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Speaker 1: Bloomberg Audio Studios, podcasts, radio.

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Speaker 2: News joining us.

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Speaker 3: Now I'm place to say f I moy and had

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Speaker 3: CEO and shareman of Bank for America, Brian, we have

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Speaker 3: to say thank you, thanks for having us.

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Speaker 4: It's great for you to be here.

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Speaker 5: These talent teammates are out working early in the morning

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Speaker 5: and hopefully making some money for the shareholders.

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Speaker 3: It's getting noisy. We can talk about how much money

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Speaker 3: they make. It it's just the moment. I actually wanted

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Speaker 3: to start with a quote from this for the Bank

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Speaker 3: of America Institute in the first hour of our coverage here.

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Speaker 3: I find this stunning every time I read it. This

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Speaker 3: will be the fifth time already. Today, medium value of

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Speaker 3: savings and checking balances are more than forty percent higher

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Speaker 3: than twenty nineteen for all income levels. As you look

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Speaker 3: across the business, consumers, companies, just how resilient is this

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Speaker 3: economy still?

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Speaker 4: Well?

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Speaker 5: Listen, the team do a great job of putting this out,

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Speaker 5: and we purposely created the institute so we can get

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Speaker 5: this data out. And it's not a reflection what's coming tomorrow.

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Speaker 5: It's more reflection on what you see in the past.

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Speaker 4: But it's very great.

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Speaker 5: AR sixty plus million customers at thirty seven million checking

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Speaker 5: account holders, and they have been remarkably resilient.

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Speaker 4: And so the idea if.

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Speaker 5: We were sitting here last year this time, we'd be

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Speaker 5: talking about our team was predicting a recession somewhere early

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Speaker 5: this year. Then they took that off the table as

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Speaker 5: you moved through the year, and now they're predicting two

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Speaker 5: percent plus growth this quarter. So you've gone from negative

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Speaker 5: to slightly positive two percent.

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Speaker 4: That is.

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Speaker 5: Returning to the mean. It's not outsized growth, it's actually

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Speaker 5: slowing down. So people can't forget we're going from a

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Speaker 5: four to five percent growth rate to two and a

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Speaker 5: half percent growth is slowing down in the shicktion on

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Speaker 5: economy accomplishment purpose. Meanwhile, the consumer is very resilient and

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Speaker 5: that's providing an anchor to windward. That the Fed has

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Speaker 5: latitude that a lot of places don't have. That they

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Speaker 5: can be holding restrictive and let the economy really catch up,

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Speaker 5: but they have to be mindful of the change at

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Speaker 5: some point that consumers slow down, and they have slowed

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Speaker 5: down their spending. And so last year to have been ten

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Speaker 5: percent growth, this year in the fall five percent, and

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Speaker 5: now it's down to three to four percent, and.

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Speaker 4: They've got to be carefully to overshoot.

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Speaker 5: So this the tension we're in right now, which is

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Speaker 5: this resilient economy and actually, as you said, Lisa, actually

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Speaker 5: trying to bring inflation down for since the financial crisis,

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Speaker 5: and now most center banks are trying.

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Speaker 4: To get inflation up.

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Speaker 5: And so it's a completely different execution and that's what

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Speaker 5: we got to get right.

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Speaker 2: You're dominant in small business landing.

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Speaker 3: I'm just wondering just how much confidence there is out

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Speaker 3: there still in corporate America at the lower level and

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Speaker 3: the small companies across this country.

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Speaker 5: If you say, by virtue of their activity, it's strong.

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Speaker 5: But on the other hand, line usage and one Dey'll

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Speaker 5: be on here later she'll talk about that line usage

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Speaker 5: has come down a bit, which means that the cost

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Speaker 5: of borrowing went up, and so therefore I'm a little

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Speaker 5: more careful and so hiring is a little more careful,

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Speaker 5: Equipment purchased a little more careful, and so well, they're

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Speaker 5: fine making money and the profits are strong, and the

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Speaker 5: team will talk about profits driving this market. An the

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Speaker 5: EPs estimates for public companies, even mid sized companies are

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Speaker 5: participating that the American economy is the dominant economy in

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Speaker 5: the world right now in terms of activity and interest

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Speaker 5: and investment and lots of good transport. But on the

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Speaker 5: other and why aren't they user line so much? It's

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Speaker 5: a little more costly. Therefore you a little more careful.

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Speaker 5: And that's the tension we're going through. Everybody's trying to

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Speaker 5: really figure out how this economy will perform. And four

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Speaker 5: months ago people worried about a recession. Six months ago

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Speaker 5: worried about recession.

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Speaker 4: Now they're not.

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Speaker 5: But now the question is do they really want to

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Speaker 5: invest heavily in it? And that's where you see in

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Speaker 5: a little bit of tension here. So everything's fine, solid, resilient,

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Speaker 5: all the words you wanted to do, but it has

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Speaker 5: to sort of work the.

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Speaker 4: Next twist in the economy to get back to normal.

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Speaker 6: It's funny I hear some of the people who work

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Speaker 6: for you, and they sound incredibly bullish.

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Speaker 1: Nothing's wrong.

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Speaker 6: Whatever is it your job to basically look around quarters

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Speaker 6: and see what potentially could be the problem.

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Speaker 1: But otherwise things are screaming.

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Speaker 6: And it suggests that even four and a half percent

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Speaker 6: ten year rates will be just fine to the lending

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Speaker 6: and the activity that you're seeing.

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Speaker 5: Well, I think we're also adjusting as a company and

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Speaker 5: as an industry and as a society to simple thing

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Speaker 5: that from two thousand and seven or eight till seventeen,

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Speaker 5: you had no interest rate. Then you had industright for

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Speaker 5: about twenty four to thirty six months. Then they were

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Speaker 5: dropping rates in nineteen. Then the COVID comes and they draw.

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Speaker 5: So we've never really had a normal interest rate environment.

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Speaker 5: You know, what would have typically been a three you know,

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Speaker 5: three percent front end rate, four to four and a

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Speaker 5: half percent back end rate of normal slope and curve

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Speaker 5: real illustration. It hasn't a curve for anybody under forty.

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Speaker 5: You know, they literally weren't working back then. So and

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Speaker 5: that sounds curmudgeonly, but the raality is that's true. So

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Speaker 5: everybody's adjusting this. So these high rates at four four

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Speaker 5: and a half percent in the tenure are not high

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Speaker 5: rates in the grands.

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Speaker 4: Give me things are high rates in the last fifteen years.

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Speaker 5: So we got to adjust to that, and that'll take

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Speaker 5: time to work through the systems and models and thought process.

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Speaker 5: Our team is the best team in the world in research,

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Speaker 5: and you're going to hear from a lot of today

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Speaker 5: and your viewers of benefit. On the other hand, you know,

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Speaker 5: as you look at it more broadly, my jobs in

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Speaker 5: the team's job at the top of the house is

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Speaker 5: to make sure we're balanced for all outcomes, and that's

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Speaker 5: why we're always worried about what happens tomorrow and we

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Speaker 5: play for it.

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Speaker 6: The balance in outcomes is leading to some really frustrated

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Speaker 6: and board traders, and we talk about that with a

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Speaker 6: lot of people who basically say there's not a lot

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Speaker 6: to do because you can't really get an edge.

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Speaker 1: Are you seeing that in trading activit? Are you seeing

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Speaker 1: that in trading.

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Speaker 6: Revenues as people basically have no incentive other than just

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Speaker 6: to hold in video, hold on to, you know, some

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Speaker 6: of the credit that keeps on rallying and just you know,

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Speaker 6: make bank well.

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Speaker 5: Our team has just come off of last year a

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Speaker 5: record amount of revenues and the quarters the record and

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Speaker 5: growing quarter of a quarter, and we think they're going

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Speaker 5: to farewell this quarter. We told the market that a

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Speaker 5: few weeks ago, and so Jimmy Damar and the team

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Speaker 5: that's out here, the research team under Candace and then

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Speaker 5: investment banking team on Matthew, you're driving the business and

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Speaker 5: the actually gaining share and so well, you know pools

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Speaker 5: are down investment banking, we've gained some share there where

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Speaker 5: pools are stable flatish, were actually up and that's different

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Speaker 5: in this business. And they do it with the right risk.

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Speaker 5: They made money I think every trading day last year,

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Speaker 5: nearly every trading day for the last five years.

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Speaker 4: And so they do it the right way. Is that

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Speaker 4: boring or not? You have to ask them. It's just

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Speaker 4: fine with us because the end of that.

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Speaker 5: Recurring capability, that ability to keep delivering for clients and

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Speaker 5: doing what they need to do and make money at

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Speaker 5: it and deliver for the shareholders and get a return

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Speaker 5: on capitals.

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Speaker 4: With Jim and the team had done.

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Speaker 3: A great eluded. So if you maintain that momentum from

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Speaker 3: that record fourth quarter.

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Speaker 4: Yeah, we think we're this quarter start off well.

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Speaker 5: The Tham's doing a good job, and when you get

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Speaker 5: to be bigger and bigger, it's hard to keep that

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Speaker 5: growth going.

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Speaker 4: They keep doing it.

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Speaker 3: Can we talk about the m and a slump as well?

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Speaker 3: Are we working our way out of that? We wake

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Speaker 3: up every single morning We've got a new, big blockbuster deal,

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Speaker 3: and then we have a conversation about whether they can

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Speaker 3: actually close it or not because of anti trust concerns

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Speaker 3: down in Washington, d C. Do you find us exiting

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Speaker 3: that slump this year? Is that what you're looking for?

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Speaker 5: I think until there's a clarity on policy, that question

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Speaker 5: is going to come up every time it deals announce it.

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Speaker 5: So the companies are actively engaging the dial like trying

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Speaker 5: to figure ot the strategic moves, and then the questions

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Speaker 5: can't get the deals through, and that happens in all industries.

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Speaker 4: We need to get this resolved.

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Speaker 5: We need to get a more rational, predictive outcome to

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Speaker 5: have your people willing to take the risk of putting

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Speaker 5: your company at risk for a cell side, and that's

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Speaker 5: really comes down to the buyers. You put themselves somewhat

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Speaker 5: at risk, their sellers really put.

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Speaker 4: Themselves at risk aus a company.

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Speaker 5: The hanging in the bands for a longer period of

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Speaker 5: time is a tough place to be. Having been there

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Speaker 5: before in my life and having caused people to be

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Speaker 5: there a lot in my life, you know it's a

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Speaker 5: tough place. And so how to run the company what

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Speaker 5: you can do? So I think we need to get

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Speaker 5: a faster turnaround. The idea is these transactions don't change

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Speaker 5: this month or a year from now, there's the same transaction.

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Speaker 5: People need to get after them, look at them, decide

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Speaker 5: what they're going to do, and give clarity so that

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Speaker 5: the market tap place. The good news is, you know,

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Speaker 5: investment banking revenues have stabilized to move back up, and

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Speaker 5: that's good.

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Speaker 4: But the M and A piece is still the piece

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Speaker 4: that could come on and push through.

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Speaker 3: Do you find that some clients are reluctant to make

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Speaker 3: deals based on what you just said, even though they

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Speaker 3: make business sense. They just don't even want to entertain

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Speaker 3: the conversation.

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Speaker 5: Because the risk of war balance is so tough. Not

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Speaker 5: everybody has a stay in power to fight through, you know,

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Speaker 5: lawsuits and time and effort and things like that, and

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Speaker 5: so it really requires if you said you needed ten

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Speaker 5: points of strategic import out of ten to to do it,

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Speaker 5: possible points you might need seven before. Now you need

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Speaker 5: all ten because you really have to say, this is

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Speaker 5: worse hanging on to and fighting through. That's a different

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Speaker 5: environment out against that you are seeing deals announced, and

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Speaker 5: that's because they make strategic compelling sense for that buyer, seller,

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Speaker 5: et cetera. But you know it's it's it's just been

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Speaker 5: slowing things down, and I think as it get some

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Speaker 5: rationality here and around the world, because remember the now

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Speaker 5: these deals are simple anymore if for any company they

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Speaker 5: have operations in Europe where there's same sets of approvals

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Speaker 5: or different sets of approvals and operations of other environments.

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Speaker 5: But yeah, the end of the day, consolidation comes because

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Speaker 5: of strategic import and I think you have to let

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Speaker 5: capitalism run.

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Speaker 6: So let's just talk about some of the policy shifts.

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Speaker 6: Which is nice gentle allusion to the election later on.

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Speaker 6: Potentially they could offer some more certainty. What kind of

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Speaker 6: em and a boom could you see after that certainty

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Speaker 6: has been established?

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Speaker 4: Yeah, we'll see.

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Speaker 5: I mean I think you know, elections or elections. This company,

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Speaker 5: the oldest part has been around since seventeen eighty four,

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Speaker 5: and you know there's been a lot of elections since

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Speaker 5: that timeframe.

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Speaker 4: And you know, we have to just people.

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Speaker 5: I think you guys asked me in Davos, do you

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Speaker 5: have a drawer from one outcome?

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Speaker 4: And answers not.

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Speaker 5: We just run the company drive, So would you know,

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Speaker 5: I think certainly around the election process here and around

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Speaker 5: the world, we'll add to Okay, we got we know

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Speaker 5: what we're dealing with and go on and SETI create

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Speaker 5: some energy.

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Speaker 4: But I think we have to be careful, say one

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Speaker 4: thing leans one way, one thing leans.

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Speaker 5: Like because frankly, the politicians have to get this right

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Speaker 5: for the good of their own state economy, the country

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Speaker 5: economies and stuff.

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Speaker 4: And I think they're all struggling with it.

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Speaker 6: So we talk to a lot of strategists, political policy strategists,

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Speaker 6: and they all say, no, one can really quite believe

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Speaker 6: that it's Trump versus Biden again, and so they're trying

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Speaker 6: to figure out who's really going to be Is it

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Speaker 6: going to be you mean, what running for office?

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Speaker 1: I mean, this is sort of what people are talking about.

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Speaker 1: They talk about me. I mean, this is sort of

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Speaker 1: something that comes up.

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Speaker 4: I've got a great job here.

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Speaker 2: And you wouldn't put you that speech tri second this morning.

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Speaker 4: Got a great job at the end of the day.

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Speaker 5: You know, our job, uh, my colleagues that are in

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Speaker 5: the leadership across all industries, is to help any administration

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Speaker 5: be successful. And that's what we try to do here

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Speaker 5: and around the world, and you know, and those are

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Speaker 5: tough jobs, and you know, but I don't think I'm

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Speaker 5: running for office. So I think I've got a great

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Speaker 5: job here, and I've got to continue to do it

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Speaker 5: and try to help this team and everybody be better

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Speaker 5: than we could be tomorrow than we are to there.

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Speaker 3: There's been some fives to put out over the last

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Speaker 3: twelve months in the industry. It's been a year since

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Speaker 3: SVB failed. NYCP has been a new issue. Seems like

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Speaker 3: last year was a right shock and this year just

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Speaker 3: big worries about maybe a credit shock. Have you noticed

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Speaker 3: any deposit flight coming towards you from regional banks in

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Speaker 3: any way, shape or form similar to what we saw

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Speaker 3: twelve months ago.

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Speaker 5: Then there hasn't been a kind of change or was

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Speaker 5: last year, because there are unique business models, that's what's

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Speaker 5: not involved a little bit of it, and so nothing

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Speaker 5: we're seeing. And by the way, we see a lot

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Speaker 5: of flowers and we don't see it anywhere. The industry

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Speaker 5: is well capitalized, has good liquidity. Believe me, from last

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Speaker 5: year this year, people short up their liquidity across the industry.

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Speaker 5: Commercial real estate is a slow burn. It's a classic burn.

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Speaker 5: In other words, if you go back in the late

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Speaker 5: eighties and early nineties, we had a role in commercial

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Speaker 5: real estate recession, and so there'll be difficulties and we

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Speaker 5: work in that. But you know, the the trading attitude,

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Speaker 5: which is these assets got to move at a price

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Speaker 5: tomorrow morning, isn't the way the banking system works. And frankly,

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Speaker 5: that's the the value of the banking system. We work

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Speaker 5: with clients. We figure out what the you know, you

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Speaker 5: take a building, you figure out what the ultimate end

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Speaker 5: state UH rental roles will provide you refinance it. Sometimes

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Speaker 5: that wipes out the equity, sometimes it doesn't. We're careful

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Speaker 5: in how we underwrite as an industry. You know, the

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Speaker 5: top thirty banks go through the stress tests, which has

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Speaker 5: a a an effect that says, wait a second, if

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Speaker 5: you're out underwriting outs in a odd way, that will

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Speaker 5: you have to put up the capital approve your right

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Speaker 5: before you even get the chance to prove your right. So,

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Speaker 5: in other words, your capital quirements reflect your underwriting today,

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Speaker 5: even though recession may never come, and it reflects your

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Speaker 5: underwriting commitments under scenario where commercial real estate drops by

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Speaker 5: thirty or forty percent instantaneously, instantaneously. So there's a effect

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Speaker 5: on that on the industry which is much more conservative

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Speaker 5: building and much more middle of the road building, which

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Speaker 5: is probably slowed down the capital provision to some of

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Speaker 5: these pro uh companies. But on the other hand, it's

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Speaker 5: not a bad thing when you get to this point.

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Speaker 5: So I we feel very good. Does that mean banks

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Speaker 5: might fail? There's been thousands of banks.

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Speaker 4: Have failed across the last thirty forty years. That's what happens.

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Speaker 5: Business models change. But on the other hand, the quality

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Speaker 5: of the banking system is strong.

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Speaker 3: When we caught up in Switzerland, we've been talking about

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Speaker 3: the prospective of a change in capital reserve rules. Cham

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Speaker 3: and palin is semi annual testimony. It pits back away

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Speaker 3: from that. What was your reaction to what chem had

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Speaker 3: to say in the last couple of weeks.

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Speaker 5: Well, we in the industry and we Bank of America

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Speaker 5: believe that we have, you know, tremendous amounts of capital liquidity.

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Speaker 5: It's tested the stress test. You know, we don't need

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Speaker 5: to keep moving the rules around. We're clear about that.

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Speaker 5: And so, you know, I think as people look at this,

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Speaker 5: they're saying, sort of, what's the reason in the end

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Speaker 5: of the US banking system and the US economy are

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Speaker 5: co exists to each other, and the US economy has

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Speaker 5: grown from pre financial crisis. Now the European economy has

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Speaker 5: grown a lot less. The US economy is much more vibrant.

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Speaker 5: It's recovered from the pandemic shock faster, it's absorbed some

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Speaker 5: of the things. And everybody says, well, that's because X,

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Speaker 5: Y or Z E. But the rout is it's because

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Speaker 5: the kind of capitalism't protect practice in the country is good,

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Speaker 5: and the kind of banking system, financial system more broadly

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Speaker 5: helps that happen.

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Speaker 4: And so you know, we've weathered storms. Just thinks, since

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Speaker 4: since early two.

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Speaker 5: Thousand, we've had a pandemic recovery from the pandemic, the

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Speaker 5: fastest rise in igistrates, to kinetic wars on the ground,

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Speaker 5: a trade debates around the world, shipping restrictions. You go

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Speaker 5: through all this in the end of the day, this industry,

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Speaker 5: we've bid one hundred billion dollars after tax from twenty

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Speaker 5: twenty so now, and we built huge reserves.

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Speaker 4: He took him back.

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Speaker 5: We dealt with the pandemic, seventy billion dollars, a barrowing overnight,

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Speaker 5: a flood of deposits. Some of those deposits come out.

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Speaker 5: That's the resilience system. And that's why we've got to

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Speaker 5: be careful about adding capital and stuff. When the perceiverists

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Speaker 5: we don't think justifies them.

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Speaker 6: In the meantime, there has been a shift in terms

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Speaker 6: of consolidation of market share and some of the bigger players.

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Speaker 6: And you were talking about how you were gaining market share.

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Speaker 6: Who are you mostly gaining market share from? Is it

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Speaker 6: the smaller banks?

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Speaker 1: Is it from Europe where in particular, you.

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Speaker 5: Know, each of our businesses are eight lines of business

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Speaker 5: have different places as they gained from. And so when

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Speaker 5: it's the investment banking and with Matthew Code and the

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Speaker 5: trading team out of Jimmy, that's largely coming from the

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Speaker 5: long tail people.

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Speaker 4: This business is hard.

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Speaker 5: It requires about a billion dollars of technology investment a

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Speaker 5: year to have a trading platform to keep up with it.

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Speaker 4: So think about that.

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Speaker 5: So when it's that hard, that means people who don't

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Speaker 5: get the returns and capital have quit.

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Speaker 4: And it's come this way.

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Speaker 5: That's very different from the consumer bank where Denat and Asian,

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Speaker 5: Holly O'Neal and Aaron lebein to run that business for

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Speaker 5: us has just been driving core account growth and so well,

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Speaker 5: if they give you the statistics about constant accounts, we've

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Speaker 5: grown our consumer base probably four million core checking accounts

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Speaker 5: since the pandemic, So the deposits are up because of

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Speaker 5: those extra balances. That's coming from everywhere, So it really

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Speaker 5: comes from different places. But the idea is our job

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Speaker 5: is to win the market and take it from every place.

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Speaker 6: When you talk about the investment in technology, how much

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Speaker 6: is that going to be an ongoing benefit to a

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Speaker 6: bank like yours.

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Speaker 1: It can invest in.

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Speaker 6: Some of the artificial intelligence that we're hearing about every day.

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Speaker 4: So I think if you think about we got to

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Speaker 4: be careful about a R.

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Speaker 5: Schrischerl intelligence versus machine learning, versus digitization versus digital practice,

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Speaker 5: because it's all different things.

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Speaker 4: But let me just give a simple steps.

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Speaker 5: In twenty ten, we had one hundred thousand people in

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Speaker 5: our consumer business.

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Speaker 4: Today we have sixty.

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Speaker 5: We had six thousand branches at the high point about

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Speaker 5: two thousand and eight.

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Speaker 4: We have about four thousand.

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Speaker 1: Now.

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Speaker 4: We had about four in a billion to posits. Now

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Speaker 4: we have nine hundred billion.

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Speaker 5: The amount of transactions going through this light years bigger,

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Speaker 5: and we're doing with forty thousand less people.

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Speaker 4: And the expense base we run.

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Speaker 5: The whole company on today nominal expenses of sixty four

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Speaker 5: billion dollars round numbers is the same we ran on

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Speaker 5: twenty fifteen. That is all all the stuff you talk about,

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Speaker 5: that's supplying technology over and over and over again. And

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Speaker 5: do we are we perfect? Absolutely not. Do we have

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Speaker 5: room to keep applying?

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Speaker 4: Yes? Is there plenty ahead of us. It's unbelievable.

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Speaker 5: And so if you look ahead, you know we're raisedly

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Speaker 5: running on neutral headcount. Eybody says you're not hiring. We're

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Speaker 5: hiring people in businesses and putting revenue generation capabilities out there.

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Speaker 5: At the same time are taking out of the expense base.

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Speaker 5: And that's a constant strain. And it's pretty remarkable what

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Speaker 5: you can do. But it's if there was some way

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Speaker 5: you snap your fingers and change the whole thing, you

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Speaker 5: would have done it. I mean, we're not.

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Speaker 3: What you just said, though, is so important and can

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Speaker 3: we finish that? I was going to joke and ask

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Speaker 3: you whether we're all be replaced by a big supercomputer

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Speaker 3: in the next five to ten years, and I think

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Speaker 3: a lot of the people behind us would like to

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Speaker 3: know the answer to.

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Speaker 2: That question as well.

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Speaker 3: But I guess, effectively, in the next five to ten years,

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Speaker 3: are we effectively saying that each additional dollar of revenue

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Speaker 3: is going to be less and less labor intensive because

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Speaker 3: of this adoption of technology.

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Speaker 5: We had three hundred thousand people, we have two hundred

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Speaker 5: and twelve thousands a day. It's going to have less

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Speaker 5: labor content. Are those people paid more? A lot more

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Speaker 5: because the way the labor content shifts. And so if

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Speaker 5: you think about it, it will have less labor content

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Speaker 5: because that is the expensive part. That'll have more value

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Speaker 5: added from labor because that's the way the.

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Speaker 4: Mathematics will work.

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Speaker 5: And so so as you think about these trends, they're

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Speaker 5: an ext world. They just keep going on. But people

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Speaker 5: forgetting these trends are already going on. And so one

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Speaker 5: person's AIS and those persons, you know, algorithm models that

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Speaker 5: traders have been.

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Speaker 4: Using for years.

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Speaker 5: One person's AI is another person's America, which is eighteen

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Speaker 5: million customers using it, you know, every day type thing,

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Speaker 5: and so you've got to be careful about it. Is

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Speaker 5: there potential here that we've never seen popre one hundred

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Speaker 5: and ten percent, But the real question is you don't

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Speaker 5: have to wait for that. Potentially you're taking it out

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Speaker 5: every day if you're working at it.

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Speaker 3: No three day weight comings bank for America one Samson

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Speaker 3: see Jamie said that three die week.

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Speaker 5: I'm not sure I understand the math there, but our

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Speaker 5: team does a good job. They want to work five days.

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Speaker 2: I'm sure that nothing away. It's going to see it.

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Speaker 3: Thanks for having us afore you shot it for I'm

446
00:17:42,040 --> 00:17:44,440
Speaker 3: on to have that the Shaman and see a bank

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00:17:44,480 --> 00:17:44,919
Speaker 3: for America.