1 00:00:00,120 --> 00:00:02,800 Speaker 1: For our Blueberg television radio waunchers all around the world. 2 00:00:02,840 --> 00:00:05,280 Speaker 1: We welcome now Brian moynan. He is the chair and 3 00:00:05,440 --> 00:00:07,880 Speaker 1: CEO of Bank of Americas. So, Brian, thanks so much 4 00:00:07,880 --> 00:00:11,160 Speaker 1: for joining us. We just said you beat across the board. 5 00:00:11,200 --> 00:00:13,600 Speaker 1: You surprised every dy across the board. Congratulations on that. 6 00:00:13,880 --> 00:00:15,760 Speaker 1: But let me ask you about what comes next, because 7 00:00:15,800 --> 00:00:17,640 Speaker 1: I noticed that you gave a bit of guidance into 8 00:00:17,640 --> 00:00:20,239 Speaker 1: twenty twenty four. Recently you've been doing a new quarterback quarter. 9 00:00:20,440 --> 00:00:22,440 Speaker 1: Do you feel like you have a little more visibility 10 00:00:22,920 --> 00:00:24,319 Speaker 1: into the future than you have in the past. 11 00:00:26,320 --> 00:00:28,319 Speaker 2: Yeah, yes, David, thank you. So the team did a 12 00:00:28,320 --> 00:00:31,200 Speaker 2: great job this quarter, seven point eight billion dollars earnings 13 00:00:31,240 --> 00:00:34,080 Speaker 2: here to date twenty three billion dollars plus earing. It's 14 00:00:34,080 --> 00:00:36,440 Speaker 2: a return on con tangible commn equity of fifteen percent 15 00:00:36,520 --> 00:00:39,360 Speaker 2: this quarter, market share growth, and a bunch of business 16 00:00:39,440 --> 00:00:42,720 Speaker 2: organic growth around the company. But what gives us confidence 17 00:00:42,720 --> 00:00:44,800 Speaker 2: to think of it? You're talking mostly about NI in 18 00:00:44,880 --> 00:00:47,360 Speaker 2: terms of future guidance. If you think about it, where 19 00:00:47,400 --> 00:00:50,520 Speaker 2: we see we've said we do fourteen point two billion 20 00:00:50,520 --> 00:00:52,400 Speaker 2: in the third quarter this year, we did fourteen point 21 00:00:52,479 --> 00:00:55,360 Speaker 2: five billion. We said we'd hold at fourteen billion for 22 00:00:55,400 --> 00:00:57,279 Speaker 2: the fourth quarter. And what we told people is as 23 00:00:57,320 --> 00:01:01,080 Speaker 2: you look forward, given the rate curve, the four rate curve, 24 00:01:01,120 --> 00:01:03,320 Speaker 2: what's going to happen rates? We see that fourteen billion 25 00:01:03,560 --> 00:01:05,559 Speaker 2: plus or minus bouncing along for a couple of quarters 26 00:01:05,600 --> 00:01:07,479 Speaker 2: and starting to grow from that. Why has that happen. 27 00:01:07,920 --> 00:01:12,560 Speaker 2: We've seen our deposit base in the commercial businesses start 28 00:01:12,560 --> 00:01:15,600 Speaker 2: to grow again after six quarters of basically being flat. 29 00:01:15,600 --> 00:01:17,440 Speaker 2: We see it in the wealth management business in the 30 00:01:17,520 --> 00:01:21,240 Speaker 2: last few months basically running steady about undre and ninety 31 00:01:21,240 --> 00:01:24,880 Speaker 2: five billion. And we've seen in the consumer business a 32 00:01:24,880 --> 00:01:27,160 Speaker 2: little spend down the accounts on some of the core side, 33 00:01:27,200 --> 00:01:30,959 Speaker 2: but overall outperforming the market. And that's a very valuable 34 00:01:31,080 --> 00:01:33,160 Speaker 2: base with five hundred billion dollars of checking in it. 35 00:01:33,240 --> 00:01:36,200 Speaker 2: So that says the one point nine trillion dollars of pods. 36 00:01:36,240 --> 00:01:38,640 Speaker 2: We have a good the loans flat this quarter, but 37 00:01:38,680 --> 00:01:41,760 Speaker 2: good growth on consumer which frankly has more yield to it. 38 00:01:41,840 --> 00:01:44,440 Speaker 2: So we expect that and as that comes together, we 39 00:01:44,959 --> 00:01:46,760 Speaker 2: expect to see ANII sort of pick up in the 40 00:01:46,760 --> 00:01:49,840 Speaker 2: second half of the year. And that couple with the 41 00:01:49,840 --> 00:01:52,360 Speaker 2: expense disciphon we have is a good path forward. 42 00:01:52,760 --> 00:01:54,960 Speaker 1: Brian talking about that deposit base, which is so important 43 00:01:54,960 --> 00:01:57,280 Speaker 1: from that interest income you added. I think it was 44 00:01:57,600 --> 00:02:00,880 Speaker 1: like two hundred thousand new checking accounts, million credit cards, 45 00:02:00,880 --> 00:02:03,240 Speaker 1: million one credit cards. Where are those coming from? Are 46 00:02:03,240 --> 00:02:05,840 Speaker 1: you taking market share from someplace? They're just more people 47 00:02:05,880 --> 00:02:09,239 Speaker 1: coming to the market. How where are they coming from? 48 00:02:09,520 --> 00:02:13,080 Speaker 2: Well, we do really well with young the consumer business 49 00:02:13,080 --> 00:02:15,640 Speaker 2: in American business. But we do really well with young Americans, 50 00:02:15,680 --> 00:02:18,840 Speaker 2: and so we keep adding a higher percentage of accounts 51 00:02:19,360 --> 00:02:23,120 Speaker 2: for young people. And so it just it comes from America, 52 00:02:23,160 --> 00:02:24,840 Speaker 2: and so it is a taking market share. These are 53 00:02:24,840 --> 00:02:27,720 Speaker 2: primary checking accounts in the household ninety two percent plus 54 00:02:27,960 --> 00:02:32,160 Speaker 2: average balance about ten thousand in them. So it's a 55 00:02:32,280 --> 00:02:35,480 Speaker 2: very strong checking base. And that account growth of nine 56 00:02:35,560 --> 00:02:38,600 Speaker 2: hundred thousand for the last four quarters, a million in 57 00:02:38,639 --> 00:02:42,120 Speaker 2: the four quarters before that. Those numbers are growing to 58 00:02:42,320 --> 00:02:45,720 Speaker 2: thirty seven million Americans use our company for their core 59 00:02:45,760 --> 00:02:49,280 Speaker 2: consumer checking business. And that's a great, great group of customers, 60 00:02:49,360 --> 00:02:52,200 Speaker 2: high customer satisfaction, high employee satisfaction that area, and it 61 00:02:52,240 --> 00:02:55,200 Speaker 2: all works and it produces a nine hundred and eighty 62 00:02:55,240 --> 00:02:57,480 Speaker 2: billion dollars in deposits and consumer right. 63 00:02:57,560 --> 00:02:59,600 Speaker 1: In the past, you've talked about the non interest bearing 64 00:02:59,639 --> 00:03:01,640 Speaker 1: account the deposits you have that you don't have to 65 00:03:01,639 --> 00:03:04,160 Speaker 1: really pay interest on. I wonder about that. You've seem 66 00:03:04,160 --> 00:03:06,440 Speaker 1: to be doing a bit better than man of your competitions. 67 00:03:06,480 --> 00:03:08,839 Speaker 1: Does do you have some pressure, because as you see 68 00:03:08,840 --> 00:03:10,960 Speaker 1: those rates go up, you must have some people at 69 00:03:11,040 --> 00:03:12,760 Speaker 1: least on the margin saying, you know what, I can 70 00:03:12,800 --> 00:03:13,840 Speaker 1: get some interest someplace. 71 00:03:15,520 --> 00:03:18,480 Speaker 2: And they did, and that's why our deposits have moved down, 72 00:03:18,760 --> 00:03:20,640 Speaker 2: you know. So if you think about a wealth management business, 73 00:03:20,680 --> 00:03:24,080 Speaker 2: they probably peaked at fifty sixty billion higher and a 74 00:03:24,080 --> 00:03:25,520 Speaker 2: lot of that money moved to the market. And I 75 00:03:25,520 --> 00:03:28,800 Speaker 2: heard in your last segment, you know, are customers at 76 00:03:28,840 --> 00:03:31,040 Speaker 2: Merrill Lynch are holding the highest amount of cash and 77 00:03:31,160 --> 00:03:33,480 Speaker 2: treasuries and things that they've held up three or four 78 00:03:33,520 --> 00:03:35,280 Speaker 2: hundred million dollars of the last couple of years. And 79 00:03:35,320 --> 00:03:36,880 Speaker 2: that money is waiting to come back in the market 80 00:03:36,880 --> 00:03:39,320 Speaker 2: when things stabilize. So in that business happened in the 81 00:03:39,320 --> 00:03:42,480 Speaker 2: commercial business, you saw that go out and then you 82 00:03:42,480 --> 00:03:44,360 Speaker 2: saw it build back, and that's starting to grow again. 83 00:03:44,400 --> 00:03:47,240 Speaker 2: At the five hundred billion dollar left in the consumer 84 00:03:46,800 --> 00:03:49,960 Speaker 2: the consumers that have investment cash, cash that they don't 85 00:03:50,000 --> 00:03:52,320 Speaker 2: need to conduct their day to day operations. They have 86 00:03:52,440 --> 00:03:55,680 Speaker 2: moved that into the higher yielding savings accountlor even in 87 00:03:55,720 --> 00:03:57,800 Speaker 2: the market. And so if you look at the upper 88 00:03:58,800 --> 00:04:02,200 Speaker 2: levels of deposit average to posit balances in fifty thousand 89 00:04:02,200 --> 00:04:05,200 Speaker 2: and sixty thousand and above, those are actually down from 90 00:04:05,200 --> 00:04:07,520 Speaker 2: the pre pandemic. And the reason why is that money 91 00:04:07,520 --> 00:04:09,560 Speaker 2: went in the market. It didn't disappear, they just moved 92 00:04:09,560 --> 00:04:12,320 Speaker 2: it to other things. The core transaction base is coming 93 00:04:12,320 --> 00:04:13,760 Speaker 2: in and out, and the paycheck comes in every two 94 00:04:13,760 --> 00:04:15,920 Speaker 2: weeks or every week or every month, it goes through, 95 00:04:15,960 --> 00:04:17,760 Speaker 2: pays all the bills, and then comes in again. That 96 00:04:18,640 --> 00:04:20,880 Speaker 2: is really hard to position because my position and my 97 00:04:21,160 --> 00:04:23,320 Speaker 2: bills go through and I don't have the cash and account. 98 00:04:23,520 --> 00:04:25,800 Speaker 2: So it's a different business, and it's a business which 99 00:04:25,839 --> 00:04:28,719 Speaker 2: we do for companies and wealthy people and consumers, but 100 00:04:28,760 --> 00:04:30,880 Speaker 2: it's a big consumer business for us, and it continues 101 00:04:30,880 --> 00:04:31,760 Speaker 2: to grow and grow well. 102 00:04:32,320 --> 00:04:34,560 Speaker 1: So, Brian, you have such a vantage point into the 103 00:04:34,600 --> 00:04:37,400 Speaker 1: consumers across the country, and you said that you're starting 104 00:04:37,400 --> 00:04:39,320 Speaker 1: to see that slow sum as we're going into a year, 105 00:04:39,440 --> 00:04:41,280 Speaker 1: do you have expectations through the end of the year 106 00:04:41,279 --> 00:04:42,880 Speaker 1: into twenty twenty four will continue to. 107 00:04:42,839 --> 00:04:46,800 Speaker 2: Slow So Let's think about two or three things there. 108 00:04:46,839 --> 00:04:48,800 Speaker 2: One is just what are the consumers doing and the 109 00:04:48,800 --> 00:04:50,800 Speaker 2: money they have in accounts, And in a given year, 110 00:04:51,520 --> 00:04:53,840 Speaker 2: we will have four trillion dollars that will be spent 111 00:04:53,880 --> 00:04:56,640 Speaker 2: by our consumers on debit card, credit card purchases, ll 112 00:04:56,680 --> 00:04:59,440 Speaker 2: payments of checks written, money out of the ATMs, and 113 00:04:59,440 --> 00:05:02,599 Speaker 2: all the different forms they spend it. That four trillion 114 00:05:02,600 --> 00:05:04,760 Speaker 2: from in twenty one to twenty two grew at nine 115 00:05:04,760 --> 00:05:07,200 Speaker 2: percent year to date for the first four or five 116 00:05:07,200 --> 00:05:08,400 Speaker 2: months of the year. I would have been telling you 117 00:05:08,480 --> 00:05:10,200 Speaker 2: in the second quarter it's still growing strong at like 118 00:05:10,240 --> 00:05:12,400 Speaker 2: eight percent. It's now down to four to five percent 119 00:05:12,760 --> 00:05:14,520 Speaker 2: in the year to date, in about four or four 120 00:05:14,520 --> 00:05:17,080 Speaker 2: and a half percent in the month of September and 121 00:05:17,160 --> 00:05:19,600 Speaker 2: in the month of October. Consistent with that, the consumer 122 00:05:19,640 --> 00:05:23,800 Speaker 2: has been slowing down their spending because interest rates take 123 00:05:23,800 --> 00:05:26,800 Speaker 2: a toll. Because as rates went up on their floating 124 00:05:26,839 --> 00:05:28,800 Speaker 2: rate loans or homemker loans or other things that float 125 00:05:28,800 --> 00:05:32,000 Speaker 2: credit cards or frankly, new car purchases or rates are higher, 126 00:05:32,480 --> 00:05:35,000 Speaker 2: there are more googses getting done those rates are higher. 127 00:05:35,120 --> 00:05:37,880 Speaker 2: That slows down there the restarted student loans, all those 128 00:05:37,920 --> 00:05:40,159 Speaker 2: slow down their ability to spend other things. They have 129 00:05:40,200 --> 00:05:42,680 Speaker 2: to shift spending around. And on top of that, frankly, 130 00:05:42,920 --> 00:05:45,360 Speaker 2: they're they're looking ahead and say, hey, I hear things 131 00:05:45,400 --> 00:05:47,320 Speaker 2: are going to be bouncing around a little bit. I'll 132 00:05:47,320 --> 00:05:49,000 Speaker 2: spend a little less. And then the third thing is 133 00:05:49,440 --> 00:05:51,600 Speaker 2: they take it. You know, they bought the goods they 134 00:05:51,600 --> 00:05:54,720 Speaker 2: bought during COVID, they bought the new couch and stuff. 135 00:05:54,720 --> 00:05:56,280 Speaker 2: They don't need to buy another one. Now they've taken 136 00:05:56,320 --> 00:05:58,640 Speaker 2: the trips and now they're back into the core activity. 137 00:05:58,839 --> 00:06:00,920 Speaker 2: And so as you put all that together, it's slown 138 00:06:01,000 --> 00:06:04,400 Speaker 2: by half. And what is spending rate at the area 139 00:06:04,520 --> 00:06:07,800 Speaker 2: of a year growth is consistent with two percent inflation 140 00:06:08,080 --> 00:06:10,840 Speaker 2: and below two percent GDP growth. It is the same 141 00:06:11,160 --> 00:06:12,960 Speaker 2: that rate of four percent or so is what we 142 00:06:13,040 --> 00:06:16,200 Speaker 2: had in seventeen, eighteen and nineteen as the economy kind 143 00:06:16,200 --> 00:06:20,000 Speaker 2: of into an equilibrium. So frankly, the FED has won 144 00:06:20,000 --> 00:06:22,840 Speaker 2: the battle of the American consumer and they're slowing down. 145 00:06:22,920 --> 00:06:25,600 Speaker 2: And then the question is what happens next to can't predict, 146 00:06:25,600 --> 00:06:28,400 Speaker 2: but this this is a four trillion dollar base, three 147 00:06:28,440 --> 00:06:30,720 Speaker 2: to four hundred million dollars a month, So think about 148 00:06:30,720 --> 00:06:32,359 Speaker 2: it. It's hard to move around a lot, so once it 149 00:06:32,400 --> 00:06:34,120 Speaker 2: slows this level, it's probably not going to kick right 150 00:06:34,160 --> 00:06:34,560 Speaker 2: back up. 151 00:06:35,040 --> 00:06:36,880 Speaker 1: So, Brian, how much of advantage point do you have 152 00:06:37,040 --> 00:06:39,440 Speaker 1: into where the consumer the household stands, because there was 153 00:06:39,480 --> 00:06:42,280 Speaker 1: a lot of talk about it. Essentially excess savings come 154 00:06:42,279 --> 00:06:44,000 Speaker 1: out of the pandemic because a lot of the checks 155 00:06:44,040 --> 00:06:46,960 Speaker 1: that were being written to individuals and the dry powder 156 00:06:47,000 --> 00:06:48,640 Speaker 1: if you will drawing down at it, do you have 157 00:06:48,640 --> 00:06:50,560 Speaker 1: a sense of how much has been drawn down? And 158 00:06:50,720 --> 00:06:53,960 Speaker 1: a second question is to what extent is real wage 159 00:06:54,040 --> 00:06:55,600 Speaker 1: increase maybe replacing some of that. 160 00:06:57,360 --> 00:06:59,520 Speaker 2: Well, that's that's the thing. So if you look look 161 00:06:59,640 --> 00:07:03,719 Speaker 2: in flas tough, especially on meetia income, households in terms 162 00:07:03,760 --> 00:07:06,000 Speaker 2: of goods and services are a higher part of goods 163 00:07:06,200 --> 00:07:08,360 Speaker 2: are harder part of what they buy. Groceries are bigger number, 164 00:07:08,440 --> 00:07:10,800 Speaker 2: gas prices are bigger number. And it's very difficult. And 165 00:07:10,840 --> 00:07:12,200 Speaker 2: that's what the pressure you see in some of the 166 00:07:12,200 --> 00:07:15,120 Speaker 2: consumer sentiment. That's one issue. But if you look at 167 00:07:15,160 --> 00:07:18,000 Speaker 2: it in a broad aggregate sense, what you see with 168 00:07:18,040 --> 00:07:20,120 Speaker 2: this kind of spennyway is a consumer is healthy. If 169 00:07:20,120 --> 00:07:23,440 Speaker 2: you look at the accounts, especially in the accounts media 170 00:07:23,480 --> 00:07:27,480 Speaker 2: income seventy five thousand under that had average balances before 171 00:07:27,520 --> 00:07:30,320 Speaker 2: the pandemic. There's still multiples, but they're trickling down, and 172 00:07:30,360 --> 00:07:32,400 Speaker 2: so the rumors that they're going to be spent down 173 00:07:32,480 --> 00:07:35,320 Speaker 2: by this Christmas of twenty two is what people were saying. 174 00:07:35,480 --> 00:07:38,560 Speaker 2: Last year, there're gonna be overspent. Didn't happen, and it 175 00:07:38,640 --> 00:07:40,800 Speaker 2: was going to happen by early this year. It didn't happen, 176 00:07:40,840 --> 00:07:42,120 Speaker 2: but it's going to happen by the fall this year 177 00:07:42,160 --> 00:07:44,880 Speaker 2: didn't happen, and now it's starting to happen slowly, but 178 00:07:45,280 --> 00:07:47,080 Speaker 2: at this rate it will still be many more months. 179 00:07:47,680 --> 00:07:50,160 Speaker 2: The thing about that is you pointed out is for 180 00:07:50,200 --> 00:07:52,440 Speaker 2: the first couple of years after the pandemic, the wages 181 00:07:52,520 --> 00:07:54,680 Speaker 2: rose quickly and then inflation caught up, and if you 182 00:07:54,680 --> 00:07:57,720 Speaker 2: look at multi years, it's more in sync. Recently, it's 183 00:07:57,800 --> 00:08:00,200 Speaker 2: upside down and the wage growth has slowed down as 184 00:08:00,240 --> 00:08:04,080 Speaker 2: employers have been more conservative in the Great resignation's gone 185 00:08:04,120 --> 00:08:06,520 Speaker 2: out of the system. So you're kind of an equiliment 186 00:08:06,520 --> 00:08:08,800 Speaker 2: across multiple years. Right now, you feel more upside down 187 00:08:08,840 --> 00:08:10,960 Speaker 2: and then buy income strat it's a little different, and 188 00:08:11,360 --> 00:08:13,280 Speaker 2: that will then slow the consumer down. That's what we're 189 00:08:13,280 --> 00:08:14,280 Speaker 2: seeing from what you've seen. 190 00:08:14,320 --> 00:08:16,520 Speaker 1: Are you anticipating more delinquencies of the fault as we 191 00:08:16,520 --> 00:08:17,440 Speaker 1: get into twenty twenty four. 192 00:08:17,440 --> 00:08:23,119 Speaker 2: On the consumer side, we have seen the early stage 193 00:08:23,160 --> 00:08:26,280 Speaker 2: delinquencies and consumer are below where they were in nineteen. 194 00:08:26,760 --> 00:08:28,840 Speaker 2: And the problem with saying that, as we say they're 195 00:08:28,840 --> 00:08:32,120 Speaker 2: normalized nineteen, everything's, oh my gosh. The reality is twenty 196 00:08:32,200 --> 00:08:34,640 Speaker 2: nineteen I think was like a forty year low in 197 00:08:34,679 --> 00:08:38,480 Speaker 2: delinquencies in charge us in our company's history. So we're 198 00:08:38,520 --> 00:08:40,720 Speaker 2: normalized to a level that is very low. The consumer 199 00:08:40,800 --> 00:08:43,480 Speaker 2: is still very strong. The delinquency in charge our rates 200 00:08:43,520 --> 00:08:46,640 Speaker 2: in the car business. In the mortgage business, we have 201 00:08:46,679 --> 00:08:49,360 Speaker 2: no charge ofs how equity you have recoveries. It's the 202 00:08:49,600 --> 00:08:51,880 Speaker 2: auto business. We're a prime lender. We have a billion 203 00:08:52,000 --> 00:08:54,720 Speaker 2: trillion dollars loans and we continue to drive that growth. 204 00:08:54,800 --> 00:08:57,000 Speaker 2: But we've always been a prime lender. The consumer side, 205 00:08:57,000 --> 00:08:59,319 Speaker 2: that's half our portfolio, and the commercial side. We're a 206 00:08:59,360 --> 00:09:02,920 Speaker 2: very good commercial lender. So whether it's whatever it is, 207 00:09:02,960 --> 00:09:04,960 Speaker 2: the consumer is in very good shape in terms of 208 00:09:05,120 --> 00:09:08,080 Speaker 2: because they're employed and earning money, and so our delinquencies 209 00:09:08,120 --> 00:09:11,200 Speaker 2: are normalizing. Because of the pandemic, they went really low, 210 00:09:11,240 --> 00:09:14,439 Speaker 2: and there's all the special programs and student loan deferrals 211 00:09:14,480 --> 00:09:17,439 Speaker 2: and all that went on. They're normalized, but they're normalizing 212 00:09:17,440 --> 00:09:20,000 Speaker 2: into place is still very low, and so the charge 213 00:09:20,000 --> 00:09:22,080 Speaker 2: offs continue to come up a little bit, but to 214 00:09:22,120 --> 00:09:23,880 Speaker 2: a number that we used to charge off every quarter 215 00:09:23,920 --> 00:09:25,760 Speaker 2: and nobody asked about think it was great results. 216 00:09:26,080 --> 00:09:29,240 Speaker 1: Brian, we've talking about the consumer and deposits. Let's talk 217 00:09:29,240 --> 00:09:31,520 Speaker 1: about the global markets business that you have, because you 218 00:09:31,600 --> 00:09:36,120 Speaker 1: also had some very reassuring, encouraging numbers on things like trading, 219 00:09:36,120 --> 00:09:38,320 Speaker 1: on things like investment banking. A few years ago, you 220 00:09:38,360 --> 00:09:41,199 Speaker 1: and I talked and you expressed some dissatisfaction, thinking that 221 00:09:41,280 --> 00:09:43,560 Speaker 1: you needed to do more in that area, maybe grow 222 00:09:43,559 --> 00:09:45,599 Speaker 1: your balance shee some take some risks. Where are you 223 00:09:45,720 --> 00:09:47,719 Speaker 1: in that process? Is there more still to come for 224 00:09:47,800 --> 00:09:49,840 Speaker 1: Bank of America in investing in that business? 225 00:09:51,480 --> 00:09:55,240 Speaker 2: Well by our former colleague Tom Montag four or five 226 00:09:55,280 --> 00:09:56,959 Speaker 2: years ago, said we need to grow this business. We 227 00:09:57,040 --> 00:09:59,440 Speaker 2: got in great shape. Let's do it. He's retired. Jimmy 228 00:09:59,480 --> 00:10:01,440 Speaker 2: Demart took over the business and started running it a 229 00:10:01,440 --> 00:10:03,600 Speaker 2: few years three or four years ago, and he's basically 230 00:10:03,640 --> 00:10:06,520 Speaker 2: taken that investment strategy and delivered on it. And so 231 00:10:06,559 --> 00:10:08,960 Speaker 2: they had one of the best quarters they've had they 232 00:10:09,040 --> 00:10:12,360 Speaker 2: consistently up about twenty five percent, you know versus pre 233 00:10:12,480 --> 00:10:15,880 Speaker 2: pandemic years average. They're doing it the right way, made 234 00:10:15,880 --> 00:10:18,760 Speaker 2: money every trading day, a lot more stable revenues and 235 00:10:18,800 --> 00:10:21,440 Speaker 2: financing and things like that that help it. The equities 236 00:10:21,480 --> 00:10:24,480 Speaker 2: business at a at one point six billion, you know, 237 00:10:24,520 --> 00:10:26,360 Speaker 2: for a long time it was a billion billion, one billion, 238 00:10:26,400 --> 00:10:28,400 Speaker 2: two and now it's fundamentally moved to a different level. 239 00:10:28,600 --> 00:10:32,359 Speaker 2: Good performance on the fixed income business rounding out the capability. 240 00:10:32,440 --> 00:10:34,000 Speaker 2: So Jim and the team have done a great job 241 00:10:34,000 --> 00:10:37,080 Speaker 2: and they delivered and they keep, you know, working theirselfs 242 00:10:37,280 --> 00:10:41,480 Speaker 2: up the ladder in market share quarter after quarter after 243 00:10:41,559 --> 00:10:44,040 Speaker 2: quarter because this business is not easy, and a lot 244 00:10:44,040 --> 00:10:45,480 Speaker 2: of people are quitting it, a lot of people are 245 00:10:45,480 --> 00:10:47,600 Speaker 2: reshaping it. But for those of us that have this 246 00:10:47,679 --> 00:10:50,520 Speaker 2: worldwide platform that's well managed, it is a chance to 247 00:10:50,520 --> 00:10:53,440 Speaker 2: continue to grow and will continue to dedicate resources to it. Well. 248 00:10:53,960 --> 00:10:57,000 Speaker 2: On the investment banking side. I'm sorry, David on the 249 00:10:57,000 --> 00:10:59,720 Speaker 2: investment banking side, because you mentioned that in Matthew Coda 250 00:10:59,760 --> 00:11:02,439 Speaker 2: runs that business for us and we were basically flatish 251 00:11:02,480 --> 00:11:04,600 Speaker 2: in the market that was down twenty percent two or 252 00:11:04,600 --> 00:11:06,439 Speaker 2: three reason. Event one of the team's doing a great job, 253 00:11:06,480 --> 00:11:08,880 Speaker 2: is serving the clients well. But secondly, we were playing 254 00:11:08,880 --> 00:11:12,000 Speaker 2: off our advantages, whether it's what we called EEDRC middle 255 00:11:12,000 --> 00:11:14,840 Speaker 2: market investment banking, or whether some of our industry groups 256 00:11:14,840 --> 00:11:17,000 Speaker 2: that are just doing a great job. You know, Matthew 257 00:11:17,000 --> 00:11:18,680 Speaker 2: has been able to hold share even though the markets 258 00:11:18,720 --> 00:11:21,120 Speaker 2: down and a pipeline is full, and we you know, 259 00:11:21,400 --> 00:11:23,800 Speaker 2: we think that you could see the transact. Just before 260 00:11:23,840 --> 00:11:25,640 Speaker 2: I got on, there was another transaction ruber in the 261 00:11:25,679 --> 00:11:28,080 Speaker 2: market that I heard your colleague speaking about. So activity 262 00:11:28,120 --> 00:11:31,160 Speaker 2: is starting to take place. It is not where it was, 263 00:11:31,360 --> 00:11:35,120 Speaker 2: you know, before the market started the rate started rising. Stuff. 264 00:11:35,240 --> 00:11:37,000 Speaker 2: But if it gets anywhere back that you'll see us 265 00:11:37,040 --> 00:11:39,440 Speaker 2: go from this one point one billion dollar level quickly 266 00:11:39,520 --> 00:11:41,640 Speaker 2: up to one point five one point six and we'll 267 00:11:41,640 --> 00:11:43,720 Speaker 2: see what goes from there. And the team does a 268 00:11:43,720 --> 00:11:45,800 Speaker 2: good job. And importantly in that business, remember we have 269 00:11:45,880 --> 00:11:50,040 Speaker 2: corporate lending and GTS or Global Transaction Services cash management 270 00:11:50,080 --> 00:11:52,400 Speaker 2: so called, and it's revenues were up fifteen to twenty 271 00:11:52,440 --> 00:11:54,480 Speaker 2: percent year over a year, and it just drove the 272 00:11:54,480 --> 00:11:56,679 Speaker 2: profit of the business, the pre tax, pre provision profit. 273 00:11:56,920 --> 00:11:58,559 Speaker 1: So, Brian, you took us exactly where a running go 274 00:11:58,640 --> 00:12:00,679 Speaker 1: which was investment banking in particularly middle market, because you 275 00:12:00,720 --> 00:12:02,600 Speaker 1: said that that's an area you think you can continue 276 00:12:02,600 --> 00:12:05,240 Speaker 1: to grow, and I wonder as you look to possibly 277 00:12:05,240 --> 00:12:07,920 Speaker 1: grow that, maybe investment is part of that. Looking for 278 00:12:08,120 --> 00:12:10,160 Speaker 1: middle level and senior people that you might bring in 279 00:12:10,200 --> 00:12:12,120 Speaker 1: as lateral as I would call them. 280 00:12:13,720 --> 00:12:16,000 Speaker 2: We will do that. But frankly, what we did is 281 00:12:16,080 --> 00:12:20,880 Speaker 2: we took Matthew took about one hundred people, around ninety 282 00:12:20,920 --> 00:12:24,640 Speaker 2: eight hundred people out of the industry led investment banking 283 00:12:24,679 --> 00:12:26,800 Speaker 2: into the middle market. And the team has done a 284 00:12:26,800 --> 00:12:28,840 Speaker 2: great job over there. So he marketed over there. And 285 00:12:28,880 --> 00:12:31,439 Speaker 2: I said earlier that's like say on hundred ninety two hundred, 286 00:12:31,440 --> 00:12:33,120 Speaker 2: I said they could go to four hundred. There's a 287 00:12:33,200 --> 00:12:36,880 Speaker 2: lot of capacity to grow there. And Wendy Stewart, who 288 00:12:36,880 --> 00:12:39,160 Speaker 2: has that middle market client base of tens of thousands 289 00:12:39,160 --> 00:12:42,120 Speaker 2: of customers, and Rabel and I has the fifty million 290 00:12:42,200 --> 00:12:44,720 Speaker 2: underd revenue companies, they have a lot of capacity to use. 291 00:12:45,120 --> 00:12:47,080 Speaker 2: And just this quarter we had a fifty million dollar 292 00:12:47,080 --> 00:12:50,280 Speaker 2: increase among that middle market customer base increase and it'll 293 00:12:50,320 --> 00:12:52,800 Speaker 2: be twenty five thirty percent of all the investment banking 294 00:12:52,840 --> 00:12:57,720 Speaker 2: revenues in the business, and so it's a very strong 295 00:12:57,760 --> 00:13:00,199 Speaker 2: area for us, but we can grow without. We'll hire 296 00:13:00,200 --> 00:13:02,040 Speaker 2: people outside if we need them. But the reality is, 297 00:13:02,080 --> 00:13:03,800 Speaker 2: and we always do that, but the reality is, we 298 00:13:03,800 --> 00:13:06,760 Speaker 2: have a lot of teammates we could redeploy as certain 299 00:13:06,760 --> 00:13:09,080 Speaker 2: areas as slow we redeployed those teammates areas that we 300 00:13:09,120 --> 00:13:11,320 Speaker 2: knew we could grow. And by the way, it's a 301 00:13:11,360 --> 00:13:14,319 Speaker 2: major investment business that we have not done layoffs and 302 00:13:14,360 --> 00:13:16,640 Speaker 2: things like that in our company generally, and not investment bank. 303 00:13:16,640 --> 00:13:18,320 Speaker 2: And we just have repositioned to people and send them 304 00:13:18,360 --> 00:13:20,360 Speaker 2: after clients that we think we can be successful with. 305 00:13:20,520 --> 00:13:22,480 Speaker 1: Brian, one of the changes it looks like it's coming 306 00:13:22,480 --> 00:13:25,280 Speaker 1: to your business is increased to reserve requirements. There's a 307 00:13:25,360 --> 00:13:28,760 Speaker 1: proposal out there, comments coming in, and I wonder what 308 00:13:28,840 --> 00:13:31,400 Speaker 1: your views on that and specifically, assuming to go through 309 00:13:31,440 --> 00:13:34,080 Speaker 1: in something like the form we're seeing right now, how 310 00:13:34,160 --> 00:13:36,960 Speaker 1: much would it change your business how you do your banking. 311 00:13:39,120 --> 00:13:41,440 Speaker 2: Well, So let's start a couple of things. One is 312 00:13:41,440 --> 00:13:44,320 Speaker 2: the rules were proposed, there's a comment period to close 313 00:13:44,360 --> 00:13:46,839 Speaker 2: in in November, and you've seen in the market and 314 00:13:46,840 --> 00:13:49,280 Speaker 2: you've seen in the press. You know, obviously an industry 315 00:13:49,280 --> 00:13:51,480 Speaker 2: has got a lot of comments coming our trade associations, 316 00:13:51,480 --> 00:13:53,880 Speaker 2: our individual companies, a lot of things we think should 317 00:13:53,880 --> 00:13:56,760 Speaker 2: be changed for the good of the American economy. That's 318 00:13:56,840 --> 00:13:59,320 Speaker 2: one thing. The second thing is the American banking system 319 00:13:59,360 --> 00:14:02,560 Speaker 2: has menace capital in capabilities, as you see in the 320 00:14:02,559 --> 00:14:05,000 Speaker 2: stress tests and all the way. We've tested that in 321 00:14:05,040 --> 00:14:07,319 Speaker 2: the real world, in the stress world, and our company 322 00:14:07,400 --> 00:14:10,520 Speaker 2: fairs better than stress tests than the peers do. So 323 00:14:10,679 --> 00:14:13,280 Speaker 2: that's that's the backdrop what it really means. Though, if 324 00:14:13,280 --> 00:14:16,160 Speaker 2: you take the rules as proposed today without any modification 325 00:14:16,320 --> 00:14:21,040 Speaker 2: and or what we call optimization, our risk weded aset 326 00:14:21,080 --> 00:14:23,800 Speaker 2: today are one point sixty three trillion, you'd have about 327 00:14:23,920 --> 00:14:26,720 Speaker 2: an increase of twenty percent to one point ninety five trillion. 328 00:14:27,440 --> 00:14:29,640 Speaker 2: Interally enough, at the end of the third quarter, our 329 00:14:30,920 --> 00:14:33,520 Speaker 2: cet one, our common equitier one capital what counts as 330 00:14:33,560 --> 00:14:35,680 Speaker 2: the enumertor in this case, is one hundred and ninety 331 00:14:35,720 --> 00:14:39,600 Speaker 2: four billion, and our requirement beginning next January is ten percent. 332 00:14:39,680 --> 00:14:42,520 Speaker 2: So ten percent times on one point ninety five trillion, 333 00:14:42,560 --> 00:14:44,880 Speaker 2: one hundred ninety five billions, we actually have the capital 334 00:14:44,880 --> 00:14:47,680 Speaker 2: in the company number one, number two, we're actually earning 335 00:14:47,680 --> 00:14:50,400 Speaker 2: a fifteen percent return on tangible common equity on that 336 00:14:50,440 --> 00:14:52,560 Speaker 2: capital today, so we would have to build a little 337 00:14:52,560 --> 00:14:56,680 Speaker 2: buffer of maybe ten billion more. But frankly, the team 338 00:14:56,680 --> 00:14:59,320 Speaker 2: does a great job of the capitol. Is this capital 339 00:14:59,360 --> 00:15:01,720 Speaker 2: needed I would say it wasn't needed, yes, or I 340 00:15:01,720 --> 00:15:04,200 Speaker 2: don't know why it's needed tomorrow. Do we have time 341 00:15:04,200 --> 00:15:06,280 Speaker 2: to phase into it. Yes. If the rules get adopted, 342 00:15:06,280 --> 00:15:08,120 Speaker 2: it will be a three year phase in the current rule. 343 00:15:08,200 --> 00:15:10,000 Speaker 2: Maybe we'll see what comes out of it. Will it 344 00:15:10,040 --> 00:15:12,640 Speaker 2: be changed? I hope so. But the reality is from 345 00:15:12,640 --> 00:15:14,640 Speaker 2: a bank American perspective, it's not like we need to 346 00:15:14,640 --> 00:15:17,040 Speaker 2: retain extra capital or do other things to get there, 347 00:15:17,080 --> 00:15:19,520 Speaker 2: because we have the capital and the company today to 348 00:15:19,640 --> 00:15:20,560 Speaker 2: the great work of the team. 349 00:15:20,840 --> 00:15:22,920 Speaker 1: If something goes through like what we've seen so far, 350 00:15:23,040 --> 00:15:26,360 Speaker 1: understanding it may be modified through the common period. Would 351 00:15:26,360 --> 00:15:29,200 Speaker 1: it affect your competitiveness? And if so with whom? Is 352 00:15:29,200 --> 00:15:32,160 Speaker 1: it with banks for overseas? Is it with non banks? 353 00:15:32,240 --> 00:15:34,880 Speaker 1: How might it hinder your competitiveness in the marketplace? 354 00:15:36,560 --> 00:15:42,080 Speaker 2: So they're all above, But let's think about that in 355 00:15:42,160 --> 00:15:46,080 Speaker 2: the US or relative to European banks and others. If 356 00:15:46,120 --> 00:15:48,040 Speaker 2: you look at bank our size in Europe, you look 357 00:15:48,080 --> 00:15:50,160 Speaker 2: at the largest bank in all the countries they have 358 00:15:50,400 --> 00:15:52,240 Speaker 2: what we call in r WA intensity, i e. The 359 00:15:52,360 --> 00:15:56,440 Speaker 2: RWA risk grade assets percentage of total assets is about 360 00:15:56,480 --> 00:15:58,440 Speaker 2: half ours and so for half the capital, they get 361 00:15:58,440 --> 00:16:01,360 Speaker 2: a higher capital ratio counterintuitive because they do the same 362 00:16:01,400 --> 00:16:03,880 Speaker 2: business as we do, as our company does, especially with 363 00:16:03,960 --> 00:16:07,640 Speaker 2: middle market lending, consumer banking, wealth management and capital markets 364 00:16:07,640 --> 00:16:10,920 Speaker 2: and large corporate banking. So that seems odd. That means 365 00:16:10,480 --> 00:16:13,880 Speaker 2: it's uncompetitive for the banks. Well, people say, well, do 366 00:16:13,920 --> 00:16:16,040 Speaker 2: we really care about that? You know? So what we 367 00:16:16,120 --> 00:16:17,920 Speaker 2: have more capital, that means we're safe and sounder. What 368 00:16:18,000 --> 00:16:20,240 Speaker 2: that really means, though, is a mid sized company in 369 00:16:20,320 --> 00:16:23,880 Speaker 2: Europe who is a supplier in the auto businesses in Europe, 370 00:16:23,880 --> 00:16:26,680 Speaker 2: and we'll be able to supply in Europe and around 371 00:16:26,680 --> 00:16:29,360 Speaker 2: the world with a lower cost of borrowing because you 372 00:16:29,400 --> 00:16:31,480 Speaker 2: can make the same return on half the capital by 373 00:16:31,560 --> 00:16:34,200 Speaker 2: charging less interest. If you come over to the US, 374 00:16:34,440 --> 00:16:37,320 Speaker 2: you know, you have two companies making bumpers for cars, 375 00:16:37,600 --> 00:16:39,520 Speaker 2: You're going to find out that the cost of borrowing 376 00:16:39,560 --> 00:16:42,200 Speaker 2: and the US is higher. That means the cars that 377 00:16:42,280 --> 00:16:44,520 Speaker 2: middle market company that supplies that materials may not be 378 00:16:44,560 --> 00:16:46,840 Speaker 2: as competitive. That's what we got to be careful of. 379 00:16:46,920 --> 00:16:48,720 Speaker 2: So a lot of people we say it isn't competitive. 380 00:16:48,760 --> 00:16:51,800 Speaker 2: Think it's about you know ourselves or are my peers 381 00:16:51,840 --> 00:16:54,120 Speaker 2: and the other big banks. No, this is about the 382 00:16:54,160 --> 00:16:56,360 Speaker 2: ability to lend downstream, and that's what we're saying is 383 00:16:56,360 --> 00:16:58,920 Speaker 2: a competitive risk. Then you take the point you made 384 00:16:58,960 --> 00:17:01,640 Speaker 2: about us visa via non bank. Half of all the 385 00:17:01,760 --> 00:17:05,200 Speaker 2: asset classes of banks lend against mortgages, credit cards, commercial 386 00:17:05,520 --> 00:17:08,200 Speaker 2: are outside the banking system, and so if you keep 387 00:17:08,600 --> 00:17:11,200 Speaker 2: raising capital requirements, what you do is push the activity out. 388 00:17:11,200 --> 00:17:13,560 Speaker 2: And as you push that activity out, you can't regulate 389 00:17:13,600 --> 00:17:15,439 Speaker 2: it and see it. So you know, well people are 390 00:17:15,440 --> 00:17:17,760 Speaker 2: worried about commercial real estate. What you're here reading a 391 00:17:17,760 --> 00:17:20,600 Speaker 2: lot about lenders quote taking back the keys are not 392 00:17:20,720 --> 00:17:23,240 Speaker 2: in the banking system. They're outside the banking system. Because 393 00:17:23,280 --> 00:17:26,159 Speaker 2: that business is half outside the banking system. That's not 394 00:17:26,240 --> 00:17:28,800 Speaker 2: altogether good. It's not a bad thing to be able 395 00:17:28,800 --> 00:17:31,040 Speaker 2: to treat that risk. We've always done it, but you've 396 00:17:31,040 --> 00:17:32,800 Speaker 2: got to be careful about it. If it goes too far, 397 00:17:33,200 --> 00:17:37,159 Speaker 2: then you have unregulated participants outside the industry carrying on 398 00:17:37,200 --> 00:17:39,879 Speaker 2: a lot of activity. And if it doesn't isn't handled right, 399 00:17:39,960 --> 00:17:42,159 Speaker 2: it impacts the broader economy and you can't touch it. 400 00:17:42,200 --> 00:17:44,800 Speaker 2: So that's a second way to think about competitiveness. 401 00:17:45,080 --> 00:17:48,040 Speaker 1: Brian, my mindful that you've been there ten years now 402 00:17:48,119 --> 00:17:51,080 Speaker 1: running Bank of America and you've always been had as 403 00:17:51,119 --> 00:17:54,679 Speaker 1: a hallmark responsible growth. Explain the growth from here on 404 00:17:54,840 --> 00:17:56,840 Speaker 1: out from your point of view, where does that come from? 405 00:17:56,920 --> 00:17:59,720 Speaker 1: Where do you devote resources, maybe take some resources away 406 00:17:59,720 --> 00:18:02,040 Speaker 1: from some other part of organization to drive the next 407 00:18:02,200 --> 00:18:03,600 Speaker 1: phase of growth for Bank of America. 408 00:18:05,640 --> 00:18:08,879 Speaker 2: Look, at the end of the day, it's been fourteen years, David. 409 00:18:08,880 --> 00:18:13,560 Speaker 2: Time flies when we're having fun. But we started the 410 00:18:13,560 --> 00:18:16,200 Speaker 2: responsible growth about a decade ago, and that was about 411 00:18:16,240 --> 00:18:18,680 Speaker 2: making sure after the financial CRISI and all the retooling 412 00:18:18,720 --> 00:18:20,560 Speaker 2: had to be done, that we focused on growth. And 413 00:18:20,640 --> 00:18:22,600 Speaker 2: responsible growth means you've got to grow no excuse. You 414 00:18:22,680 --> 00:18:25,160 Speaker 2: got to do it the right way with risk, client focus, 415 00:18:25,200 --> 00:18:26,879 Speaker 2: and you got to be sustainable. It's got to be growth. 416 00:18:26,880 --> 00:18:28,960 Speaker 2: It can stick to the ribs. That's what we do. 417 00:18:29,240 --> 00:18:30,920 Speaker 2: And so as we look forward, the growth is going 418 00:18:30,960 --> 00:18:33,399 Speaker 2: to come from more clients and more done with each client. 419 00:18:33,480 --> 00:18:36,199 Speaker 2: So this today, if you at our innings materials, we 420 00:18:36,200 --> 00:18:40,760 Speaker 2: talked about eleven thousand new net new clients in the 421 00:18:41,440 --> 00:18:44,880 Speaker 2: wealth manship business or one hundred new commercial clients, more 422 00:18:44,880 --> 00:18:47,480 Speaker 2: than we did all last year. Or we talked about 423 00:18:47,840 --> 00:18:49,879 Speaker 2: the ten thousand referrals that went out of the private 424 00:18:49,920 --> 00:18:52,399 Speaker 2: bank to other parts of the company. All these different 425 00:18:52,400 --> 00:18:54,639 Speaker 2: statistics are all about driving that. Now, where do we 426 00:18:54,680 --> 00:18:57,280 Speaker 2: have great opportunity? Think about our merchant business. We bought 427 00:18:57,320 --> 00:18:59,399 Speaker 2: the piece in a few years ago, took a charge 428 00:18:59,400 --> 00:19:01,600 Speaker 2: to bring it in, restructure to business, and now we're 429 00:19:01,600 --> 00:19:03,840 Speaker 2: out selling. The sales are up twenty percent. Think about 430 00:19:04,040 --> 00:19:06,800 Speaker 2: our four O and K and other retirement businesses. We're 431 00:19:06,880 --> 00:19:08,560 Speaker 2: number six in a business. We can grow that. Think 432 00:19:08,600 --> 00:19:12,959 Speaker 2: about our GTS cash manager business, just infinitely scalable across 433 00:19:13,000 --> 00:19:15,560 Speaker 2: the globe, a lot to do international that we do 434 00:19:15,600 --> 00:19:18,160 Speaker 2: a lot already, we can do more. And then think 435 00:19:18,520 --> 00:19:20,320 Speaker 2: so if you think about all these different products we 436 00:19:20,359 --> 00:19:23,200 Speaker 2: have places where number six in the core businesses we're one, 437 00:19:23,240 --> 00:19:25,680 Speaker 2: two three. That doesn't mean they can't grow. That means 438 00:19:25,680 --> 00:19:27,280 Speaker 2: if you look at our consumer business, which is the 439 00:19:27,320 --> 00:19:31,440 Speaker 2: largest retail consumer business in the country, it's still growing 440 00:19:31,560 --> 00:19:34,719 Speaker 2: year over year ten percent, more investment accounts, another million 441 00:19:35,280 --> 00:19:37,800 Speaker 2: checking accounts, which is three percent growth in a big, 442 00:19:37,960 --> 00:19:40,959 Speaker 2: huge book. And that just plays and comes right across 443 00:19:40,960 --> 00:19:43,760 Speaker 2: where we have less branches, less people, less technology, but 444 00:19:43,920 --> 00:19:47,399 Speaker 2: very valuable teammates when customers need that source, but use 445 00:19:47,440 --> 00:19:49,280 Speaker 2: that digital drive it. And so we have lots of 446 00:19:49,359 --> 00:19:51,400 Speaker 2: room for growth in every area, even that middle market 447 00:19:51,480 --> 00:19:54,560 Speaker 2: investment bank I talked about earlier. Again, twenty five to 448 00:19:54,600 --> 00:19:56,800 Speaker 2: thirty percent of the activity could be fifty sixty percent 449 00:19:56,800 --> 00:19:58,760 Speaker 2: of the activity and help us grow. We can see 450 00:19:58,800 --> 00:20:00,200 Speaker 2: the clients, we can see what can do. We just 451 00:20:00,280 --> 00:20:01,400 Speaker 2: got to get after Brian. 452 00:20:01,480 --> 00:20:04,080 Speaker 1: Finally, a couple of broader questions here. We're all mindful 453 00:20:04,160 --> 00:20:05,760 Speaker 1: what's going on right now in the Middle East with 454 00:20:06,119 --> 00:20:09,720 Speaker 1: Israel and Hamas, and that's after Ukraine. There was a 455 00:20:09,800 --> 00:20:12,960 Speaker 1: lot of geopolitical conflict around the world. Does that affect 456 00:20:13,000 --> 00:20:15,720 Speaker 1: your business at Bank of America? How do you internalize that? 457 00:20:15,840 --> 00:20:18,080 Speaker 1: How do you adjust to that? If at all? 458 00:20:20,119 --> 00:20:23,879 Speaker 2: Well, we have teammates in Israel. We had an office 459 00:20:23,920 --> 00:20:26,320 Speaker 2: and the teammates talked to us on the phone today 460 00:20:26,359 --> 00:20:29,360 Speaker 2: to a group of senior leaders. And so the first 461 00:20:29,400 --> 00:20:30,920 Speaker 2: thing we do is have to make sure our teammates 462 00:20:30,920 --> 00:20:35,400 Speaker 2: are safe, and more broadly across our two hundred thousand teammates, 463 00:20:35,400 --> 00:20:40,720 Speaker 2: other teammates have relatives and family that were hurt in 464 00:20:40,800 --> 00:20:44,000 Speaker 2: the initial attack, and you know, so it's a tough situation, 465 00:20:44,040 --> 00:20:46,400 Speaker 2: but that's where we always go. First, stabilize, make sure 466 00:20:46,400 --> 00:20:48,320 Speaker 2: our teammates are getting all the support they can have. 467 00:20:48,560 --> 00:20:51,680 Speaker 2: Then we do work with humanitarian organization to provide broader leaf. 468 00:20:52,000 --> 00:20:54,040 Speaker 2: But if you think about it, more from the volatility 469 00:20:54,040 --> 00:20:56,240 Speaker 2: in the markets and more from the outcome. You know, look, 470 00:20:56,320 --> 00:20:59,120 Speaker 2: you've got you know, wars on two places going now, 471 00:20:59,119 --> 00:21:02,040 Speaker 2: and these are all that's as the volatility and adds 472 00:21:02,080 --> 00:21:03,600 Speaker 2: the movement in the markets and as a day to 473 00:21:03,680 --> 00:21:05,560 Speaker 2: day movement. But the end of the day, these are 474 00:21:05,880 --> 00:21:10,040 Speaker 2: you know, huge human crises going on and we hope solve. 475 00:21:10,560 --> 00:21:12,000 Speaker 2: We aren't sure they will. But you have to run 476 00:21:12,040 --> 00:21:13,960 Speaker 2: the company given that we got to be ready for anything. 477 00:21:14,000 --> 00:21:16,280 Speaker 2: Comes out as saying geopolitical risk as a major risk 478 00:21:16,320 --> 00:21:17,760 Speaker 2: for the company faces on a given day. 479 00:21:17,880 --> 00:21:20,000 Speaker 1: And as you say so correctly, it's first informance of 480 00:21:20,119 --> 00:21:23,560 Speaker 1: humanitarian tragedy. Really a horror going on. This is not 481 00:21:23,600 --> 00:21:26,119 Speaker 1: so much amanetarian tragedy. But what's going on in Washington 482 00:21:26,200 --> 00:21:28,560 Speaker 1: right now? The same question is it affecting you because 483 00:21:28,600 --> 00:21:31,160 Speaker 1: we're looking at the prospect that possibly a government shutdown 484 00:21:31,200 --> 00:21:33,880 Speaker 1: again in November, and they seem to have some dysfunction. 485 00:21:34,240 --> 00:21:36,840 Speaker 1: That's a political issue. That's not your job. But could 486 00:21:36,880 --> 00:21:39,040 Speaker 1: it affect the economy? Could it affect Bank of America? 487 00:21:41,040 --> 00:21:44,560 Speaker 2: Look, the government running smoothly is sort of an assumed outcome, 488 00:21:46,160 --> 00:21:48,280 Speaker 2: you know, in the United States, and anything that gets 489 00:21:48,320 --> 00:21:50,600 Speaker 2: some way that is is not a good thing. And 490 00:21:50,720 --> 00:21:54,080 Speaker 2: so the abs and flows of the needs for funding 491 00:21:54,160 --> 00:21:56,359 Speaker 2: and operations shutting down or threaten to shutting that, No, 492 00:21:56,440 --> 00:21:58,159 Speaker 2: that's good and everybody knows that, and that's why they 493 00:21:58,240 --> 00:22:00,480 Speaker 2: keep trying to figure out ways to it down the 494 00:22:00,560 --> 00:22:02,280 Speaker 2: road and have the political argument they want to have 495 00:22:02,359 --> 00:22:06,000 Speaker 2: about the policies embedded in those budgets, which are that's 496 00:22:06,040 --> 00:22:07,720 Speaker 2: what they that's what they're there for. They're supposed to 497 00:22:07,720 --> 00:22:10,080 Speaker 2: have those arguments, But you want the rest of the bank, 498 00:22:10,240 --> 00:22:12,440 Speaker 2: the rest of the operations. You've got millions of federal 499 00:22:12,440 --> 00:22:15,760 Speaker 2: employees are affected by it. So we approach a government 500 00:22:15,800 --> 00:22:18,000 Speaker 2: shutdown the many that have occurred over time that we've 501 00:22:18,000 --> 00:22:20,439 Speaker 2: been around, because we've been around since seventeen eighty four, 502 00:22:20,520 --> 00:22:22,080 Speaker 2: so this is not a new concept for us. But 503 00:22:22,560 --> 00:22:25,040 Speaker 2: we've approached it the same way you approach any other disaster. First, 504 00:22:25,080 --> 00:22:28,040 Speaker 2: the employees of the government. We wagh fees and payments 505 00:22:28,040 --> 00:22:30,000 Speaker 2: and everything to make sure they're fine, and then we 506 00:22:30,160 --> 00:22:32,760 Speaker 2: basically then try to work to ensure that we have 507 00:22:32,840 --> 00:22:36,199 Speaker 2: the risk covered. We have to worry about impact on markets, 508 00:22:36,240 --> 00:22:38,040 Speaker 2: and so we analyze that, we get ready for it, 509 00:22:38,119 --> 00:22:39,520 Speaker 2: and we have teams that are ready to go in 510 00:22:39,560 --> 00:22:43,800 Speaker 2: any given moment. It's you know, anything that's anything that 511 00:22:43,800 --> 00:22:45,760 Speaker 2: has United States not be the most stable place on 512 00:22:45,800 --> 00:22:48,520 Speaker 2: earth is just not a good thing. And so yeah, 513 00:22:48,600 --> 00:22:50,560 Speaker 2: but you have to divorce the real political process away 514 00:22:50,560 --> 00:22:52,800 Speaker 2: from the operations, which we just need to government be 515 00:22:52,840 --> 00:22:55,000 Speaker 2: paying its bills and functioning. And they can have the 516 00:22:55,080 --> 00:22:57,480 Speaker 2: argument over size of budgets and everything. That's what that's 517 00:22:57,560 --> 00:22:59,439 Speaker 2: what they're supposed to do. But we need to make 518 00:22:59,440 --> 00:23:01,680 Speaker 2: sure that we don't have an accident on the other side. 519 00:23:01,680 --> 00:23:02,920 Speaker 2: And that's the thing we got to be careful of. 520 00:23:03,080 --> 00:23:05,760 Speaker 1: Well, when you mentioned stability, I really am mindful what's 521 00:23:05,760 --> 00:23:07,880 Speaker 1: been going on with actually yields in the bond market, 522 00:23:07,960 --> 00:23:09,880 Speaker 1: which has been pretty bad or recently for all sorts 523 00:23:09,880 --> 00:23:12,480 Speaker 1: of the reasons that you identified actually including geopolitical. Is 524 00:23:12,520 --> 00:23:14,600 Speaker 1: that something that we should be concerned about the degree 525 00:23:14,600 --> 00:23:15,680 Speaker 1: of volatility in the bond market. 526 00:23:17,920 --> 00:23:20,359 Speaker 2: You know, it's you've had guests talking about it. In 527 00:23:20,400 --> 00:23:22,119 Speaker 2: a day to day it moves, you know, if you 528 00:23:22,160 --> 00:23:25,080 Speaker 2: don't like it today, look tomorrow. As like the statement 529 00:23:25,080 --> 00:23:27,680 Speaker 2: about the New England weather because it was four eighty 530 00:23:28,040 --> 00:23:30,200 Speaker 2: almost five, then down to four sixty and then back 531 00:23:30,280 --> 00:23:32,920 Speaker 2: up to four eighty and up today. So it bounces around. 532 00:23:32,960 --> 00:23:34,639 Speaker 2: But that's just the ebb and flows of people in 533 00:23:34,720 --> 00:23:36,800 Speaker 2: the market trying to figure out, you know, the day 534 00:23:36,840 --> 00:23:39,119 Speaker 2: to day trading. Longer term, you know, the FED is 535 00:23:39,160 --> 00:23:41,760 Speaker 2: going to hold rates higher for longer. What our team, 536 00:23:42,080 --> 00:23:44,520 Speaker 2: Candice Browning Plant the team and the great research team 537 00:23:44,920 --> 00:23:48,960 Speaker 2: believe that the cuts they have in their models are 538 00:23:49,720 --> 00:23:51,960 Speaker 2: two next two or three next year and four the 539 00:23:52,160 --> 00:23:54,879 Speaker 2: year after. So that's one hundred and seventy five basis 540 00:23:54,960 --> 00:23:57,320 Speaker 2: points off of the level is now still about four. 541 00:23:57,440 --> 00:23:59,679 Speaker 2: That is higher for longer, and that's what the market's 542 00:23:59,880 --> 00:24:01,480 Speaker 2: just before. You're gonna have a real rate curve. And 543 00:24:02,040 --> 00:24:04,800 Speaker 2: anybody that's under the age of forty something wasn't around 544 00:24:05,280 --> 00:24:08,360 Speaker 2: pre global financial crisis when the rate structure was hired. 545 00:24:08,359 --> 00:24:11,200 Speaker 2: A three percent Fed's funds rate is more normal than 546 00:24:11,240 --> 00:24:14,720 Speaker 2: what we went through from twenty ten to nineteen and 547 00:24:14,720 --> 00:24:16,320 Speaker 2: it never got up to that level. And in fact, 548 00:24:16,320 --> 00:24:17,720 Speaker 2: at the end of nineteen if you remember, the FED 549 00:24:17,760 --> 00:24:20,399 Speaker 2: started cutting rates to push the economy. So they're mindful 550 00:24:20,440 --> 00:24:24,359 Speaker 2: of impact. But the idea is to have inflation at target, 551 00:24:24,359 --> 00:24:27,040 Speaker 2: as opposed to longing for it, which is what many 552 00:24:27,119 --> 00:24:30,040 Speaker 2: FED governors had, many FED chairs had to do, and 553 00:24:30,160 --> 00:24:32,439 Speaker 2: many central bankers in the world. They kept saying, oh, 554 00:24:32,480 --> 00:24:34,440 Speaker 2: if only we had inflation. You know, now you have it. 555 00:24:34,520 --> 00:24:35,679 Speaker 2: Now you've got to manage it down. But you got 556 00:24:35,760 --> 00:24:37,639 Speaker 2: to be careful you don't overshoot. And that's the challenge. 557 00:24:37,720 --> 00:24:40,760 Speaker 2: So the rates will reflect the geopolitical or reflect their 558 00:24:40,840 --> 00:24:43,640 Speaker 2: view of the great curve. They're clear about where they're going. 559 00:24:43,800 --> 00:24:45,800 Speaker 2: I think they're more done than not. Everybody thinks that. 560 00:24:46,119 --> 00:24:47,560 Speaker 2: But even when they talk about higher for longer, it 561 00:24:47,640 --> 00:24:50,560 Speaker 2: means a rate curve coming down to support the normalization 562 00:24:50,680 --> 00:24:53,840 Speaker 2: of growth, and that's consumer spending. We see that says 563 00:24:54,000 --> 00:24:55,680 Speaker 2: maybe this is coming down faster than they think. 564 00:24:56,119 --> 00:24:57,680 Speaker 1: Brian can't thank you enough. Thank you so much for 565 00:24:57,800 --> 00:25:00,359 Speaker 1: John that. Brian Moine, and he's chair and see of 566 00:25:00,480 --> 00:25:01,160 Speaker 1: BECC of America.