.760 we've had some fun and it was interesting to start. 0:00:46.600 --> 0:00:48.680 For the last ten years or so, we've. 0:00:48.560 --> 0:00:50.640 Been on a role just producing responsible growth and the 0:00:50.640 --> 0:00:52.760 team does a great job and we can take private. 0:00:52.800 --> 0:00:54.400 We've put the company to where it should be. Is 0:00:54.560 --> 0:00:55.960 one of the big great companies in the world. 0:00:56.120 --> 0:00:59.400 Beyond interesting fifteen years ago was the absorption of countrywide 0:00:59.440 --> 0:01:02.160 Financial It was Meril. It's a very very different bank 0:01:02.160 --> 0:01:04.280 and a very very different moment. That phrase you use 0:01:04.360 --> 0:01:07.759 is one you've used so many times, responsible growth. There 0:01:07.800 --> 0:01:09.880 is a feeling that maybe we move towards something house 0:01:09.920 --> 0:01:11.600 in the world of banking over the next few years. 0:01:11.640 --> 0:01:13.560 Some might say it's sort of reckless growth, which is 0:01:13.560 --> 0:01:15.560 going to go for it? How would you describe the future? 0:01:15.959 --> 0:01:19.280 So what you're hearing is an enthusiasm for in the 0:01:19.319 --> 0:01:22.200 investment banking side of particularly transactions right for a long time, 0:01:22.360 --> 0:01:24.640 for the last couple of years, it's been hard to 0:01:24.640 --> 0:01:27.399 get a transaction through. And what stops a seller from 0:01:27.440 --> 0:01:29.920 selling or a buyer from buying is this thing is delayed. 0:01:29.959 --> 0:01:32.080 I'm exposed and so what they'll do is they'll push 0:01:32.120 --> 0:01:32.360 it through. 0:01:32.400 --> 0:01:34.600 So there's a lot of enthusiasm that they'll be better 0:01:34.640 --> 0:01:36.679 growth in United States. There a lot of enthusiasm by 0:01:36.720 --> 0:01:38.560 the bankers saying these deals can get done, so I 0:01:38.560 --> 0:01:41.039 can go have this future conversation. It's just not another 0:01:41.120 --> 0:01:43.480 idea that goes through the system. Everybody says that's a 0:01:43.520 --> 0:01:45.640 great idea, but it now can be a great idea. 0:01:45.720 --> 0:01:47.600 Let's go do it, or a great idea. 0:01:47.360 --> 0:01:48.840 I don't want to do it, but it's a more 0:01:48.840 --> 0:01:50.680 of a substance space than it is more of a 0:01:50.720 --> 0:01:52.320 worry about the environment around us. 0:01:52.360 --> 0:01:54.640 Are you basically saying that there's more enthusiasm, that there 0:01:54.680 --> 0:01:56.760 is conviction and will to actually get stuff done. 0:01:56.880 --> 0:01:59.160 Yeah, I think you saw some deals getting announced and 0:01:59.160 --> 0:02:01.680 you'll see more deals geting announced in our sector. In banking, 0:02:01.760 --> 0:02:05.160 especially in the United States, the consolidation is still far 0:02:05.200 --> 0:02:06.160 away from being. 0:02:07.920 --> 0:02:08.360 Done. 0:02:08.600 --> 0:02:10.680 There will always be big banks or always be small banks, 0:02:10.680 --> 0:02:12.600 but you'll let people make a decision what they want 0:02:12.600 --> 0:02:13.720 to do. And there haven't been a lot of bank 0:02:13.760 --> 0:02:16.200 deals done. Bank to bank deals we can't do them, 0:02:16.280 --> 0:02:19.079 it's not legal, but as investment banking, we can help 0:02:19.160 --> 0:02:19.800 other people do them. 0:02:19.840 --> 0:02:21.760 And it haven't been a lot done because just uncertain. 0:02:21.480 --> 0:02:24.000 You're getting caught in a transaction and having issues. So 0:02:24.080 --> 0:02:27.239 the belief that they should promote the banks consoliding and 0:02:27.240 --> 0:02:29.480 getting more efficient, passing that through to customers, passing that 0:02:29.560 --> 0:02:33.040 through to small businesses, et cetera, is different. 0:02:33.120 --> 0:02:33.840 Will be a change. 0:02:33.880 --> 0:02:36.600 Well, there's the banking sector specifically, and some of the 0:02:36.600 --> 0:02:39.280 deregulation and whether some of these mergers in consolidation will 0:02:39.320 --> 0:02:40.240 be allowed, and. 0:02:40.240 --> 0:02:41.520 Then there's a broader corporate sector. 0:02:41.520 --> 0:02:43.560 As some of the enthusiasm we've seen and we've heard 0:02:43.600 --> 0:02:46.400 from the cities, a head of banking from JP Morgan, 0:02:47.720 --> 0:02:50.320 how much do you see that being maybe a little 0:02:50.480 --> 0:02:53.840 premature based on some of the policies coming down the 0:02:53.880 --> 0:02:57.239 pike and the uncertainty around debt, deficit and rates. 0:02:57.680 --> 0:03:00.520 Well, I think you have to divorce a little bit 0:03:00.560 --> 0:03:03.320 some of the fiscal work that has to be done, 0:03:03.320 --> 0:03:05.840 and in coming Treasury or Secretary and others have to 0:03:05.840 --> 0:03:07.840 take very seriously this question of how do we manage 0:03:08.000 --> 0:03:10.480 the revenue stream, the expense stream and the amount of 0:03:10.520 --> 0:03:11.160 debt and get. 0:03:11.080 --> 0:03:11.839 It all to work out. 0:03:12.600 --> 0:03:14.840 That one of the ways that that becomes easier if 0:03:14.840 --> 0:03:17.880 you have more activity and more things going on. 0:03:18.000 --> 0:03:19.680 So I think the enthusiasm. 0:03:19.240 --> 0:03:21.560 You're here when the bankers is more structurally that the 0:03:21.639 --> 0:03:26.800 belief is that even starting yesterday, you don't have you 0:03:26.800 --> 0:03:28.480 don't have the constraint that you have, so you can 0:03:28.560 --> 0:03:32.440 go if there's more that enables more, that's good stuff, 0:03:32.520 --> 0:03:34.480 but right now it'll stop it going in the wrong 0:03:34.520 --> 0:03:38.480 direction and look hard, medium small sized businesses their biggest. 0:03:38.120 --> 0:03:39.040 Complaint last summer. 0:03:39.120 --> 0:03:41.640 Last time I was here and we talked to the 0:03:41.800 --> 0:03:45.040 to the administration about it was the biggest complaint was 0:03:45.480 --> 0:03:47.800 you're in my pocket. You're slow me down. I can't 0:03:47.800 --> 0:03:49.840 get things done. I want to permit to do something 0:03:49.840 --> 0:03:50.440 it takes forever. 0:03:50.480 --> 0:03:52.560 I want your labor rules. 0:03:52.600 --> 0:03:54.120 All this stuff was going on just over and over, 0:03:54.160 --> 0:03:56.680 and small medium sized business don't have the thousands of 0:03:56.680 --> 0:03:58.920 people that big companies have to figure it all out, 0:03:58.920 --> 0:04:01.120 and they're figuring out their own. The same person's running 0:04:01.120 --> 0:04:03.200 the business at nice sittingers say, so, what does this 0:04:03.560 --> 0:04:06.240 new taxation strategy on so security mean to me? 0:04:06.840 --> 0:04:08.280 How does it apply? How I have to change all 0:04:08.320 --> 0:04:08.880 my systems? 0:04:08.880 --> 0:04:11.440 And so they're just saying, if you just stop, you 0:04:11.480 --> 0:04:12.880 know things will get better. 0:04:12.960 --> 0:04:15.000 So you're on the number one lender to small businesses 0:04:15.120 --> 0:04:17.520 in the United States, give us the read on things 0:04:17.720 --> 0:04:20.160 right now. Are they already making those decisions to make 0:04:20.200 --> 0:04:22.039 a move to make those investments that they were on 0:04:22.400 --> 0:04:24.920 hold over the last four years doing? Are they already 0:04:24.920 --> 0:04:25.440 making that move? 0:04:25.680 --> 0:04:27.440 So if you come over the last say, six eight 0:04:27.480 --> 0:04:31.240 months or so, that it went from regulation and inflation, 0:04:31.520 --> 0:04:32.360 the inflation. 0:04:32.000 --> 0:04:33.680 Has kind of come down as their worry. 0:04:33.760 --> 0:04:36.400 Right now, what's actually interesting is they're going back to 0:04:36.600 --> 0:04:38.040 labor shortages and rightly. 0:04:38.360 --> 0:04:39.240 Now the interesting thing. 0:04:39.120 --> 0:04:41.840 About that that has a question about immigration and all 0:04:41.880 --> 0:04:44.320 this stuff going on. But what they're feeling is demand. 0:04:44.560 --> 0:04:47.679 I need people to do things. And so they're starting 0:04:47.680 --> 0:04:51.240 to feel the demand steady. Remember when the Fed was 0:04:51.320 --> 0:04:52.719 raising rates, hid their cost of. 0:04:52.720 --> 0:04:53.719 Barring went up a lot. 0:04:53.920 --> 0:04:56.480 They went from three hundred basis points over an index 0:04:56.560 --> 0:04:58.360 that went up by five hundred basis points. That's a 0:04:58.360 --> 0:05:00.960 big number, and so that cause them to say, let 0:05:01.040 --> 0:05:03.760 me be careful and then if as the rates come 0:05:03.760 --> 0:05:05.040 download but they feel a little better. 0:05:05.160 --> 0:05:06.920 And now let's say, okay, I have the opportunity to grow, 0:05:07.440 --> 0:05:08.719 but can I get the people? 0:05:08.839 --> 0:05:11.760 And remember that was the twenty twenty one twenty two timeframe, 0:05:12.000 --> 0:05:14.400 so in there there's got to be a solution this immigration. 0:05:14.440 --> 0:05:16.760 It doesn't constrain those small medium. 0:05:16.560 --> 0:05:18.400 Sized business for growing or they're going to start letting. 0:05:18.400 --> 0:05:19.840 Would you say, just to jump in, would you say 0:05:19.839 --> 0:05:22.080 we are supply constrained. Do you think we are prone 0:05:22.240 --> 0:05:23.400 to have these bursts of inflation? 0:05:25.000 --> 0:05:26.120 Yes and no, And. 0:05:27.720 --> 0:05:31.480 We don't know honestly, because because of stimulus after the. 0:05:31.440 --> 0:05:34.040 Pandemic, there was so much more than there maybe had 0:05:34.040 --> 0:05:35.839 to be by technical economic. 0:05:35.440 --> 0:05:38.960 Discussion, you know, it's hard to say whether we're supply 0:05:39.040 --> 0:05:41.480 constrained and other things. And it were supply constraints because 0:05:41.480 --> 0:05:45.040 it cut off a supply and the stoppage of goods 0:05:45.040 --> 0:05:46.880 coming in the country and shipping and all that stuff 0:05:46.880 --> 0:05:48.640 that we went through. So you haven't gotten to a 0:05:48.640 --> 0:05:51.719 real normalized side of that yet. But that's the blame 0:05:51.760 --> 0:05:55.039 for the current thing. I think the supply shortages can 0:05:55.120 --> 0:05:57.320 mitigate if you know, we got to be a little 0:05:57.320 --> 0:05:59.039 careful about labor supply, We've got to be a little 0:05:59.040 --> 0:06:00.680 care for about tariff. 0:06:00.440 --> 0:06:01.799 Impacting supply and things. 0:06:01.839 --> 0:06:04.200 But I think people the second sourcing has gone on, 0:06:04.200 --> 0:06:06.919 people are finding places to get stuff. So I'm not 0:06:07.040 --> 0:06:09.160 quite sure that's going to be the issue, but a 0:06:09.160 --> 0:06:10.480 lot of what we think it was the issue is 0:06:10.520 --> 0:06:13.320 actually the pandemic, the stimulus and the impact the pandemic 0:06:13.360 --> 0:06:13.880 on supply. 0:06:14.160 --> 0:06:15.320 That's worked a suit of system. 0:06:15.440 --> 0:06:17.200 So John started with the fact that you've been a 0:06:17.240 --> 0:06:20.039 Bank of America for fifteen years. We keep hearing about 0:06:20.080 --> 0:06:23.240 succession plans in different places. What's your succession plan? 0:06:23.640 --> 0:06:24.600 But you're trying to throw me out. 0:06:24.920 --> 0:06:27.280 No, no, not at all. I'm just wondering because this 0:06:27.320 --> 0:06:30.440 is something that we. 0:06:31.320 --> 0:06:31.560 Lost. 0:06:31.640 --> 0:06:36.320 Questions are the way the fascination with all this is interesting, 0:06:36.360 --> 0:06:38.119 and one just means we're all getting older. 0:06:38.160 --> 0:06:40.920 So what they'reality is run. 0:06:41.160 --> 0:06:43.360 We run across in our company through the top three layers, 0:06:43.360 --> 0:06:46.800 including for the CEO succession. Every six months, we go 0:06:46.839 --> 0:06:49.440 through everything who the media successors, for every one of 0:06:49.480 --> 0:06:52.279 our teammates jobs, and we have a slate and we 0:06:52.400 --> 0:06:53.960 go from a slate because if we run a company, 0:06:54.000 --> 0:06:58.119 people leave for a whole, they retire, they get another job, whatever, 0:06:58.200 --> 0:06:59.320 and you're always filling jobs. 0:06:59.320 --> 0:07:01.080 And so with the way, the board will make. 0:07:00.960 --> 0:07:04.080 A choice at some point, I'm not going anywhere unless 0:07:04.080 --> 0:07:06.799 they throw me out. They know that. But my job, 0:07:06.880 --> 0:07:08.839 and one of the biggest jobs I have, is preparing 0:07:08.880 --> 0:07:11.920 people for the what it would be like to run 0:07:11.960 --> 0:07:16.280 this company out there, and that's important. So we do 0:07:16.320 --> 0:07:17.760 a lot with our team to get them used to 0:07:17.840 --> 0:07:19.840 experiences and get them to learn more about the. 0:07:19.760 --> 0:07:21.040 Trade offs you have to make at the top of 0:07:21.080 --> 0:07:21.480 the house. 0:07:21.360 --> 0:07:23.400 Because if you come through a business or come through 0:07:23.440 --> 0:07:25.600 a function, you haven't made those trails. That's part of 0:07:25.640 --> 0:07:27.840 our general strategy, and so we talked to our board. 0:07:27.880 --> 0:07:30.480 But you'll never hear us discuss A is in and 0:07:30.520 --> 0:07:32.880 B is. That to me is the worst thing you 0:07:32.880 --> 0:07:34.600 can do. I went through that process and the end 0:07:34.680 --> 0:07:36.800 of two thousand and nine. Whether it's DAI to day speculation, 0:07:37.160 --> 0:07:37.560 that's not. 0:07:37.520 --> 0:07:38.960 The way to do it. Well, thank you for that 0:07:39.040 --> 0:07:40.160 very much. You'll be the first person. 0:07:40.320 --> 0:07:40.920 Okay, thank you. 0:07:41.000 --> 0:07:43.200 I appreciate that we only have about thirty seconds. You 0:07:43.200 --> 0:07:45.160 said something to us when we were at Bank of 0:07:45.200 --> 0:07:48.920 America that AI would basically keep the staff the same 0:07:48.960 --> 0:07:51.880 size but increase the footprint of business. Do you stand 0:07:51.920 --> 0:07:52.240 by that? 0:07:52.680 --> 0:07:55.880 Yeah, there are two facts I'll give you. One is 0:07:55.920 --> 0:07:57.000 we run the company on the. 0:07:56.920 --> 0:07:59.760 Nominal amount of dollars of expenses we did ten years 0:07:59.800 --> 0:08:02.960 ago almost now nomena not not inflation, just and we 0:08:03.040 --> 0:08:05.800 run it on thirty thousand less people. That is all digitization, 0:08:06.240 --> 0:08:11.000 and AI is an extension of automation, digitization models, et cetera, 0:08:11.360 --> 0:08:14.160 automating work, taking out work and automated. Therefore you don't 0:08:14.200 --> 0:08:16.720 need and I think he keeps going. The idea is, 0:08:16.760 --> 0:08:19.800 if we're good, we'll keep adjusting where the teammates end 0:08:19.920 --> 0:08:21.600 up so it may not be the same two hundred 0:08:21.600 --> 0:08:24.200 twelve thousand people, two hundred and thirteen thousand people doing 0:08:24.200 --> 0:08:26.040 the same thing ten years from now. Yeah, but my 0:08:26.120 --> 0:08:28.320 guess is that our employment levels will stay relatively static 0:08:28.520 --> 0:08:30.840 if you work towards stuff that can't be replicated near 0:08:30.880 --> 0:08:31.520 turned by air. 0:08:31.480 --> 0:08:33.559 Ron gent And you've been super generous with your time 0:08:33.559 --> 0:08:35.040 and you show me up every year because you always 0:08:35.040 --> 0:08:36.840 come out here with a suit jacket on and I'm 0:08:36.880 --> 0:08:39.160 sitting here with like a winter jacket. Yeah, but I 0:08:39.200 --> 0:08:41.520 have Yeah, I know, I know you've been influenced by Brian. 0:08:41.679 --> 0:08:42.880 No, it's actually just a lot warmer. 0:08:43.920 --> 0:08:46.000 Thanks for America, CEA, you and Chairman, thank you.