Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Now I want to take you over to the Economic
Speaker 2: Club of Washington, where I'm pleased to say that David Rubinstein,
Speaker 2: the Carlisle co founder and host of Pets to Pair
Speaker 2: Conversations on bloombag TV, is joined by good front of
Speaker 2: this program. The Banks America CEO Brian moynihan.
Speaker 1: Let's take a listen. There's a lot of burden upon
Speaker 1: the banking system to both report suspicious activity reports and
Speaker 1: do a lot of analysis, and we have to close accounts.
Speaker 1: We can't tell people why we did it, and often
Speaker 1: we're told by authorities to close accounts. That creates confusion.
Speaker 1: Another area comes up in this discussions in a crypto
Speaker 1: area were the regulator said you can't bank crypto operating companies,
Speaker 1: employees of crypto companies, etc. We are allowed to do
Speaker 1: We bank everybody but the operating company. They said, that's
Speaker 1: a high risk activity. Ask us for authority and guess what,
Speaker 1: you would have never gotten the authorities. So that came
Speaker 1: up as issue. So at the end of the day,
Speaker 1: it's about getting these regulations right now. I think it
Speaker 1: opens a dialogue about how to get these regulations correct,
Speaker 1: and the end of the day, we were open for everybody.
Speaker 1: We serve millions and millions of Americans trallions and transactions
Speaker 1: a year, and we continue to do so.
Speaker 3: Okay. So when this administration was elected, there was a
Speaker 3: lot of i would say, jubilation in the streets the
Speaker 3: banking where all people thought that the banking regulation had
Speaker 3: been too tough. Under President Biden, some people thought that
Speaker 3: regulation would be more amenable to banks. Has that turned
Speaker 3: out to be the case, shat, or it's still too
Speaker 3: early to know, and is the Banking Committee happy with
Speaker 3: the direction that the current administration is going, or you
Speaker 3: just don't know yet.
Speaker 1: So you have to start people sort of step back
Speaker 1: and say the regulation, the regulation of banking has been
Speaker 1: always been true since our charter or was part of
Speaker 1: a bank was some seventeen eighty four. So we've been
Speaker 1: regulated from that day forward. If you think about the
Speaker 1: Great Financial Crisis and Dodd Frank and a lot of
Speaker 1: capital rules and quite rules and all that stay came in,
Speaker 1: there was a reason for the world wh at large
Speaker 1: really not happy with banks in a way, and non
Speaker 1: banks that became banks. Golden sax Morgan, Stanley, MARYLANDT cetera.
Speaker 1: So you could understand that when you go fast forward
Speaker 1: through the fifteen years hence plus, you go through the
Speaker 1: pandemic and the banking system stands up and stabilizes the economy.
Speaker 1: You go through the regional banking crisis, the banking system
Speaker 1: steps up and stabilize it, and they keep adding capital
Speaker 1: and LIQUIDI you're sort of saying, wait a second. You know,
Speaker 1: we are a source of strength. And by the way,
Speaker 1: the American bank industry is really a source of strength.
Speaker 1: So the penlan kept just swinging even though the reason
Speaker 1: why it had swung had stopped. And so our industry
Speaker 1: was say, wait a second, why are we have twenty
Speaker 1: percent more capital and we did during the pandemic. The
Speaker 1: risk is the same. It's just by mathematical creep of calculations.
Speaker 1: Why are you saying we're going to limit your fees
Speaker 1: charged for certain activity or demon activity alone when it
Speaker 1: wasn't alone, and with one hundred years of history saying
Speaker 1: an overdraft is alone, somebody just says, I want to
Speaker 1: make it alone. And so this idea of the regulators
Speaker 1: sort of imposing new rules and regulations that Congress did
Speaker 1: not intend actually was kind of an interesting question, right.
Speaker 3: So many people when they talk about the Federal Reserve,
Speaker 3: they wonder whether the Fed are going to increase interest
Speaker 3: rates or decrease interest rates. But in the banking community,
Speaker 3: you're often worried about.
Speaker 1: The stress tests.
Speaker 3: And do you think the FED has pushed stress tests
Speaker 3: to two tough a limit on banks? Or are you okay
Speaker 3: with the current stress tests?
Speaker 1: It's so the stress tests are publicly available were I
Speaker 1: think the first one was twenty ten and then picked
Speaker 1: up an earnest eleven or twelve, and so every year
Speaker 1: you can see this report card in the bank industry's health,
Speaker 1: and every year the bank industry has great health. But
Speaker 1: the issue we got in the bank industry ended up
Speaker 1: suing the FED was behind the scenes that the rules
Speaker 1: kept changing the test. So if you think of the
Speaker 1: last four or five years, you had volatility and capital
Speaker 1: requirements that were went from fifties seventy five basis points
Speaker 1: up and down a year with basically tests that said
Speaker 1: ten percent employment, fifty downturn in the equity markets, thirty
Speaker 1: percent drop in housing, thirty to forty percent drop in
Speaker 1: commercial real estate. Uh, you know, high yield spreads blowed
Speaker 1: out by a thousand two thousand basis points. Whatever it was,
Speaker 1: you look at all it the same test produced as
Speaker 1: different results. It didn't make sense. So behind the scenes,
Speaker 1: the transparency wasn't there, and that's what we end up
Speaker 1: suing them on. So the stress tests are a very
Speaker 1: good thing. Frankly gives us state of health for thirty
Speaker 1: one banks, which cover most the industry. The way the
Speaker 1: United States run was far superior. We do stress tests
Speaker 1: every quarter, multiple scenarios, and you know, our trading book
Speaker 1: is stressed every day. So if you think about it's
Speaker 1: a good thing, it's just behind the scenes. What was
Speaker 1: happening is that dials were being turned on us and
Speaker 1: the numbers were becoming irrational to the market, and we
Speaker 1: have investors and we have to raise capital and have
Speaker 1: capital available for the industry.
Speaker 3: So there was somebody there's a vice chairman of the
Speaker 3: Federal Reserve who's in charge of regulating the banks and
Speaker 3: so forth. That person has given up that position recently,
Speaker 3: and was that something in the banking community was happy
Speaker 3: with that he stepped aside or you didn't really care
Speaker 3: whether he stepped aside or not.
Speaker 1: Well, at the end of the day, is I think
Speaker 1: he had a year left on his term in the
Speaker 1: new administrator president, who would point someone for that position.
Speaker 1: We'll get it today. We're as when people always ask me,
Speaker 1: do you have different approaches for different administrations, and you say, well,
Speaker 1: in the long term, we've been around since Washington was president.
Speaker 1: So if we geared ourselves up for this president, not
Speaker 1: that present, we'd have to change forty five times whatever
Speaker 1: it is. And if you think even of in the
Speaker 1: form soil, think how many different prime ministers there's been
Speaker 1: in England or so even in my tenure CEO. So
Speaker 1: the end of the day, you run the company the
Speaker 1: right way, and what we're trying to say is get
Speaker 1: us to rationalatory structure that and have it stick to
Speaker 1: the ribs. If you keep swinging like this, our clients
Speaker 1: can't be it can't depend on us. When eighty is so, before.
Speaker 3: The Great Recession, there were a number of large banks
Speaker 3: the United States and Europe and Asia. And now it
Speaker 3: seems as if the Great Recession and post COVID, the
Speaker 3: United States is dominating the global banking world. What happened
Speaker 3: to the European banks? So they're not really competing with
Speaker 3: you and JP Morgan and well as Fargo, as much
Speaker 3: as they used to. What happened What are the American
Speaker 3: banks doing that enabled them to become so much not
Speaker 3: so dominant in the banking world.
Speaker 1: The American banking system is probably a story as much
Speaker 1: of American capitalism being successful because the odds the banks
Speaker 1: in the country, the banks in the country, or the
Speaker 1: banks represent the size, scale, and scope in the vibrancy
Speaker 1: of that economy. So what happened from pre financial crisis
Speaker 1: now is at that time you and I have been
Speaker 1: sitting here talking about how China's economy is going to
Speaker 1: be bigger in the United States in the very like
Speaker 1: by now the European economy was as big and was
Speaker 1: going to outgrow the United States under the enthusiasms the
Speaker 1: U framework. And guess what were one and a half,
Speaker 1: one three quarters times the size economy back then? You're
Speaker 1: like point one or whatever it is. So we've outgrown.
Speaker 1: That's part of the vibrancy. And frankly, dealing with the
Speaker 1: financial crisis, recapitalized industries, failing, a bunch of company industry participants,
Speaker 1: bringing people into the tent the right regulations, and then
Speaker 1: going forward. And so what's happened is Europe is not
Speaker 1: kind of crawled out economically. Therefore, the banking system has
Speaker 1: been hamstrung. At the same time.
Speaker 3: Now you've been the CEO for fifteen years, and the
Speaker 3: bank has covercovered from a lot of problems that had
Speaker 3: when you took over. You've got a great career. Suppose
Speaker 3: the President of United States said next year, I need
Speaker 3: a new chairman of the Federal Reserve Board, and you've
Speaker 3: been running Bank of America. Why don't you come in
Speaker 3: and be chairman of the Federal Reserve Board. Your response
Speaker 3: would be.
Speaker 1: I think, I say, talk to David Rubinston. I don't
Speaker 1: think so. I'm sorry. So our company an end of day. Yeah,
Speaker 1: I get up every morning and I've got teammates out
Speaker 1: here in the audience, and this team is unbelievable. And
Speaker 1: if you see what we do for a customer, and
Speaker 1: my emails and the public demand customers send me when
Speaker 1: we're doing great things for him, and when we're not
Speaker 1: doing great things for him, come directly to me. Nobody
Speaker 1: reads about me. And so if you see what we
Speaker 1: can do for a company, for individual, you see the
Speaker 1: enthusiasm for young kid who's open an account, enthusiasm for
Speaker 1: the four or five thousand kids we hire between eighteen
Speaker 1: and twenty two that come into our company every year.
Speaker 1: The communities that we support, that just does a great job.
Speaker 1: And I love doing it as long as I'm healthy,
Speaker 1: as long as I have the energy, as long as
Speaker 1: you know, the team in the board support good.
Speaker 3: So recently another banker you probably heard of, Jamie Diamond,
Speaker 3: and he testified on Capitol Hill that maybe the regulators
Speaker 3: and Congress should get together and say, let's just start
Speaker 3: afresh and take a look at all the banking regulations
Speaker 3: from a fresh perspective, building from scratch. Do you have
Speaker 3: a comment on that.
Speaker 1: Is that a good idea or well, I think this
Speaker 1: spaghetti chart of overlap is a question. So it just
Speaker 1: take the Consumer Bureau. In two thousand ten U with
Speaker 1: Dot Frank ten or eleven, they set up the Consumer Bureau.
Speaker 1: The theory was that all the consumer regulatory activity would
Speaker 1: move to a new agency. Guess what, we still have
Speaker 1: the occ regulars Consumer Activity stud, the Federal Regulars Consumer
Speaker 1: Activity stud. The FDC will hit consumer activity on occasion,
Speaker 1: and you have the Consumer Bureau. And if you have
Speaker 1: the FDIC as regular, you have the FDIC. So none
Speaker 1: of that happens, so you end up with another added
Speaker 1: regular it much like after nine eleven HIHS came in
Speaker 1: and it was supposed to swoop everything in and it
Speaker 1: didn't quite happen that way. So I think you could
Speaker 1: start with a fresh sheet of paper recognizing that in UH,
Speaker 1: you know, the the National Banking Act in the eighteen hundreds,
Speaker 1: so whether the Federal Reserve Act and the FDIC Act
Speaker 1: in the thirties, the world has changed a lot since then,
Speaker 1: and so you know, the idea of national reglatory UH consolidation,
Speaker 1: even on a dynamic country like the United States, is
Speaker 1: probably more appropriate today than it was when you had
Speaker 1: ten fifteen thousand banks, all the stry beat it all
Speaker 1: over and Tom Barkin's coming from the Richmond Fed. Tom
Speaker 1: is terrific, But there was a day when everything went
Speaker 1: on in Richmond and the Richmond Fed catchment basin was
Speaker 1: only there that day.
Speaker 3: Is you're regulated by the Federal Reserve, the FDICE, the
Speaker 3: Comptrol of the Currency, and anybody else, the.
Speaker 1: Consumer Bureau, the SEC, the CFTC. Then for this way,
Speaker 1: there's one hundred plus regulars in our building every day.
Speaker 3: So do you spend a lot of time with the
Speaker 3: regulators or you try to avoid that.
Speaker 1: I'd like to spend time when they're telling us we're
Speaker 1: doing good stuff, but no, I spent We all spent
Speaker 1: a lot of time on I great chief risk officer
Speaker 1: and Jeff Greener who organized that for the company. All
Speaker 1: my senior executives spend time with him, and look the
Speaker 1: day to day regulators are helped trying to help us
Speaker 1: be better, and we understand that we are on the
Speaker 1: road to perfection as a company. And fincel Party said
Speaker 1: you strive for perfection next since we found that's which
Speaker 1: I do. If they've got ideas for all ears, simplifying
Speaker 1: the organization will allow frankly, cost to be taken out
Speaker 1: from the regatory side, and we pay fees to support it,
Speaker 1: and it wouldn't be the worst idea.
Speaker 3: Now. When interest rates go up, the theory is that
Speaker 3: banks can charge more for loans and therefore their more profitable.
Speaker 3: And banks have been very profitable in recent years. When
Speaker 3: interest rates go down, is that a concern to banks
Speaker 3: because you're less profitability or you really don't care well?
Speaker 1: The toughest time to be a bank with a trillion
Speaker 1: two trillion dollars deposits is when interest rates are zero
Speaker 1: because we have we can't charge people to store their money.
Speaker 1: It's it's we're not like a self storage unit or
Speaker 1: something like that. So the end day you have a
Speaker 1: floor on interest rates, and so when interestrates came down,
Speaker 1: you start squeezing margins. So the loan rates came down,
Speaker 1: but the deposit rates have a zero floor. When rates
Speaker 1: move up, that changes and so the zero just checking accounts,
Speaker 1: all that stuff become worth more and the loan rates
Speaker 1: go up. So as long as the rate structure is
Speaker 1: more normal, and you know, anybody there in the age
Speaker 1: of forty has never seen a real rate structure except
Speaker 1: for like right now. Yeah, they're they're if the probably
Speaker 1: a little older than that now. And so the idea
Speaker 1: of a three percent fed fund rate isn't high rates,
Speaker 1: it's the usual rate. In fact, on the lower side,
Speaker 1: a four and a half percent tenure the usual rate.
Speaker 1: And so in that environment banks will make money. But
Speaker 1: the end of the day, the NETS's margin, which is
Speaker 1: the difference between what we lend at and what we
Speaker 1: pay for funds, tends to run two hundred and fifty
Speaker 1: basis points in that benefit goes back to the depositor
Speaker 1: side and to the debtholder side, and as rates go
Speaker 1: up and the ups and downs, it's just what hits
Speaker 1: that floor. That margin got down to one fifty or
Speaker 1: something like.
Speaker 3: That because interest rates come down, though you're not it's
Speaker 3: not going to affect your profitability, not a lot, because
Speaker 3: you have right So you don't want Jpale's job. It
Speaker 3: sounds like, but suppose he called you and said, should
Speaker 3: I increase interest rates? Decrease interest rates are holding the same?
Speaker 3: What would your advice be.
Speaker 1: Our team right now is basically says there'll be no
Speaker 1: further rate cuts through their forecast period, which is this
Speaker 1: year next year. And they were one of the first
Speaker 1: people to pull that off the table, and they did
Speaker 1: because they said, inflation is coming down, but is a
Speaker 1: bigger fight. An there's the dual mandate, employment, inflation, employment.
Speaker 1: They're in great shape on inflation. It's been coming down,
Speaker 1: it's working this way down. It takes multiple years to
Speaker 1: squeeze inflation out. They started in twenty two and so
Speaker 1: think of you know, twenty six is actually a normal
Speaker 1: period to squeeze it out. And there's a drag on
Speaker 1: economy today and so you're seeing economic growth from three
Speaker 1: percent in the last couple of quarters to two percent.
Speaker 1: We haven't moved down to two percent, so he shouldn't
Speaker 1: our expectations. They won't cut rates. I think we have
Speaker 1: the little rest of the year. Yeah, for the rest
Speaker 1: of the year, in the next year and frankly until inflations.
Speaker 3: And okay, so let me ask you. The business that
Speaker 3: my firm has been in is private equity. But now
Speaker 3: private equy firms have become private credit firms as well.
Speaker 3: And private credit firms they lend money, but they're not
Speaker 3: regulated quite the way you are. So is that a
Speaker 3: source of concern that we can lend money and we're
Speaker 3: not as highly regulated as you are, and you're lending
Speaker 3: money but you're highly regulated, or you don't care about that.
Speaker 1: You know, I think I care about your firm. But
Speaker 1: look in the private capital has grown because they can
Speaker 1: do something we can't. Along a couple dimensions. One is
Speaker 1: they can finance companies that may have more leverage, and
Speaker 1: we are basically stopped out at six times leverage. And
Speaker 1: that used to be a rule that it was taken
Speaker 1: back then it was a guidance and then it was
Speaker 1: like wait too, we examine you so and we do
Speaker 1: go above it for certain credits and stuff like that.
Speaker 1: So that's one thing. The second thing is the ability
Speaker 1: to bring the whole capital structure, debt, equity, the mezzanine,
Speaker 1: whole nine yards. That's hard for a bank because we
Speaker 1: don't engage yet business. But on top of that, you know,
Speaker 1: we we have a trillion dollars a commercial loan commitments,
Speaker 1: a half a billion plus of drawing loans. We don't
Speaker 1: fear any competitor, and we work with those companies, including yours,
Speaker 1: to generate assets for them. But it's just a different style.
Speaker 1: I think the world should be concerned and make sure
Speaker 1: that those enterprises making loans to you know, billion dollar
Speaker 1: operating company have the ability to work with the times
Speaker 1: of stress. That that's going to be a interest question.
Speaker 1: We haven't gone through a stress period with this practice
Speaker 1: out there.
Speaker 3: I think JP Morgan, maybe other banks. Maybe you have
Speaker 3: gone out and raised private credit funds that you can
Speaker 3: then lend out without the normal constraints that you have
Speaker 3: the money you have from the positors. Is that something
Speaker 3: you've done or you think it's a good idea.
Speaker 1: We've created some some capacity. In the end, the credit
Speaker 1: we like we're willing to do is important as much
Speaker 1: as we can, so we have you know, we're dying
Speaker 1: for more loans. We have two trillion dollars of positive
Speaker 1: to trillion dollars loans. We're trying to do all the
Speaker 1: loans we think have good out of quality and so
Speaker 1: we don't feel this constraint.
Speaker 3: Let's talk about in your background. I am an only child.
Speaker 3: You have how many siblings?
Speaker 1: Seven?
Speaker 3: Seven? So you know growing up with eight people in
Speaker 3: the family. Wasn't that crowd at a time?
Speaker 1: Sir? I'm trying to think I didn't have I was
Speaker 1: set up to get my own bedroom for the first
Speaker 1: time in my life for my younger brother decided he
Speaker 1: wanted to move into the bedroom because he was scared
Speaker 1: to sleep alone. So I think I'm trying to think
Speaker 1: probably when I was in college, his first time I
Speaker 1: ever had a bedroom to myself. So yes, it was gad.
Speaker 3: What did your father do to support eight children? Might
Speaker 3: see him private equity or something.
Speaker 1: He was He was a research chemist for DuPont and
Speaker 1: so he spent his whole life on plastics. So the graduate,
Speaker 1: you know, plastics, young man, my dad was at you.
Speaker 3: Know, he's so that's what he grew up in Ohio
Speaker 3: And then you went to college in the East Coast
Speaker 3: and at Brown. Yes, and you were the co captain
Speaker 3: of the rugby team.
Speaker 1: Yes.
Speaker 3: And do you still play rugby or not so much?
Speaker 1: No, I don't play. I played rugby at Brown, I
Speaker 1: played rugby at law school, and I played rugby after.
Speaker 1: It's a great sport. Have never played it till I
Speaker 1: played it at college. It is, in a way the
Speaker 1: most intense. It looks like disorganization out there is extreme
Speaker 1: ill organized. But it's unique and that it's physical and tackling.
Speaker 1: You kick, you run. Everybody gets to handle the ball
Speaker 1: and you run for eighty minutes. And so it's a
Speaker 1: very demanding game. It was a lot of fun. Okay.
Speaker 3: So now you are the chancellor of Brown University, which
Speaker 3: means the chairman of the board essentially. So how do
Speaker 3: you have time for that?
Speaker 1: I've been on the board for fifteen years and at
Speaker 1: the end of the day, the chair of a board,
Speaker 1: Chris Packson runs university. Doesn't spectacular job. And our job
Speaker 1: is to govern and not you know.
Speaker 3: So after you graduated from Brown, you went to law
Speaker 3: school Notre Dame. Yes, sir, and okay. And did you
Speaker 3: play rugby at Notre Dames? I did, okay. So then
Speaker 3: you went to practice law back in Rhode Island? Is
Speaker 3: that right? Why did you move back to Rhode Island?
Speaker 3: You're from Ohio, you went to Notre Dame and the Midwest.
Speaker 3: Why did you go back to Rhode Island.
Speaker 1: Well, none of the Boston law firms would hire a
Speaker 1: person from not Dame law school, so I.
Speaker 3: Had, you know, okay, it was, it was.
Speaker 1: It's hard to believe, but literally I was the first
Speaker 1: lawyer hired by the firm and I'm from Notre Dame.
Speaker 1: And they did it more because I had the Brown
Speaker 1: you know connection stuff. But the big law firms in Boston,
Speaker 1: you know, just even with one of my teammates working there,
Speaker 1: founding John Theclair, they couldn't convince them to hire me.
Speaker 1: So I ended up with a great law firm and
Speaker 1: had a great short legal career there, and it didn't.
Speaker 3: So I'm a big fan of people who are lawyers
Speaker 3: getting out of law and going into finance. So I
Speaker 3: can empathize with you. Okay, so you're practicing lawyer, minding
Speaker 3: your own business. I assume you're a good lawyer. What
Speaker 3: kind of were your corporate lawyer.
Speaker 1: We had this instant when I came out. I've lost
Speaker 1: When I went to law school, I was going to
Speaker 1: be a criminal lawyer, because it was afinutely Bailey, it
Speaker 1: was the rock of the world at that point. And
Speaker 1: or I was going to be a labor lawyer. And
Speaker 1: then I went to law school, and I went to
Speaker 1: a firm, and oddly enough, you know, I went to
Speaker 1: law school. From eighty one to eighty four, there were
Speaker 1: no corporate lawyers in America because it was before the
Speaker 1: eighties took off, and after the seventies the activity died.
Speaker 1: So I, being a person that is impatient life, I said,
Speaker 1: when I'd be a corporate lawyer, to much the scrint
Speaker 1: of the litigation lawyers and stuff. Who thought that I
Speaker 1: lost my bard? But so I became a corporate lawyer
Speaker 1: more by I could see the opportunity to get responsibility.
Speaker 1: And I did that for nine years and Praham a partner.
Speaker 3: And now how did you escape from being a corporate lawyer?
Speaker 3: What did you do?
Speaker 1: There's a fellow named one of my mentors is named
Speaker 1: Terry Murray, who ran Fleet and I did corporate law.
Speaker 1: A lot of work I did for Fleet and then
Speaker 1: Terry after we did a transaction called the Bank Canoeing
Speaker 1: and transaction with KKR put money into the bank industry,
Speaker 1: and we bought the Bank Aneing, And I mean you,
Speaker 1: Fleet bought the bankneeing And from the federal government in
Speaker 1: the early nineties after the real estate crisis. I'd structured
Speaker 1: that deal in a way that I'd structured private equity
Speaker 1: deals for our bank private equity firm, which was a
Speaker 1: thing called dual convertible preferred stock converted into a parent
Speaker 1: company stock or bank stock, never been done in the
Speaker 1: public array. Terry said to the General Council, he's too
Speaker 1: smart to be a lawyer, which I never figured out
Speaker 1: what the General Council thought about. He was a brilliant guy,
Speaker 1: and he said, get him in here and we'll figure
Speaker 1: out if he's gonna do something.
Speaker 3: So he and I went to work at Fleet, which
Speaker 3: is headquartered in Rhode Island.
Speaker 1: I just went to work for Fleet, and I was
Speaker 1: deputy general counsel for like three months and then went
Speaker 1: on a special project to re engineer the company, and
Speaker 1: I came.
Speaker 3: In and Fleet ultimately merged with Bank Boston. And how
Speaker 3: did you survive?
Speaker 1: That. Well, that was the last deal I did is
Speaker 1: I was a head of M and A and strategy
Speaker 1: and Terry Murray and Chad gift or put thing of
Speaker 1: that deal. And Chad took a liking to me.
Speaker 3: I was acquired give who was ahead of Bank Boss.
Speaker 1: It was acquired taste for Chad because I was in
Speaker 1: the middle of negotiating getting all the cost structure and
Speaker 1: getting the alignment, and I was meant to be the
Speaker 1: pain in the butt. And so Chad ultimately took a
Speaker 1: liking to me as a great mentor and said you
Speaker 1: got to run a business, and put me in running
Speaker 1: a business. And we were merging two companies together. And
Speaker 1: I survived and ran the wealth management business.
Speaker 3: For if he ran the wealth management business for the
Speaker 3: combined Bank Boston Fleet and then Bank Boston Fleet combined
Speaker 3: company was sold to Bank of America.
Speaker 1: In two thousand and three fall.
Speaker 3: Yeah, and so how did you survive that one?
Speaker 1: Well, they asked me to run the wealth management business
Speaker 1: and the combined companies, and I did that, and Ken
Speaker 1: Lewis wanted to integrate some of the people because the
Speaker 1: companies were maybe at sixty forty, but they're very sizeable companies,
Speaker 1: and so he was trying to get a manager team
Speaker 1: that represented both companies, and so Chad was chair and
Speaker 1: Ken for CEO, and I went and ran in the
Speaker 1: wealth management business of the combined company.
Speaker 3: Right, But then you became the general counsel.
Speaker 1: For four days for.
Speaker 3: How long?
Speaker 1: Forty days and forty nights.
Speaker 3: All right, So we became the general counsel of the
Speaker 3: combined Bank of America.
Speaker 1: Ye. And then well then, so what happened was in
Speaker 1: December of two thousand and eight. We remember we bought
Speaker 1: Merril and the Lehman the weekend and everything, so we
Speaker 1: were originally trying to buy it Leman. We said we
Speaker 1: couldn't do it as a company I was running at
Speaker 1: that point the corporate Investment Bank and other parts of
Speaker 1: Bank of America. We couldn't do that. And then over
Speaker 1: the weekend that's when the world became very ugly, and
Speaker 1: so we bought Meryl, and remember Morgan stand they got
Speaker 1: investment from the Japanese bank and investments were made around
Speaker 1: and so after that, I'm sort of running the integration
Speaker 1: a bunch of stuff as we're going through from October
Speaker 1: or whatever it was till the fall and then uh,
Speaker 1: around the time Merrill showed up without with a seven
Speaker 1: billion dollar loss in the quarter at Les Captain's supposed
Speaker 1: to have. We started telling the government we couldn't do
Speaker 1: the deal and stuff, and so Ken asked me to
Speaker 1: be a general counsel because we were limiting a lot
Speaker 1: of jobs. And I actually eliminated my job and I
Speaker 1: was basically out of the company. Said you know what,
Speaker 1: stay and become general counsel because we need somebody. And
Speaker 1: from December ninth to.
Speaker 3: All right, became the general counsel the Combined Bank of America.
Speaker 1: As we as we negotiate with the government to figure
Speaker 1: out how to get the Meryl deal done. And then
Speaker 1: I went back in business right after. But then you
Speaker 1: left after that for a while, no, no, I became.
Speaker 1: So then in early mid January of nine I took
Speaker 1: over a bunch of the businesses after John Thane left
Speaker 1: and went back into business. And then by the end
Speaker 1: of a nine MCU it had a lot of jobs
Speaker 1: in a short period of time. So now it wasn't
Speaker 1: what somebody should know.
Speaker 3: Now, you bought Merrill Lynch at a discount, I guess
Speaker 3: the low price, but it turned out to be a
Speaker 3: pretty good deal.
Speaker 1: I guess from an operating base, it was always a
Speaker 1: good deal. The issue. The issue was that the hole
Speaker 1: in their capital cost us something delution. So we worked
Speaker 1: through that over time. So you know, with new capital
Speaker 1: rules and everything, we had about seven a half eight
Speaker 1: billion shares at the time. It went up to almost
Speaker 1: twelve billion. Now we're down about seven point four, so
Speaker 1: back down to where we should have been. But it
Speaker 1: took a lot of work twelve But from an operating base,
Speaker 1: it was always on home.
Speaker 3: Right before your bank came back, and from a rough
Speaker 3: position you borrowed in effect five billion dollars from Warren Buffett?
Speaker 3: Is that right? More or less? And it was pretty
Speaker 3: expensive capital. Some people say so did Warren Buffett got
Speaker 3: a better deal? The Bank of America had a better
Speaker 3: deal out of that.
Speaker 1: Well, if you our stock was trading at five dollars,
Speaker 1: he converted seven to fourteen a share, so it was
Speaker 1: a class of twenty percent. He had a six percent dividend.
Speaker 1: We were paying low dividend. But if you bought the
Speaker 1: comment or the preferred deferred had a ten percent dividend
Speaker 1: in that day in the common, you would have done
Speaker 1: better because you would have picked up more the first
Speaker 1: two bucks.
Speaker 3: Did you negotiate the deal with Warren Buffett? Or is
Speaker 3: he called smart?
Speaker 1: It's Apocryphay, he's told the story, so it's not my
Speaker 1: but he The idea came to in the bath. He
Speaker 1: called up, got into the call center believe or not,
Speaker 1: then finally got someone to get a number, called me
Speaker 1: and said, I want to put five billionaire bank and
Speaker 1: I said, we don't need the capitol. Warren, he said, oh,
Speaker 1: no you don't. That's why I'm calling you. You need
Speaker 1: stability and I can provide stability. And I said, yes
Speaker 1: you can. The night before a found named Mike Longs
Speaker 1: and now runs viser who has work for us at
Speaker 1: the time, and found name Bruce Thomps. And I were
Speaker 1: sitting here saying we need to we need to get
Speaker 1: some stability because remember what people think about if government
Speaker 1: shutdowns in defaults. The government was really in trouble in
Speaker 1: August of twenty eleven. They couldn't come together and funding.
Speaker 1: They were starting to overdraft their accounts, let's just call
Speaker 1: it that. So that was going on, and then we
Speaker 1: were getting background because all the mortgage litigation, and so
Speaker 1: he came in put the money in and from then,
Speaker 1: you know, from basically five dollars share price up to
Speaker 1: forty four, forty five dollars whatever. It's been pretty unbroken since.
Speaker 1: So he's faredwell, we fared well.
Speaker 3: She's don't have the stock erse he sold mostly.
Speaker 1: Sold, He sold about a third of it and then yeah,
Speaker 1: actually he bought another three hundred million shares. He ended
Speaker 1: up with a billion shares. He sold down at like
Speaker 1: six hundred last I know. But he's he did very
Speaker 1: well and we did very well, and he's been a
Speaker 1: great investor.
Speaker 3: Let's talk about the beginning of Bank of America. So
Speaker 3: Bank of America started as a Bank of Italy. So
Speaker 3: who started Bank of America And why did you name
Speaker 3: it after Italy as opposed to America.
Speaker 1: Well, apg And who was Italian descent, started the Bank
Speaker 1: of Italy when he came to the country in San
Speaker 1: Francisco to help the local the Italian community that emigrated
Speaker 1: to San Francisco. And so and he became famous in
Speaker 1: the San Francisco earthquakes and fires in the early nineteen
Speaker 1: hundreds by setting up a barrel and starting one money.
Speaker 1: And then fast forward to nineteen ninety nine when the
Speaker 1: Nation's Bank, which was the North Carolina Bank, which is
Speaker 1: the bank the bank today and the Bank of America
Speaker 1: merged good names. Nation Bank wasn't a bad bank that name,
Speaker 1: and but Bank of America is a better name, so
Speaker 1: they took the name. But the operating company has survived
Speaker 1: as bank.
Speaker 3: It was Nation's Bank moved from San Francisco headquarters to
Speaker 3: Charlotte headquarters where you are headquartered now.
Speaker 1: And and you know, it's interesting because with the la fires,
Speaker 1: we've We've asked our teammate Raoul and I to step
Speaker 1: in because you know, we have a herriage in California
Speaker 1: helping in times of stress that we have a big
Speaker 1: business in California, and Raoul was doing a great job.
Speaker 1: But you do have these historical ways that we've done
Speaker 1: business around the We were the first bank to make
Speaker 1: a loan in Japan after over two ended at the
Speaker 1: request of the US government to start lending money. We've
Speaker 1: been in the UAE since it was formed. So you
Speaker 1: go back and heritage, it's just a wonderful herriage. And
Speaker 1: the Bank of Italy herriage is apocryphal because of been
Speaker 1: any but the reality is the bank that is the
Speaker 1: bank that survived on us and drove all This was
Speaker 1: the North Carolina Bank, which formed and bring capital to
Speaker 1: the Southeast as a group because the New York bankers
Speaker 1: wouldn't come down to as much business. That is the
Speaker 1: bank that survived all this, and it's it's so all
Speaker 1: these rivers came together and formed this Hunage River.
Speaker 3: One of your predecessors is the head of Bank of America,
Speaker 3: became the head of the World Bank at one point.
Speaker 3: You have any interest in being the head of the
Speaker 3: World Bank, You've.
Speaker 1: Got a j coming in. I'll let him. Let him
Speaker 1: win that because okay, I haven't been asked, and he
Speaker 1: does a great he'll be terrific for it.
Speaker 3: So let's says, I'm going to ask you about this
Speaker 3: banking today. Why do we need all these bank facilities,
Speaker 3: bank branches, buildings, financial centers because everything is done online.
Speaker 3: It seems that do you actually have a lot of buildings.
Speaker 3: You really need all those buildings you have where you
Speaker 3: have your bank.
Speaker 1: This is the classic do as I do, not as
Speaker 1: I say. Because in the day between this morning when
Speaker 1: the banks open up to tomorrow morning, four hundred thousand
Speaker 1: people come into our branches. So this idea nobody goes
Speaker 1: to bank branch. Just is not true. The idea nobody
Speaker 1: uses cash. Well, about a quarter billion dollars and we'll
Speaker 1: go out of our ATM machines in the next twenty
Speaker 1: four hours the idea, but nobody writes checks. There were
Speaker 1: one millions.
Speaker 3: How many How many banks do you have around the
Speaker 3: country an hour?
Speaker 1: We have three thousand, seven hundred. We went from six
Speaker 1: thousand down to three seven.
Speaker 3: And what about eight pms? You have a lot of them.
Speaker 1: We have about fourteen thousand of them. To the high
Speaker 1: point you had eighteen thousand. And that's technology, end of
Speaker 1: the day. The huge technology impact in banking over a
Speaker 1: long period of time. But since the team started in
Speaker 1: twenty ten, coming together really started a few years before that,
Speaker 1: we have been basically engineering head count, the facilities. We
Speaker 1: had one hundred and twenty million square feet of real
Speaker 1: estate in two thousand and ten. We have about seventy
Speaker 1: million to day.
Speaker 3: Now, have you ever gone to get money out of
Speaker 3: an ATM and been denied?
Speaker 1: Not since college. During the Great Blizzards eight Blizzards of
Speaker 1: seventy eight, when we were at the wrong we had
Speaker 1: a friend gave us an ATM card to go out
Speaker 1: and get some money to buy liquor before everything shut
Speaker 1: down and we went to the wrong bank.
Speaker 3: What about give us some money About credit cards? You
Speaker 3: ever had our credit card denied?
Speaker 1: Not that I'm aware of, but so hopefully nobody else has.
Speaker 1: It shouldn't have been either.
Speaker 3: How has the world of technology affected the banking world?
Speaker 3: So right now so called fintech? Has fintech dramatically changed
Speaker 3: the way Bank of America operates.
Speaker 1: It's so we invest about four billion dollars in new
Speaker 1: code every year. Every weekend, we'll have a couple million
Speaker 1: lines of code go in to amend our systems and
Speaker 1: change our systems or add new technology that's not to
Speaker 1: run the systems. That's an their eight or nine billion
Speaker 1: dollars that is just new activity. So the impacts have
Speaker 1: been unbelievable, But people over it's still human beings and
Speaker 1: what they do and how they do it. So you
Speaker 1: have to be high touch in high tech. So in
Speaker 1: the mid nineties when I was ahead of strategy, it's
Speaker 1: the company I remember, you know, consultants coming in saying
Speaker 1: twenty years will be no bank branches. Well it's thirty
Speaker 1: years and guess what we still have thirty seven hundred.
Speaker 1: The reality is people want it all the ways. So
Speaker 1: but the impact of the phone iPhone in particular was
Speaker 1: so different, and we were the first app available on
Speaker 1: the iPhone. And the reason why is we'd built our
Speaker 1: technology through someone's pressions and the compressions in the company
Speaker 1: to be a web based technology. Back when people didn't
Speaker 1: do that. It was really an app based technology. So
Speaker 1: it could be app made an app back we don't
Speaker 1: think of these things they but back then that was
Speaker 1: an unusual thing to have an app. Everybody went to
Speaker 1: the websites, et cetera. So that took off. And so
Speaker 1: from that start, you know, you now have forty million
Speaker 1: consumers who bank digitally with us all the time. Last
Speaker 1: year we had about ninety plus percent of our interactions
Speaker 1: with consumers are digital. And yet the critically importance of
Speaker 1: a person going into one of our stores and saying,
Speaker 1: I got to figure out how to save more money.
Speaker 1: Can you help me do a financial plan. My mother's sick,
Speaker 1: I've got a power of attorney. I need you to
Speaker 1: figure out how I can manage our affairs. My kid
Speaker 1: wants to go to college. I need to figure out
Speaker 1: how to borrow the money. All those things are critically important,
Speaker 1: so you have to be able to do both.
Speaker 3: So people still writing checks the way they did ten
Speaker 3: twenty thirty years ago. You set a big business for
Speaker 3: your check cashing.
Speaker 1: Check cashing is not a business, it's a convenience for
Speaker 1: the customer. The check's written from like twenty nineteen and
Speaker 1: now probably down thirty or forty percent, there's still a
Speaker 1: fair amount of them. What you've seen is a dollar
Speaker 1: volume written staates flat right, but the number written comes down,
Speaker 1: and we track that literally every week. But we track
Speaker 1: all our spending every week. But we can see what's
Speaker 1: going on in the Americans consumer. But in the dynamic
Speaker 1: there is people are still paying their rent or the
Speaker 1: mortgage or something like that car payment with it. What
Speaker 1: they've done with Zell, which didn't exist a decade ago
Speaker 1: and now is the dominant course. Our clients send more
Speaker 1: money over zel than total VEMO is sent to give
Speaker 1: you a cent said so in so it's become the
Speaker 1: dominant way. That's replaced a lot of small dollar checks.
Speaker 1: But the big dollar checks still go through the system.
Speaker 3: Old days, and I used to write a check, bank
Speaker 3: eventually would send me back the canceled check. What happened
Speaker 3: to those canceled checks? Where do you keep them all? Now,
Speaker 3: they're all.
Speaker 1: Document destruction policies, but they're all image based. So even
Speaker 1: if you went to a branch and deposit check, it's
Speaker 1: image based, right then the actual checks destroyed. It's the
Speaker 1: idea of taking a check deposit ATM. So about fifteen
Speaker 1: percent of the banks deposits checks are deposited at the
Speaker 1: physical of ATM a lot of small business activity. The
Speaker 1: other yep, that's called eighty five percent. About fifty percent
Speaker 1: of it goes through mobile taking a picture of it,
Speaker 1: which is you imaging the check. The other thirty percent
Speaker 1: goes through the ATMs, which the ATM takes a picture
Speaker 1: of check. The check disappears in all cases.
Speaker 3: So if I want to go to use an ATM,
Speaker 3: and I have a Bank of America ATM card, but
Speaker 3: I don't see any Bank of America ATMs, I go
Speaker 3: to some other bank ATM, I pay a fee.
Speaker 1: Is that you would, David, because you're you wouldn't, but
Speaker 1: other people might.
Speaker 3: I thought you have to pay a fee, right be?
Speaker 3: I mean is that a profit center for banks? Those
Speaker 3: fees are?
Speaker 1: You know, at the end of the day, we get
Speaker 1: fifty five percent of our revenue, our one hundred million
Speaker 1: dollars of revenue last year, fifty five percent came from interest,
Speaker 1: forty five percent fees. The dominant part of those fees
Speaker 1: are trading revenue and asset management fees and things like that.
Speaker 1: We have consumer fees, but they've come down dramatically because
Speaker 1: basically you said that the consumer is you keep changing
Speaker 1: your behavior. We keep driving on the cost to serve,
Speaker 1: and we'll give that back by low and lower fee structure.
Speaker 1: So we have a no feed checking account. We have
Speaker 1: a five dollars simple checking account that people know that
Speaker 1: you can't overdraft. We've we do our overdraft fees. When
Speaker 1: we first start changing the policies fifteen years ago, where
Speaker 1: you have five billion dollars a year and now there
Speaker 1: are one hundred and twenty million dollars a year, do you.
Speaker 3: Think we will have in our collective lifetime no more currency,
Speaker 3: everything will be digital or you think that's not likely?
Speaker 1: If not in our lifetime, what.
Speaker 3: About a digital currency which doesn't preclude other things, but
Speaker 3: a digital currency, Well, I think the.
Speaker 1: New administration wants to push. So you have to think
Speaker 1: about three parts of this dialog there's a blockchain question,
Speaker 1: there's the stable coin type of currency question, and then
Speaker 1: there's the bitcoin and other types of things. It's pretty
Speaker 1: clear there's going to be a stable coin, which is
Speaker 1: going to be a full dollar backed type of thing,
Speaker 1: which is no different than a money market fund, a
Speaker 1: check access is no different than a bank account really,
Speaker 1: and so if they if they make that legal, we'll
Speaker 1: go into that business. So you'll have a be a
Speaker 1: Bank of America coin in a bank and a US
Speaker 1: dollar deposit, and we'll be able to move them back
Speaker 1: and forth, because now it hasn't been legal for us
Speaker 1: to do it, but it's just then like another foreign currency.
Speaker 1: The question of what it's useful for is going to
Speaker 1: be interesting.
Speaker 3: Right. So in the old days, old ten twenty thirty
Speaker 3: years ago, if you had a lot of coins, you
Speaker 3: put them in a jar or your desk. Eventually could
Speaker 3: wrap them up and take them to the bank. Now,
Speaker 3: if you go to the bank, they don't want the coins,
Speaker 3: so that the what do you do with these coins? Now?
Speaker 1: They we're got to get rid of the pennies. So
Speaker 1: maybe uh yeah, today, if you roll over bring them in,
Speaker 1: they'll they'll count them up and stuff. But it's a
Speaker 1: tricky thing because it's just a lot of work for.
Speaker 3: Okay, so now President Trump said, we're not going to
Speaker 3: make the penny anymore.
Speaker 1: We'll take all your coins.
Speaker 3: Don't worry, Okay, the penny, the penny. What about the penny?
Speaker 3: We don't making the penny? Is that a problem?
Speaker 1: You know? I think the economics that they're talking about
Speaker 1: is it costs more to distribute it. Look, yeah, to
Speaker 1: day we when you think about the bills, you know
Speaker 1: the currency and what it's coin or bills, and it's
Speaker 1: mostly bills in terms of value. If it's an interesting thing.
Speaker 1: So ninety percent of all the bills that move around
Speaker 1: the world we move one day, as at the government.
Speaker 1: And yeah, there's nothing bigger than a hundred. So a
Speaker 1: billion dollars of hundreds weighs a few tons. A million
Speaker 1: dollars of one hundreds is a twenty five foot stack.
Speaker 1: So there's a big physical part of this. Now, the
Speaker 1: reality is that's done for reserve currency in central banks.
Speaker 1: That's who holds the rest of the money. All moves
Speaker 1: digitally day. So we move, We'll move three trillion dollars
Speaker 1: today digitally. So the idea in our consumers money movement
Speaker 1: is dominated digitally, whether it's a z L payment, a
Speaker 1: wire an ach you know, at the end of the day,
Speaker 1: that doesn't include credit and debit cards, which would take
Speaker 1: another big part because the end the day, what's what's
Speaker 1: a debit card? Is just an introduction to digital so
Speaker 1: getting rid of pennies and stuff. There's economics supportive, but
Speaker 1: the reality is will always have currency because that represents you.
Speaker 3: Know, what's the most common uh currency? Is it one
Speaker 3: hundred dollars bill or the one dollar bill?
Speaker 1: I don't know that, but I'm sure there's more ones
Speaker 1: than hundreds. But the end the day, all the big
Speaker 1: you know, the real money movement to the central banks
Speaker 1: is all the hundreds. It's paaladed one hundreds. It's it's
Speaker 1: it's a wild scene to watch, you know, pallets go
Speaker 1: through this. We go to the federal Reserve. We pick
Speaker 1: up these pallets of cash and send them around with
Speaker 1: the Central Bank of you know, France to have the reserves.
Speaker 3: Well, when you need cash, do you go to the
Speaker 3: bank and get cash at the end of the week
Speaker 3: or do you just go to ATM or you don't
Speaker 3: use cash so much?
Speaker 1: I do everything and every one of our clients. Does
Speaker 1: I look at the end of the day, you know,
Speaker 1: I go and off and go and say hi to
Speaker 1: the teammates because that's kind of fun. So I try
Speaker 1: if the bank's open, I'll go and say hello and
Speaker 1: get some money out. But you know, like you like me,
Speaker 1: like everybody you become. You know, if you look at
Speaker 1: the way the money, so you're to date, about seven
Speaker 1: percent more money got moved by Bank America consumers over
Speaker 1: last year, so it's pretty healthy. If you look, twenty
Speaker 1: five percent went by credit card movement payments uh in,
Speaker 1: about fourteen percent went by uh uh checks and and
Speaker 1: zell and other stuff. Cash was probably in a single
Speaker 1: high single it's you know, so it's not a lot
Speaker 1: of cash goes out the ATMs every day when you
Speaker 1: put it against these other payments. So four trillion, four
Speaker 1: and a half trillion will go out and cash, how
Speaker 1: the aten to day is a couple hundred million, and
Speaker 1: that's going on economy being spent. So a healthy consumer
Speaker 1: spends money and that's good, but they use all the
Speaker 1: device as cash is becoming less, but it's still critically
Speaker 1: important and so that's why you have ATMs, and that's
Speaker 1: why you have branches, and that's your small businesses receive
Speaker 1: cash especially and bring in deposit, and that's why you
Speaker 1: need a physical plan.
Speaker 3: So if I go to your bank and I want
Speaker 3: to make a deposit of ten thousand dollars in cash, yeah,
Speaker 3: I'm going to get reported to the federal government. Yes,
Speaker 3: and ten thousand isn't what it used to be.
Speaker 1: Well, that's one of the one of the reforms are
Speaker 1: saying is and somebody testified a few weeks ago to
Speaker 1: this fact site. I'm paraphrasing their story, is they said,
Speaker 1: when nineteen seventy two they set the ten thousand dollars level.
Speaker 1: The theories even goes back to the forties. But just
Speaker 1: let's just say nineteen seventy two and nineteen seventy two,
Speaker 1: you could buy a full loaded Cadillac for ten thousand
Speaker 1: dollars out this many years later, and we still report
Speaker 1: not only if you did ten thousand, but if you
Speaker 1: did three or four transaction a period of time that
Speaker 1: looked like you were trying to evade the ten thousand,
Speaker 1: we'd have to report that too. Well, the simple answer,
Speaker 1: we're saying, just index set to where it should, which
Speaker 1: would be like one hundred thousand. When you do that,
Speaker 1: that takes out all this activity and moves it away.
Speaker 1: And one hundred thousand dollars is the inflation adjusted amount
Speaker 1: from fifty years ago for ten or maybe seventy eight
Speaker 1: or eighty thousand, and so if you're saying lift that amount,
Speaker 1: you'll take the average transactor completely off the table, and
Speaker 1: you really will be looking for people who are trying
Speaker 1: to move amounts of money or avoid the transaction level.
Speaker 1: It's such a simple fix, and I think people can
Speaker 1: see that. And by the way, in twenty two, in
Speaker 1: twenty or twenty two, there was an act pass that
Speaker 1: became law that gave the authority the Treasury to do that.
Speaker 1: They just need to do it now.
Speaker 3: So now you live in the Boston area as you
Speaker 3: have for many many years, the main biggest headquarters I office,
Speaker 3: I think you have or financial center offices in New York.
Speaker 1: And your headquarters is in Charlotte.
Speaker 3: Charlotte, So is that inconvenient for you to go all
Speaker 3: these different places?
Speaker 1: It's not, because we also travel all of It's like,
Speaker 1: you know, I'm here today, I'll be in Florida for
Speaker 1: a couple of days, and et cetera. So We move
Speaker 1: all over as executives and big companies, and you do too.
Speaker 1: But you know, the idea of moving people around and
Speaker 1: moving their you know, where they work, and moving their families,
Speaker 1: it's more difficult then, you know, we have twenty years
Speaker 1: ago when we said we're moving the headquarters of Boston.
Speaker 1: Thirty years ago, you just got to move. It was
Speaker 1: not a question that you said, oh, maybe I got
Speaker 1: a better idea. So as we look across that, we
Speaker 1: have sixteen thousand plus people in Charlotte. We have about
Speaker 1: the same amount when you take New York in the
Speaker 1: areas around New York, but we also have five thousand
Speaker 1: people in Boston. Around there, we have you know, thirty
Speaker 1: five forty thousand people in the state of California. We
Speaker 1: have twenty five thirty thousand people in Texas, you know,
Speaker 1: so Florida. We have operations centers in Jacksonville. So you
Speaker 1: have people everywhere. And the idea is we try to
Speaker 1: always look at it and level load activity around the
Speaker 1: country to avoid you know, to use time its own
Speaker 1: differences to our advantage for call centers, and that's access
Speaker 1: talent pools. And then remember all our branches and our
Speaker 1: private banking teammates, our maryrial teammates, and our business lending
Speaker 1: teammates across all the businesses. They're all in the field
Speaker 1: during ninety seven hundred markets out there every day.
Speaker 3: So if I wanted to buy make an investment in
Speaker 3: a bank stock, would you say it's a good idea
Speaker 3: to invest in bank stocks now? Or do you think
Speaker 3: bank stocks may be overvalued?
Speaker 1: Or what?
Speaker 3: Do you think?
Speaker 1: Our valuation difference to the S and P is lower
Speaker 1: than it's been and I think our company is a
Speaker 1: great value and rest the banks a pretty good day.
Speaker 3: So now when you took over the bank, you had
Speaker 3: more employees than you have today. The bank has expanded.
Speaker 3: Why do you have fewer employees because your bank's so
Speaker 3: much bigger.
Speaker 1: So that's technology, and that's applied technology. In twenty ten,
Speaker 1: we opened with two hundred and eighty two hundred eighty
Speaker 1: four thousand ployees. We went up to three hundred and
Speaker 1: five thousand to peak, and we ran as low as
Speaker 1: two hundred and four thousand. Now we're about two hundred
Speaker 1: and thirteen thousand, and so all that was done with
Speaker 1: applied technology and digitization, new technologies both. So if you
Speaker 1: think about work, the way to get rid of work
Speaker 1: is to eliminate and re engineer the work and eliminate
Speaker 1: steps and things like that. You can do that through automation,
Speaker 1: you can do that through just not doing them, et cetera.
Speaker 1: Goalay duplication. Then you can eliminate management of work because
Speaker 1: if you have less people, you need less managers, and
Speaker 1: then you eliminate the real estate that people sit in.
Speaker 1: And so we've been doing that on and on again.
Speaker 1: But the key to make it really move was technology.
Speaker 1: And so whereas we had in twenty ten we would
Speaker 1: have had five thousand, five hundred branches, we now have
Speaker 1: thirty seven hundred branches. We actually have probably almost one
Speaker 1: thousand those in places we did not have branches back then,
Speaker 1: in different cities, and so if you think about maybe
Speaker 1: six or seven hundred like that, so you think about
Speaker 1: that those brains are bigger and more efficient, but all
Speaker 1: the transactions that come out and what's in their sales
Speaker 1: activity and relationship activity, and so it's just that concept
Speaker 1: re engine We have this thing called opt X. Every
Speaker 1: year we come up with thousands of IDAs to take
Speaker 1: out and re engineer the company and so at the
Speaker 1: end of the day, more customers, more activity more people,
Speaker 1: and yet you've driven the head count down and our
Speaker 1: costs are two thirds people and then basically the other
Speaker 1: third is some advertising, the buildings, technology and electricity.
Speaker 3: And now there's an acronym today that some people in
Speaker 3: Washington don't like, called DEI. Do you have a DEI
Speaker 3: policy or not anymore?
Speaker 1: We have diversity inclusion in our company. But let's step back.
Speaker 1: What we've always been as a bank of opportunity. So
Speaker 1: we think about creating an opportunity for our teammates. And
Speaker 1: how do we do that. We go out and hire
Speaker 1: from all areas and bring people in to our companies.
Speaker 1: So we go to four hundred different schools to recruit kids.
Speaker 1: We go we have a program we called Pathways. So
Speaker 1: Pathways we announced in twenty eighteen, we said we'd hire
Speaker 1: ten thousand people from low and modern income neighborhoods to
Speaker 1: come work in our company. We complete the first ten thousand,
Speaker 1: then we went out and said we'll do another ten thousand.
Speaker 1: We're up to thirty thousand people over the last decade
Speaker 1: almost that we've hired from LMI communities to come work
Speaker 1: for our company, from high school, junior college, and colleges
Speaker 1: to come work. So once we have a very diverse
Speaker 1: company in terms of representation from all economic status, all
Speaker 1: races and ethnicities. Once they get in, the opportunity is
Speaker 1: there of a lifetime. We equal pay for equal work,
Speaker 1: the ability to promote, we train, we do all the work,
Speaker 1: and so the idea is that's an opportunity. When we
Speaker 1: look outside our company, we try to work with other
Speaker 1: employers to create the same opportunity we create. We try
Speaker 1: to work with nonprofits and communities to create opportunity for
Speaker 1: them to be successful. And so the idea is just
Speaker 1: create opportunity. So we have a diverse team, we have
Speaker 1: we stressed inclusion. When you're at our company, you can
Speaker 1: be who you want to be and be successful. Including
Speaker 1: we have three hundred thousand memberships in our employee resource groups,
Speaker 1: of which about sixty percent of people are in one.
Speaker 1: The average SMP company five hundred company has five percent employees.
Speaker 1: Our employees love to work together, they're open to all,
Speaker 1: even though at coolhort and so we just try to
Speaker 1: create opportunity.
Speaker 3: Now that's a young profession. Young person's graduate in college,
Speaker 3: why should they go into the banking profession as opposed
Speaker 3: to private equity investment, banking, healthcare. What's the appeal of
Speaker 3: working in a bank.
Speaker 1: Well, when we bring the two thousand kids in and
Speaker 1: I talked to them, I always say the same thing.
Speaker 1: You can make a lot of money doing a lot
Speaker 1: of things. You can have a great career, do a
Speaker 1: lot of things. But if you're going to come to
Speaker 1: our company, you really want to help people. You want
Speaker 1: to provide the answer. Our market position is what would
Speaker 1: you like the power to do? And I said, your
Speaker 1: job at this company is to help people answer that question,
Speaker 1: whether it's a customer, whether it's a teammate, there's a shareholder,
Speaker 1: whether it's a community, And you've got to come and
Speaker 1: want to do that. You want to deliver a lot
Speaker 1: of profits done the right way with a purpose around it.
Speaker 1: And if that's what makes the place special in our
Speaker 1: turn of rates and all time low, it's and we
Speaker 1: are sought after by young kids to work. So here
Speaker 1: everybody's going to tech companies and stuff. It's we have
Speaker 1: hundreds of thousand applications for the two thousand higher.
Speaker 3: Your Bank of America is mostly focused in America, I assume,
Speaker 3: But do you have a lot of business outside and
Speaker 3: do you want more business outside of the United States.
Speaker 1: Yeah, we do business one hundred and thirty countries. We're
Speaker 1: in thirty forty core countries. We've been in like I said,
Speaker 1: in Japan that you have for eighty years now, in
Speaker 1: India for sixty five years, and Brazil since nineteen fifty four,
Speaker 1: in Argentina since nineteen fourteen. You know. So we have
Speaker 1: an national business. And the amount of loans we have
Speaker 1: outside the United States for commercial customers exceeds what we
Speaker 1: have in the United States and for large corporate customers.
Speaker 1: So we're a global business for global investors, global firms,
Speaker 1: that private equi firms, global investors, global companies. And so
Speaker 1: we do investment banking, corporate banking, treasure, cash management, and
Speaker 1: trading across the world. And we're you know, the top
Speaker 1: two three in the world. And these businesses going back
Speaker 1: to you early point that the US companies that come
Speaker 1: to dominate those businesses were right at the top.
Speaker 3: Were you ever at a cocktail party or lunch and
Speaker 3: somebody gives you a resume that ever happened to you?
Speaker 3: If somebody they thinks should be hired by the bank.
Speaker 1: There's this thing called email that gets in their fashion.
Speaker 3: Right, and now on the personal side, You've been there
Speaker 3: fifteen years, you haven't announced any time, and you might
Speaker 3: step back and you're not prepared to announce that today.
Speaker 1: Right, No, I don't thin, So I'll tell you first.
Speaker 3: Okay, So have you been able to convince your children
Speaker 3: to go in the banking world.
Speaker 1: My oldest son's an investment banker for a different firm, obviously,
Speaker 1: in my middle child is a risk manager for another
Speaker 1: firm in financial services, and my youngers and communications, and
Speaker 1: I think I never said, Look, being a CEO's child
Speaker 1: is not the easiest thing being a CEO's spouse. So
Speaker 1: they and they saw me work in different ways across
Speaker 1: the years, and so it's their decision with their careers.
Speaker 1: And it's nice. My son, he's a deal doer, he's
Speaker 1: an m and a type of guy. So it's fun
Speaker 1: because I used.
Speaker 2: To do that.
Speaker 1: I haven't done that long time.
Speaker 3: What do you do for rest and relaxation all your
Speaker 3: spare time?
Speaker 1: You know, I do whatever else does.
Speaker 2: And that was David Rubinstein speaking with Bank of America
Speaker 2: Chief Executive Officer Brian moynihan at the Economic Club of Washington,
Speaker 2: and you can watch
Speaker 1: More of that interview on The David Rubinstein Show Peer
Speaker 1: to Peer Conversations on March twelfth at nine pm in
Speaker 1: New York