WEBVTT - Bank of America CEO Brian Moynihan Talks "Over-Regulation" 0:00:02.759 --> 0:00:07.240 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.000 --> 0:00:09.559 Now I want to take you over to the Economic 0:00:09.600 --> 0:00:12.400 Club of Washington, where I'm pleased to say that David Rubinstein, 0:00:12.440 --> 0:00:14.840 the Carlisle co founder and host of Pets to Pair 0:00:14.920 --> 0:00:18.040 Conversations on bloombag TV, is joined by good front of 0:00:18.040 --> 0:00:20.840 this program. The Banks America CEO Brian moynihan. 0:00:21.079 --> 0:00:24.960 Let's take a listen. There's a lot of burden upon 0:00:24.960 --> 0:00:29.880 the banking system to both report suspicious activity reports and 0:00:30.640 --> 0:00:33.120 do a lot of analysis, and we have to close accounts. 0:00:33.200 --> 0:00:35.000 We can't tell people why we did it, and often 0:00:35.000 --> 0:00:38.280 we're told by authorities to close accounts. That creates confusion. 0:00:38.560 --> 0:00:41.680 Another area comes up in this discussions in a crypto 0:00:41.720 --> 0:00:44.839 area were the regulator said you can't bank crypto operating companies, 0:00:44.920 --> 0:00:47.680 employees of crypto companies, etc. We are allowed to do 0:00:48.120 --> 0:00:51.840 We bank everybody but the operating company. They said, that's 0:00:52.000 --> 0:00:55.040 a high risk activity. Ask us for authority and guess what, 0:00:55.080 --> 0:00:57.560 you would have never gotten the authorities. So that came 0:00:57.640 --> 0:00:58.760 up as issue. So at the end of the day, 0:00:58.800 --> 0:01:00.640 it's about getting these regulations right now. I think it 0:01:00.680 --> 0:01:03.120 opens a dialogue about how to get these regulations correct, 0:01:03.680 --> 0:01:06.240 and the end of the day, we were open for everybody. 0:01:06.400 --> 0:01:09.800 We serve millions and millions of Americans trallions and transactions 0:01:09.840 --> 0:01:11.480 a year, and we continue to do so. 0:01:11.640 --> 0:01:14.679 Okay. So when this administration was elected, there was a 0:01:14.680 --> 0:01:18.360 lot of i would say, jubilation in the streets the 0:01:18.400 --> 0:01:21.960 banking where all people thought that the banking regulation had 0:01:22.000 --> 0:01:25.600 been too tough. Under President Biden, some people thought that 0:01:25.800 --> 0:01:29.560 regulation would be more amenable to banks. Has that turned 0:01:29.560 --> 0:01:31.200 out to be the case, shat, or it's still too 0:01:31.240 --> 0:01:34.280 early to know, and is the Banking Committee happy with 0:01:34.400 --> 0:01:36.800 the direction that the current administration is going, or you 0:01:36.880 --> 0:01:37.640 just don't know yet. 0:01:38.800 --> 0:01:41.000 So you have to start people sort of step back 0:01:41.040 --> 0:01:45.440 and say the regulation, the regulation of banking has been 0:01:45.480 --> 0:01:49.360 always been true since our charter or was part of 0:01:49.400 --> 0:01:51.720 a bank was some seventeen eighty four. So we've been 0:01:51.760 --> 0:01:54.800 regulated from that day forward. If you think about the 0:01:54.880 --> 0:01:57.600 Great Financial Crisis and Dodd Frank and a lot of 0:01:57.600 --> 0:01:59.800 capital rules and quite rules and all that stay came in, 0:02:00.360 --> 0:02:02.760 there was a reason for the world wh at large 0:02:03.120 --> 0:02:06.200 really not happy with banks in a way, and non 0:02:06.240 --> 0:02:09.600 banks that became banks. Golden sax Morgan, Stanley, MARYLANDT cetera. 0:02:09.840 --> 0:02:12.640 So you could understand that when you go fast forward 0:02:12.680 --> 0:02:15.240 through the fifteen years hence plus, you go through the 0:02:15.280 --> 0:02:18.480 pandemic and the banking system stands up and stabilizes the economy. 0:02:18.760 --> 0:02:21.400 You go through the regional banking crisis, the banking system 0:02:21.400 --> 0:02:23.960 steps up and stabilize it, and they keep adding capital 0:02:23.960 --> 0:02:26.760 and LIQUIDI you're sort of saying, wait a second. You know, 0:02:26.840 --> 0:02:28.760 we are a source of strength. And by the way, 0:02:28.760 --> 0:02:31.080 the American bank industry is really a source of strength. 0:02:31.280 --> 0:02:34.480 So the penlan kept just swinging even though the reason 0:02:34.480 --> 0:02:37.680 why it had swung had stopped. And so our industry 0:02:37.800 --> 0:02:40.440 was say, wait a second, why are we have twenty 0:02:40.480 --> 0:02:42.560 percent more capital and we did during the pandemic. The 0:02:42.639 --> 0:02:46.399 risk is the same. It's just by mathematical creep of calculations. 0:02:46.919 --> 0:02:50.880 Why are you saying we're going to limit your fees 0:02:50.960 --> 0:02:54.200 charged for certain activity or demon activity alone when it 0:02:54.240 --> 0:02:59.240 wasn't alone, and with one hundred years of history saying 0:02:59.240 --> 0:03:01.280 an overdraft is alone, somebody just says, I want to 0:03:01.280 --> 0:03:04.160 make it alone. And so this idea of the regulators 0:03:04.200 --> 0:03:07.240 sort of imposing new rules and regulations that Congress did 0:03:07.280 --> 0:03:10.600 not intend actually was kind of an interesting question, right. 0:03:10.680 --> 0:03:13.160 So many people when they talk about the Federal Reserve, 0:03:13.680 --> 0:03:15.960 they wonder whether the Fed are going to increase interest 0:03:16.000 --> 0:03:19.120 rates or decrease interest rates. But in the banking community, 0:03:19.120 --> 0:03:20.280 you're often worried about. 0:03:20.040 --> 0:03:21.680 The stress tests. 0:03:21.720 --> 0:03:24.640 And do you think the FED has pushed stress tests 0:03:24.680 --> 0:03:27.400 to two tough a limit on banks? Or are you okay 0:03:27.440 --> 0:03:28.840 with the current stress tests? 0:03:29.120 --> 0:03:34.520 It's so the stress tests are publicly available were I 0:03:34.520 --> 0:03:37.080 think the first one was twenty ten and then picked 0:03:37.120 --> 0:03:39.360 up an earnest eleven or twelve, and so every year 0:03:39.400 --> 0:03:42.000 you can see this report card in the bank industry's health, 0:03:42.000 --> 0:03:44.320 and every year the bank industry has great health. But 0:03:44.400 --> 0:03:46.080 the issue we got in the bank industry ended up 0:03:46.080 --> 0:03:49.880 suing the FED was behind the scenes that the rules 0:03:49.960 --> 0:03:53.240 kept changing the test. So if you think of the 0:03:53.280 --> 0:03:55.680 last four or five years, you had volatility and capital 0:03:55.720 --> 0:04:01.000 requirements that were went from fifties seventy five basis points 0:04:01.080 --> 0:04:02.960 up and down a year with basically tests that said 0:04:02.960 --> 0:04:07.320 ten percent employment, fifty downturn in the equity markets, thirty 0:04:07.320 --> 0:04:09.640 percent drop in housing, thirty to forty percent drop in 0:04:09.640 --> 0:04:13.680 commercial real estate. Uh, you know, high yield spreads blowed 0:04:13.680 --> 0:04:16.000 out by a thousand two thousand basis points. Whatever it was, 0:04:16.600 --> 0:04:18.320 you look at all it the same test produced as 0:04:18.360 --> 0:04:20.719 different results. It didn't make sense. So behind the scenes, 0:04:20.960 --> 0:04:23.120 the transparency wasn't there, and that's what we end up 0:04:23.160 --> 0:04:25.200 suing them on. So the stress tests are a very 0:04:25.240 --> 0:04:27.200 good thing. Frankly gives us state of health for thirty 0:04:27.200 --> 0:04:29.680 one banks, which cover most the industry. The way the 0:04:29.800 --> 0:04:32.760 United States run was far superior. We do stress tests 0:04:32.760 --> 0:04:36.960 every quarter, multiple scenarios, and you know, our trading book 0:04:37.000 --> 0:04:38.720 is stressed every day. So if you think about it's 0:04:38.760 --> 0:04:40.919 a good thing, it's just behind the scenes. What was 0:04:40.920 --> 0:04:43.760 happening is that dials were being turned on us and 0:04:43.800 --> 0:04:46.120 the numbers were becoming irrational to the market, and we 0:04:46.160 --> 0:04:48.279 have investors and we have to raise capital and have 0:04:48.320 --> 0:04:49.560 capital available for the industry. 0:04:49.720 --> 0:04:52.360 So there was somebody there's a vice chairman of the 0:04:52.400 --> 0:04:55.159 Federal Reserve who's in charge of regulating the banks and 0:04:55.160 --> 0:05:00.159 so forth. That person has given up that position recently, 0:05:00.720 --> 0:05:03.440 and was that something in the banking community was happy 0:05:03.480 --> 0:05:05.480 with that he stepped aside or you didn't really care 0:05:05.520 --> 0:05:06.640 whether he stepped aside or not. 0:05:06.920 --> 0:05:08.240 Well, at the end of the day, is I think 0:05:08.279 --> 0:05:10.400 he had a year left on his term in the 0:05:10.400 --> 0:05:13.000 new administrator president, who would point someone for that position. 0:05:14.279 --> 0:05:18.320 We'll get it today. We're as when people always ask me, 0:05:18.400 --> 0:05:21.960 do you have different approaches for different administrations, and you say, well, 0:05:22.000 --> 0:05:24.760 in the long term, we've been around since Washington was president. 0:05:24.839 --> 0:05:27.479 So if we geared ourselves up for this president, not 0:05:27.520 --> 0:05:30.040 that present, we'd have to change forty five times whatever 0:05:30.040 --> 0:05:31.839 it is. And if you think even of in the 0:05:31.880 --> 0:05:34.560 form soil, think how many different prime ministers there's been 0:05:34.560 --> 0:05:37.839 in England or so even in my tenure CEO. So 0:05:38.279 --> 0:05:39.440 the end of the day, you run the company the 0:05:39.520 --> 0:05:40.840 right way, and what we're trying to say is get 0:05:40.880 --> 0:05:45.200 us to rationalatory structure that and have it stick to 0:05:45.200 --> 0:05:48.440 the ribs. If you keep swinging like this, our clients 0:05:48.520 --> 0:05:52.599 can't be it can't depend on us. When eighty is so, before. 0:05:52.360 --> 0:05:55.640 The Great Recession, there were a number of large banks 0:05:55.680 --> 0:05:58.599 the United States and Europe and Asia. And now it 0:05:58.640 --> 0:06:02.960 seems as if the Great Recession and post COVID, the 0:06:03.120 --> 0:06:07.240 United States is dominating the global banking world. What happened 0:06:07.240 --> 0:06:09.839 to the European banks? So they're not really competing with 0:06:10.520 --> 0:06:14.120 you and JP Morgan and well as Fargo, as much 0:06:14.160 --> 0:06:16.360 as they used to. What happened What are the American 0:06:16.360 --> 0:06:19.200 banks doing that enabled them to become so much not 0:06:19.320 --> 0:06:20.960 so dominant in the banking world. 0:06:21.640 --> 0:06:25.160 The American banking system is probably a story as much 0:06:25.240 --> 0:06:28.839 of American capitalism being successful because the odds the banks 0:06:28.839 --> 0:06:30.440 in the country, the banks in the country, or the 0:06:30.480 --> 0:06:36.480 banks represent the size, scale, and scope in the vibrancy 0:06:36.520 --> 0:06:39.640 of that economy. So what happened from pre financial crisis 0:06:39.760 --> 0:06:42.000 now is at that time you and I have been 0:06:42.040 --> 0:06:44.960 sitting here talking about how China's economy is going to 0:06:44.960 --> 0:06:47.040 be bigger in the United States in the very like 0:06:47.200 --> 0:06:49.520 by now the European economy was as big and was 0:06:49.560 --> 0:06:52.479 going to outgrow the United States under the enthusiasms the 0:06:52.600 --> 0:06:56.800 U framework. And guess what were one and a half, 0:06:56.839 --> 0:06:59.480 one three quarters times the size economy back then? You're 0:06:59.720 --> 0:07:02.120 like point one or whatever it is. So we've outgrown. 0:07:02.320 --> 0:07:04.359 That's part of the vibrancy. And frankly, dealing with the 0:07:04.360 --> 0:07:09.360 financial crisis, recapitalized industries, failing, a bunch of company industry participants, 0:07:09.720 --> 0:07:14.240 bringing people into the tent the right regulations, and then 0:07:14.360 --> 0:07:16.920 going forward. And so what's happened is Europe is not 0:07:17.200 --> 0:07:20.120 kind of crawled out economically. Therefore, the banking system has 0:07:20.160 --> 0:07:21.920 been hamstrung. At the same time. 0:07:22.080 --> 0:07:24.800 Now you've been the CEO for fifteen years, and the 0:07:24.840 --> 0:07:27.000 bank has covercovered from a lot of problems that had 0:07:27.000 --> 0:07:30.280 when you took over. You've got a great career. Suppose 0:07:30.360 --> 0:07:33.520 the President of United States said next year, I need 0:07:33.560 --> 0:07:36.360 a new chairman of the Federal Reserve Board, and you've 0:07:36.400 --> 0:07:39.080 been running Bank of America. Why don't you come in 0:07:39.120 --> 0:07:41.000 and be chairman of the Federal Reserve Board. Your response 0:07:41.000 --> 0:07:41.520 would be. 0:07:42.080 --> 0:07:44.320 I think, I say, talk to David Rubinston. I don't 0:07:44.320 --> 0:07:50.520 think so. I'm sorry. So our company an end of day. Yeah, 0:07:50.960 --> 0:07:53.360 I get up every morning and I've got teammates out 0:07:53.400 --> 0:07:56.320 here in the audience, and this team is unbelievable. And 0:07:56.360 --> 0:07:57.840 if you see what we do for a customer, and 0:07:58.760 --> 0:08:01.160 my emails and the public demand customers send me when 0:08:01.160 --> 0:08:03.120 we're doing great things for him, and when we're not 0:08:03.160 --> 0:08:05.520 doing great things for him, come directly to me. Nobody 0:08:05.560 --> 0:08:08.160 reads about me. And so if you see what we 0:08:08.200 --> 0:08:12.800 can do for a company, for individual, you see the 0:08:12.920 --> 0:08:16.480 enthusiasm for young kid who's open an account, enthusiasm for 0:08:16.520 --> 0:08:19.360 the four or five thousand kids we hire between eighteen 0:08:19.400 --> 0:08:21.680 and twenty two that come into our company every year. 0:08:22.240 --> 0:08:25.240 The communities that we support, that just does a great job. 0:08:25.600 --> 0:08:29.040 And I love doing it as long as I'm healthy, 0:08:29.400 --> 0:08:31.160 as long as I have the energy, as long as 0:08:31.240 --> 0:08:33.600 you know, the team in the board support good. 0:08:33.800 --> 0:08:38.680 So recently another banker you probably heard of, Jamie Diamond, 0:08:39.040 --> 0:08:43.880 and he testified on Capitol Hill that maybe the regulators 0:08:43.920 --> 0:08:46.400 and Congress should get together and say, let's just start 0:08:46.440 --> 0:08:49.640 afresh and take a look at all the banking regulations 0:08:49.640 --> 0:08:52.520 from a fresh perspective, building from scratch. Do you have 0:08:52.559 --> 0:08:53.240 a comment on that. 0:08:53.360 --> 0:08:55.959 Is that a good idea or well, I think this 0:08:56.720 --> 0:09:00.440 spaghetti chart of overlap is a question. So it just 0:09:00.480 --> 0:09:03.480 take the Consumer Bureau. In two thousand ten U with 0:09:03.600 --> 0:09:06.440 Dot Frank ten or eleven, they set up the Consumer Bureau. 0:09:06.440 --> 0:09:09.240 The theory was that all the consumer regulatory activity would 0:09:09.240 --> 0:09:13.040 move to a new agency. Guess what, we still have 0:09:13.080 --> 0:09:15.800 the occ regulars Consumer Activity stud, the Federal Regulars Consumer 0:09:15.800 --> 0:09:18.520 Activity stud. The FDC will hit consumer activity on occasion, 0:09:19.280 --> 0:09:20.880 and you have the Consumer Bureau. And if you have 0:09:20.920 --> 0:09:24.040 the FDIC as regular, you have the FDIC. So none 0:09:24.040 --> 0:09:25.720 of that happens, so you end up with another added 0:09:25.720 --> 0:09:29.040 regular it much like after nine eleven HIHS came in 0:09:29.080 --> 0:09:30.760 and it was supposed to swoop everything in and it 0:09:30.760 --> 0:09:33.040 didn't quite happen that way. So I think you could 0:09:33.040 --> 0:09:37.240 start with a fresh sheet of paper recognizing that in UH, 0:09:37.840 --> 0:09:40.840 you know, the the National Banking Act in the eighteen hundreds, 0:09:40.840 --> 0:09:45.000 so whether the Federal Reserve Act and the FDIC Act 0:09:45.000 --> 0:09:48.360 in the thirties, the world has changed a lot since then, 0:09:48.480 --> 0:09:52.599 and so you know, the idea of national reglatory UH consolidation, 0:09:52.920 --> 0:09:55.720 even on a dynamic country like the United States, is 0:09:55.720 --> 0:09:58.400 probably more appropriate today than it was when you had 0:09:58.480 --> 0:10:00.480 ten fifteen thousand banks, all the stry beat it all 0:10:00.480 --> 0:10:03.680 over and Tom Barkin's coming from the Richmond Fed. Tom 0:10:03.720 --> 0:10:07.120 is terrific, But there was a day when everything went 0:10:07.120 --> 0:10:10.000 on in Richmond and the Richmond Fed catchment basin was 0:10:10.400 --> 0:10:11.640 only there that day. 0:10:11.760 --> 0:10:16.680 Is you're regulated by the Federal Reserve, the FDICE, the 0:10:16.720 --> 0:10:20.319 Comptrol of the Currency, and anybody else, the. 0:10:20.240 --> 0:10:27.880 Consumer Bureau, the SEC, the CFTC. Then for this way, 0:10:27.880 --> 0:10:30.920 there's one hundred plus regulars in our building every day. 0:10:31.120 --> 0:10:32.640 So do you spend a lot of time with the 0:10:32.679 --> 0:10:34.200 regulators or you try to avoid that. 0:10:36.920 --> 0:10:38.719 I'd like to spend time when they're telling us we're 0:10:38.720 --> 0:10:42.360 doing good stuff, but no, I spent We all spent 0:10:42.400 --> 0:10:44.199 a lot of time on I great chief risk officer 0:10:44.240 --> 0:10:47.360 and Jeff Greener who organized that for the company. All 0:10:47.360 --> 0:10:50.000 my senior executives spend time with him, and look the 0:10:50.080 --> 0:10:52.400 day to day regulators are helped trying to help us 0:10:52.400 --> 0:10:54.440 be better, and we understand that we are on the 0:10:54.480 --> 0:10:57.600 road to perfection as a company. And fincel Party said 0:10:57.600 --> 0:10:59.920 you strive for perfection next since we found that's which 0:11:00.120 --> 0:11:04.359 I do. If they've got ideas for all ears, simplifying 0:11:04.400 --> 0:11:07.920 the organization will allow frankly, cost to be taken out 0:11:07.960 --> 0:11:11.480 from the regatory side, and we pay fees to support it, 0:11:10.960 --> 0:11:13.080 and it wouldn't be the worst idea. 0:11:13.280 --> 0:11:16.160 Now. When interest rates go up, the theory is that 0:11:16.240 --> 0:11:19.680 banks can charge more for loans and therefore their more profitable. 0:11:19.679 --> 0:11:22.000 And banks have been very profitable in recent years. When 0:11:22.040 --> 0:11:24.880 interest rates go down, is that a concern to banks 0:11:24.920 --> 0:11:28.600 because you're less profitability or you really don't care well? 0:11:28.600 --> 0:11:32.720 The toughest time to be a bank with a trillion 0:11:33.679 --> 0:11:36.360 two trillion dollars deposits is when interest rates are zero 0:11:37.000 --> 0:11:41.400 because we have we can't charge people to store their money. 0:11:41.720 --> 0:11:44.079 It's it's we're not like a self storage unit or 0:11:44.080 --> 0:11:45.800 something like that. So the end day you have a 0:11:45.800 --> 0:11:48.360 floor on interest rates, and so when interestrates came down, 0:11:48.480 --> 0:11:51.280 you start squeezing margins. So the loan rates came down, 0:11:51.400 --> 0:11:54.400 but the deposit rates have a zero floor. When rates 0:11:54.960 --> 0:11:58.520 move up, that changes and so the zero just checking accounts, 0:11:58.520 --> 0:12:00.960 all that stuff become worth more and the loan rates 0:12:01.000 --> 0:12:04.160 go up. So as long as the rate structure is 0:12:04.200 --> 0:12:07.000 more normal, and you know, anybody there in the age 0:12:07.040 --> 0:12:09.439 of forty has never seen a real rate structure except 0:12:09.440 --> 0:12:12.959 for like right now. Yeah, they're they're if the probably 0:12:13.080 --> 0:12:15.600 a little older than that now. And so the idea 0:12:15.600 --> 0:12:18.000 of a three percent fed fund rate isn't high rates, 0:12:18.040 --> 0:12:20.520 it's the usual rate. In fact, on the lower side, 0:12:20.559 --> 0:12:22.440 a four and a half percent tenure the usual rate. 0:12:22.480 --> 0:12:24.559 And so in that environment banks will make money. But 0:12:24.640 --> 0:12:27.000 the end of the day, the NETS's margin, which is 0:12:27.000 --> 0:12:28.760 the difference between what we lend at and what we 0:12:28.800 --> 0:12:31.760 pay for funds, tends to run two hundred and fifty 0:12:31.760 --> 0:12:35.640 basis points in that benefit goes back to the depositor 0:12:35.720 --> 0:12:38.400 side and to the debtholder side, and as rates go 0:12:38.480 --> 0:12:40.160 up and the ups and downs, it's just what hits 0:12:40.200 --> 0:12:42.920 that floor. That margin got down to one fifty or 0:12:42.920 --> 0:12:43.319 something like. 0:12:43.280 --> 0:12:46.040 That because interest rates come down, though you're not it's 0:12:46.080 --> 0:12:48.320 not going to affect your profitability, not a lot, because 0:12:48.320 --> 0:12:51.560 you have right So you don't want Jpale's job. It 0:12:51.640 --> 0:12:54.920 sounds like, but suppose he called you and said, should 0:12:54.920 --> 0:12:58.240 I increase interest rates? Decrease interest rates are holding the same? 0:12:58.280 --> 0:12:59.200 What would your advice be. 0:12:59.559 --> 0:13:04.760 Our team right now is basically says there'll be no 0:13:04.920 --> 0:13:08.000 further rate cuts through their forecast period, which is this 0:13:08.080 --> 0:13:10.360 year next year. And they were one of the first 0:13:10.360 --> 0:13:12.120 people to pull that off the table, and they did 0:13:12.160 --> 0:13:15.120 because they said, inflation is coming down, but is a 0:13:15.120 --> 0:13:18.800 bigger fight. An there's the dual mandate, employment, inflation, employment. 0:13:18.840 --> 0:13:21.920 They're in great shape on inflation. It's been coming down, 0:13:22.000 --> 0:13:24.400 it's working this way down. It takes multiple years to 0:13:24.400 --> 0:13:29.280 squeeze inflation out. They started in twenty two and so 0:13:29.720 --> 0:13:32.160 think of you know, twenty six is actually a normal 0:13:32.160 --> 0:13:35.240 period to squeeze it out. And there's a drag on 0:13:35.320 --> 0:13:38.160 economy today and so you're seeing economic growth from three 0:13:38.240 --> 0:13:40.800 percent in the last couple of quarters to two percent. 0:13:41.040 --> 0:13:44.000 We haven't moved down to two percent, so he shouldn't 0:13:44.600 --> 0:13:48.439 our expectations. They won't cut rates. I think we have 0:13:48.600 --> 0:13:50.160 the little rest of the year. Yeah, for the rest 0:13:50.160 --> 0:13:53.480 of the year, in the next year and frankly until inflations. 0:13:53.600 --> 0:13:56.960 And okay, so let me ask you. The business that 0:13:57.280 --> 0:13:59.840 my firm has been in is private equity. But now 0:14:00.000 --> 0:14:02.520 private equy firms have become private credit firms as well. 0:14:03.000 --> 0:14:06.480 And private credit firms they lend money, but they're not 0:14:07.080 --> 0:14:09.600 regulated quite the way you are. So is that a 0:14:09.640 --> 0:14:12.079 source of concern that we can lend money and we're 0:14:12.120 --> 0:14:14.280 not as highly regulated as you are, and you're lending 0:14:14.320 --> 0:14:16.520 money but you're highly regulated, or you don't care about that. 0:14:17.960 --> 0:14:22.520 You know, I think I care about your firm. But 0:14:23.880 --> 0:14:31.800 look in the private capital has grown because they can 0:14:31.840 --> 0:14:34.920 do something we can't. Along a couple dimensions. One is 0:14:35.520 --> 0:14:40.520 they can finance companies that may have more leverage, and 0:14:40.600 --> 0:14:43.200 we are basically stopped out at six times leverage. And 0:14:43.240 --> 0:14:45.160 that used to be a rule that it was taken 0:14:45.200 --> 0:14:46.840 back then it was a guidance and then it was 0:14:46.880 --> 0:14:49.240 like wait too, we examine you so and we do 0:14:49.280 --> 0:14:51.080 go above it for certain credits and stuff like that. 0:14:51.120 --> 0:14:53.440 So that's one thing. The second thing is the ability 0:14:53.440 --> 0:14:56.920 to bring the whole capital structure, debt, equity, the mezzanine, 0:14:57.080 --> 0:14:59.240 whole nine yards. That's hard for a bank because we 0:14:59.240 --> 0:15:02.400 don't engage yet business. But on top of that, you know, 0:15:02.440 --> 0:15:05.120 we we have a trillion dollars a commercial loan commitments, 0:15:05.120 --> 0:15:07.560 a half a billion plus of drawing loans. We don't 0:15:07.560 --> 0:15:10.360 fear any competitor, and we work with those companies, including yours, 0:15:10.360 --> 0:15:13.080 to generate assets for them. But it's just a different style. 0:15:13.600 --> 0:15:16.600 I think the world should be concerned and make sure 0:15:17.320 --> 0:15:21.640 that those enterprises making loans to you know, billion dollar 0:15:21.720 --> 0:15:24.680 operating company have the ability to work with the times 0:15:24.680 --> 0:15:26.360 of stress. That that's going to be a interest question. 0:15:26.400 --> 0:15:28.160 We haven't gone through a stress period with this practice 0:15:28.160 --> 0:15:28.480 out there. 0:15:28.600 --> 0:15:31.320 I think JP Morgan, maybe other banks. Maybe you have 0:15:31.400 --> 0:15:34.600 gone out and raised private credit funds that you can 0:15:34.640 --> 0:15:37.160 then lend out without the normal constraints that you have 0:15:38.160 --> 0:15:40.440 the money you have from the positors. Is that something 0:15:40.480 --> 0:15:41.760 you've done or you think it's a good idea. 0:15:41.880 --> 0:15:48.200 We've created some some capacity. In the end, the credit 0:15:48.240 --> 0:15:53.240 we like we're willing to do is important as much 0:15:53.240 --> 0:15:55.800 as we can, so we have you know, we're dying 0:15:55.800 --> 0:15:57.400 for more loans. We have two trillion dollars of positive 0:15:57.440 --> 0:15:59.000 to trillion dollars loans. We're trying to do all the 0:15:59.040 --> 0:16:01.200 loans we think have good out of quality and so 0:16:01.360 --> 0:16:02.600 we don't feel this constraint. 0:16:02.680 --> 0:16:05.320 Let's talk about in your background. I am an only child. 0:16:06.320 --> 0:16:07.760 You have how many siblings? 0:16:07.880 --> 0:16:08.160 Seven? 0:16:08.520 --> 0:16:13.560 Seven? So you know growing up with eight people in 0:16:13.600 --> 0:16:15.280 the family. Wasn't that crowd at a time? 0:16:15.400 --> 0:16:22.200 Sir? I'm trying to think I didn't have I was 0:16:22.200 --> 0:16:23.760 set up to get my own bedroom for the first 0:16:23.800 --> 0:16:25.360 time in my life for my younger brother decided he 0:16:25.400 --> 0:16:27.320 wanted to move into the bedroom because he was scared 0:16:27.320 --> 0:16:30.640 to sleep alone. So I think I'm trying to think 0:16:30.640 --> 0:16:33.960 probably when I was in college, his first time I 0:16:34.000 --> 0:16:35.880 ever had a bedroom to myself. So yes, it was gad. 0:16:36.200 --> 0:16:40.360 What did your father do to support eight children? Might 0:16:40.360 --> 0:16:41.800 see him private equity or something. 0:16:44.440 --> 0:16:47.840 He was He was a research chemist for DuPont and 0:16:47.920 --> 0:16:52.120 so he spent his whole life on plastics. So the graduate, 0:16:52.200 --> 0:16:54.280 you know, plastics, young man, my dad was at you. 0:16:54.240 --> 0:16:56.600 Know, he's so that's what he grew up in Ohio 0:16:57.200 --> 0:16:59.360 And then you went to college in the East Coast 0:17:00.080 --> 0:17:03.000 and at Brown. Yes, and you were the co captain 0:17:03.040 --> 0:17:03.960 of the rugby team. 0:17:04.200 --> 0:17:04.520 Yes. 0:17:05.160 --> 0:17:07.320 And do you still play rugby or not so much? 0:17:08.520 --> 0:17:11.840 No, I don't play. I played rugby at Brown, I 0:17:11.840 --> 0:17:14.000 played rugby at law school, and I played rugby after. 0:17:14.160 --> 0:17:18.480 It's a great sport. Have never played it till I 0:17:18.480 --> 0:17:22.480 played it at college. It is, in a way the 0:17:22.480 --> 0:17:25.320 most intense. It looks like disorganization out there is extreme 0:17:25.359 --> 0:17:29.920 ill organized. But it's unique and that it's physical and tackling. 0:17:30.240 --> 0:17:32.720 You kick, you run. Everybody gets to handle the ball 0:17:33.040 --> 0:17:35.320 and you run for eighty minutes. And so it's a 0:17:35.400 --> 0:17:38.040 very demanding game. It was a lot of fun. Okay. 0:17:38.280 --> 0:17:42.800 So now you are the chancellor of Brown University, which 0:17:42.840 --> 0:17:45.040 means the chairman of the board essentially. So how do 0:17:45.080 --> 0:17:45.960 you have time for that? 0:17:46.600 --> 0:17:49.080 I've been on the board for fifteen years and at 0:17:49.119 --> 0:17:50.760 the end of the day, the chair of a board, 0:17:51.359 --> 0:17:54.400 Chris Packson runs university. Doesn't spectacular job. And our job 0:17:54.480 --> 0:17:57.040 is to govern and not you know. 0:17:57.320 --> 0:17:59.600 So after you graduated from Brown, you went to law 0:17:59.600 --> 0:18:04.240 school Notre Dame. Yes, sir, and okay. And did you 0:18:04.280 --> 0:18:08.080 play rugby at Notre Dames? I did, okay. So then 0:18:08.119 --> 0:18:10.320 you went to practice law back in Rhode Island? Is 0:18:10.320 --> 0:18:12.400 that right? Why did you move back to Rhode Island? 0:18:12.440 --> 0:18:15.320 You're from Ohio, you went to Notre Dame and the Midwest. 0:18:15.320 --> 0:18:16.800 Why did you go back to Rhode Island. 0:18:17.000 --> 0:18:19.119 Well, none of the Boston law firms would hire a 0:18:19.160 --> 0:18:20.680 person from not Dame law school, so I. 0:18:20.600 --> 0:18:22.600 Had, you know, okay, it was, it was. 0:18:23.080 --> 0:18:25.400 It's hard to believe, but literally I was the first 0:18:25.480 --> 0:18:27.840 lawyer hired by the firm and I'm from Notre Dame. 0:18:29.000 --> 0:18:30.800 And they did it more because I had the Brown 0:18:30.960 --> 0:18:34.440 you know connection stuff. But the big law firms in Boston, 0:18:34.680 --> 0:18:39.400 you know, just even with one of my teammates working there, 0:18:39.760 --> 0:18:41.800 founding John Theclair, they couldn't convince them to hire me. 0:18:41.840 --> 0:18:43.920 So I ended up with a great law firm and 0:18:43.960 --> 0:18:46.520 had a great short legal career there, and it didn't. 0:18:46.800 --> 0:18:48.920 So I'm a big fan of people who are lawyers 0:18:48.960 --> 0:18:52.199 getting out of law and going into finance. So I 0:18:52.200 --> 0:18:55.480 can empathize with you. Okay, so you're practicing lawyer, minding 0:18:55.480 --> 0:18:57.159 your own business. I assume you're a good lawyer. What 0:18:57.240 --> 0:18:58.439 kind of were your corporate lawyer. 0:18:58.680 --> 0:19:02.440 We had this instant when I came out. I've lost 0:19:02.520 --> 0:19:03.679 When I went to law school, I was going to 0:19:03.680 --> 0:19:05.600 be a criminal lawyer, because it was afinutely Bailey, it 0:19:05.640 --> 0:19:08.159 was the rock of the world at that point. And 0:19:08.520 --> 0:19:10.679 or I was going to be a labor lawyer. And 0:19:10.720 --> 0:19:12.679 then I went to law school, and I went to 0:19:12.680 --> 0:19:16.119 a firm, and oddly enough, you know, I went to 0:19:16.200 --> 0:19:18.320 law school. From eighty one to eighty four, there were 0:19:18.320 --> 0:19:20.840 no corporate lawyers in America because it was before the 0:19:20.920 --> 0:19:25.320 eighties took off, and after the seventies the activity died. 0:19:25.359 --> 0:19:29.520 So I, being a person that is impatient life, I said, 0:19:29.560 --> 0:19:31.840 when I'd be a corporate lawyer, to much the scrint 0:19:31.840 --> 0:19:33.960 of the litigation lawyers and stuff. Who thought that I 0:19:34.000 --> 0:19:36.240 lost my bard? But so I became a corporate lawyer 0:19:36.240 --> 0:19:39.399 more by I could see the opportunity to get responsibility. 0:19:39.440 --> 0:19:41.280