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Transcript

Brian Moynihan · The David Rubenstein Show

• 0:02
  Speaker 1: One of the largest and most respective banks in the
• 0:04
  Speaker 1: world is Bank of America. For the past fifteen years,
• 0:07
  Speaker 1: it's been led by its CEO, Brian and Mornihan. I
• 0:10
  Speaker 1: had a chance to sit down with him recently to
• 0:12
  Speaker 1: talk about the new environment in Washington, lower interest rates
• 0:16
  Speaker 1: and the impact on the banking community and.
• 0:18
  Speaker 2: Davos, you were asking.
• 0:23
  Speaker 1: A question of President Trump and he didn't quite answer
• 0:27
  Speaker 1: the question that he asked you a question. So the
• 0:30
  Speaker 1: question he asked you was something like, why are you
• 0:33
  Speaker 1: not banking certain groups? What is the answer? I don't
• 0:36
  Speaker 1: think he gave you a chance to really answer that question.
• 0:38
  Speaker 1: But what is the answer to that question?
• 0:40
  Speaker 3: Well, first off, the Bank of America has seventy million
• 0:44
  Speaker 3: consumer customers and millions of small businesses all over the country,
• 0:47
  Speaker 3: all over the world, and so we bank everybody. But
• 0:51
  Speaker 3: the real question was about over regulation, frankly, and so
• 0:55
  Speaker 3: as you look at what's happened is because the interpretations
• 0:58
  Speaker 3: aml any money laundering BSA, Bank Secrecy Act KYC, Know
• 1:04
  Speaker 3: your customer, know your customer's customer. You know, there's a
• 1:07
  Speaker 3: lot of burden upon the banking system to both report
• 1:12
  Speaker 3: suspicious activity reports and do a lot of analysis, and
• 1:16
  Speaker 3: we have to close accounts, so we can't tell people
• 1:17
  Speaker 3: why we did it, and often we're told by authorities
• 1:20
  Speaker 3: of close accounts.
• 1:21
  Speaker 4: That creates confusion.
• 1:22
  Speaker 3: Another area comes up in this discussions in a crypto area,
• 1:26
  Speaker 3: where the regulator said you can't bank crypto operating companies,
• 1:29
  Speaker 3: employees of crypto companies, et cetera. We bank everybody. So
• 1:31
  Speaker 3: at the end of the day, it's about getting these
• 1:33
  Speaker 3: regulations right now. I think it opens a dialogue about
• 1:35
  Speaker 3: how to get these regulations correct.
• 1:37
  Speaker 4: And the end of the day, we were open for everybody.
• 1:40
  Speaker 3: We serve millions and millions of Americans trallions and transactions
• 1:43
  Speaker 3: a year.
• 1:44
  Speaker 4: And we continue to do so.
• 1:45
  Speaker 1: Okay, So when this administration was elected, there was a
• 1:48
  Speaker 1: lot of i would say jubilation in the streets the
• 1:52
  Speaker 1: banking where all the people thought that the banking regulation
• 1:55
  Speaker 1: had been too tough under President Biden, and some people
• 1:59
  Speaker 1: thought that regulation be more amenable to banks. Has that
• 2:03
  Speaker 1: turned out to be the case, shed or is it
• 2:04
  Speaker 1: still too early to know and is the Banking Committee
• 2:07
  Speaker 1: happy with the direction that the current administration is going
• 2:10
  Speaker 1: or you just don't know yet.
• 2:11
  Speaker 3: If you think about the Great Financial Crisis, and Dodd
• 2:14
  Speaker 3: Frank and a lot of capital rules and quity rules
• 2:17
  Speaker 3: and all that stafe came in. There was a reason
• 2:19
  Speaker 3: for the world ri at large to be really not happy
• 2:21
  Speaker 3: with banks and non banks that became banks, Golden Sacks, Morgan, Stanley, Maryland,
• 2:25
  Speaker 3: et cetera. So you could understand that when you go
• 2:28
  Speaker 3: fast forward through the fifteen years hence plus, you go
• 2:31
  Speaker 3: through the pandemic and the banking system stands up and
• 2:33
  Speaker 3: stabilizes the economy.
• 2:35
  Speaker 4: You go through the.
• 2:36
  Speaker 3: Regional banking crisis, the banking system steps up and stabilize it,
• 2:39
  Speaker 3: and they keep adding capital and liquidier, sort of saying,
• 2:41
  Speaker 3: wait a second, we are a source of strength. And
• 2:44
  Speaker 3: by the way, the Berican bank industry is really a
• 2:46
  Speaker 3: source of strength. So the Penland kept just swinging, even
• 2:50
  Speaker 3: though the reason why it had swung had stopped, and
• 2:52
  Speaker 3: so our industry was say, wait a second, why are
• 2:55
  Speaker 3: we have twenty percent more capital we did during the pandemic.
• 2:59
  Speaker 3: The risk is the same, it's just by mathematical creep
• 3:01
  Speaker 3: of calculations.
• 3:03
  Speaker 1: So many people when they talk about the Federal Reserve,
• 3:06
  Speaker 1: they wonder whether the Fed are going to increase interest
• 3:08
  Speaker 1: rates or decrease interest rates. But in the banking community,
• 3:11
  Speaker 1: you're often worried about the stress tests. And do you
• 3:14
  Speaker 1: think the FED has pushed stress tests to two tough
• 3:18
  Speaker 1: a limit on banks? Are you okay with the current
• 3:20
  Speaker 1: stress tests?
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  Speaker 3: It's so the stress tests are publicly available were I
• 3:27
  Speaker 3: think the first one was twenty ten and then picked
• 3:29
  Speaker 3: up an earnest eleven or twelve, and so every year
• 3:32
  Speaker 3: you can see this report card in the bank industry's health,
• 3:34
  Speaker 3: and every year the bank industry has great health.
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  Speaker 4: The rules kept changing.
• 3:37
  Speaker 3: The test, so you if you think of the last
• 3:40
  Speaker 3: four or five years, you had volatility and capital requirements
• 3:44
  Speaker 3: that were you went from fifty to seventy five basis
• 3:48
  Speaker 3: points up and down a year with basically tests said
• 3:50
  Speaker 3: ten percent employment, fifty downturn in the equity markets, thirty
• 3:54
  Speaker 3: percent drop in housing, thirty to forty percent drop in
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  Speaker 3: commercial real estate, highield spreads blown out by a thousand,
• 4:01
  Speaker 3: two thousand basis points, whatever it was. You look at
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  Speaker 3: all it the same test produced as different results. It
• 4:06
  Speaker 3: didn't make sense. So behind the scenes, the transparency wasn't there,
• 4:09
  Speaker 3: and that's what we end up suing them on. So
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  Speaker 3: the stress tests are a very good thing. Frankly gives
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  Speaker 3: a state of health for thirty one banks, which cover
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  Speaker 3: most the industry. The way the United States run was
• 4:18
  Speaker 3: far superior. We do stress tests every quarter, multiple scenarios,
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  Speaker 3: and our trading book.
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  Speaker 4: Is stressed every day.
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  Speaker 3: So if you think about it's a good thing, it's
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  Speaker 3: just that behind the scenes, what was happening is that
• 4:29
  Speaker 3: dials are being turned on us and the numbers were
• 4:31
  Speaker 3: becoming irrational to the market, and we have investors and
• 4:34
  Speaker 3: we have to raise capital and have capital available for
• 4:36
  Speaker 3: the industry.
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  Speaker 1: So there was somebody there's a vice chairman of the
• 4:39
  Speaker 1: Federal Reserve who's in charge of regulating the banks and
• 4:42
  Speaker 1: so forth. That person has given up that position recently,
• 4:47
  Speaker 1: and was that something in the banking community was happy
• 4:50
  Speaker 1: with that he stepped aside or you didn't really care
• 4:52
  Speaker 1: whether he stepped aside or not.
• 4:54
  Speaker 3: Well, the ind of the day is, I think he
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  Speaker 3: had a year left on his term, and the new
• 4:57
  Speaker 3: administrative president would point someone for that BASI.
• 5:01
  Speaker 4: We'll get it today.
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  Speaker 3: As when people always ask me, do you have different
• 5:06
  Speaker 3: approaches for different administrations, and you say, well, in the
• 5:09
  Speaker 3: long term, we've been around since Washington as president. So
• 5:12
  Speaker 3: if we geared ourselves up for this president, not that presdent.
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  Speaker 4: We'd have to change forty five times whatever it is.
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  Speaker 3: And if you think even in the foreign soil, think
• 5:19
  Speaker 3: how many different prime ministers there's been in.
• 5:21
  Speaker 4: England or so even in my tenure CEO.
• 5:25
  Speaker 3: So the end of the day, you run the company
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  Speaker 3: the right way, and what we're trying to say is
• 5:27
  Speaker 3: get us to rational.
• 5:28
  Speaker 4: Gatory structure that and have it stick to the ribs.
• 5:33
  Speaker 3: If you keep swinging like this, our clients can't be
• 5:36
  Speaker 3: as it can't depend on us when adias.
• 5:38
  Speaker 1: So recently, another banker you probably heard of, Jamie Diamond,
• 5:44
  Speaker 1: and he testified on Capitol Hill that maybe the regulators
• 5:48
  Speaker 1: and Congress should get together and say, let's just start
• 5:51
  Speaker 1: afresh and take a look at all the banking regulations
• 5:54
  Speaker 1: from a fresh perspective, building from scratch.
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  Speaker 2: Do you have a comment on that. Is that a
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  Speaker 2: good idea?
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  Speaker 4: Or just take Consumer Bureau.
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  Speaker 3: In twenty ten with Dot Frank ten or eleven, they
• 6:04
  Speaker 3: set up the Consumer Bureau. The theory was that all
• 6:06
  Speaker 3: the consumer regulatory activity would move to a new agency.
• 6:11
  Speaker 3: Guess what we still have the occ regulars consumer activity
• 6:13
  Speaker 3: start of the federal regulars consumer activity stud the FTC
• 6:16
  Speaker 3: will hit consumer activity on occasion, and you have the
• 6:19
  Speaker 3: Consumer Bureau.
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  Speaker 4: And if you have the FDIC as regular you have
• 6:21
  Speaker 4: the FDIC.
• 6:22
  Speaker 1: You're regulated by the Federal Reserve. The FDIC the comptrol
• 6:26
  Speaker 1: of the currency. So do you spend a lot of
• 6:28
  Speaker 1: time with the regulators or you try to avoid that.
• 6:32
  Speaker 3: I'd like to spend time when they're telling us we're
• 6:34
  Speaker 3: doing good stuff. We all spend a lot of time
• 6:36
  Speaker 3: on I have great chief risk officer and Jeff green
• 6:38
  Speaker 3: Or who organized that for the company. All my senior
• 6:41
  Speaker 3: executives spend time with them and look the day to
• 6:43
  Speaker 3: day regulators are help trying to help us be better.
• 6:46
  Speaker 3: And we understand that we are on the road to
• 6:48
  Speaker 3: perfection as a company. And as vincelent Party said, you
• 6:51
  Speaker 3: strive for perfection next since we found that's what we're
• 6:53
  Speaker 3: trying to do. If they've got ideas for all ears,
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  Speaker 3: simplifying the organization will allow frankly, cost to be taken
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  Speaker 3: out from the regatory side, and we pay fees to
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  Speaker 3: support it.
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  Speaker 4: Uh And it wouldn't be the worst idea.
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  Speaker 1: Now, when interest rates go up, the theory is that
• 7:09
  Speaker 1: banks can charge more for loans and therefore their more profitable.
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  Speaker 2: And banks have been very profitable in recent years.
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  Speaker 1: When interest rates go down, is that a concern to
• 7:17
  Speaker 1: banks because you have less profitability or you really don't care?
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  Speaker 3: Well, The toughest time to be a bank with a
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  Speaker 3: trillion two trillion dollars deposits is when interest rates are
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  Speaker 3: zero because we have we can't charge people.
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  Speaker 4: To store their money.
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  Speaker 3: It's it's we're not like a self storage unit or
• 7:37
  Speaker 3: something like that. So at the end the day, you
• 7:39
  Speaker 3: have a floor on interest rates. And so when interest
• 7:41
  Speaker 3: rates came down, you started squeezing margins, so the loan
• 7:43
  Speaker 3: rates came down, But the deposit rates have a zero floor.
• 7:47
  Speaker 4: When rates move up.
• 7:49
  Speaker 3: That changes and so the zero interest checking accounts all
• 7:52
  Speaker 3: and stuff become worth more, and the loan rates go.
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  Speaker 2: Up because interest rates come down. Though you're not it's
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  Speaker 2: not going to affect.
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  Speaker 1: Your profitability, not not a lot, because you have right
• 8:01
  Speaker 1: So you don't want Jaypale's job. It sounds like, but
• 8:03
  Speaker 1: suppose he called you and said, should I increase interest rates?
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  Speaker 2: Decrease? Interest rates are holding the same? What would your
• 8:09
  Speaker 2: advice be?
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  Speaker 3: Our team right now is basically says it would be
• 8:15
  Speaker 3: no further rate cuts through their forecast period, which is
• 8:19
  Speaker 3: this year next year. Inflation is coming down, but is
• 8:21
  Speaker 3: a bigger fight. An there's the dual mandate, employment, inflation, employment.
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  Speaker 3: They're in great shape on inflation. It's been coming down,
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  Speaker 3: it's working some way down. It takes multiple years of
• 8:31
  Speaker 3: squeeze inflation out and there's a drag on economy today.
• 8:33
  Speaker 3: And so you're seeing economic growth from three percent in
• 8:36
  Speaker 3: the last couple of quarters to two percent. We haven't
• 8:39
  Speaker 3: moved down to two percent our expectations.
• 8:42
  Speaker 4: They won't cut rates.
• 8:43
  Speaker 1: So let me ask you. The business that my firm
• 8:45
  Speaker 1: has been in is private equity. But now private equity
• 8:48
  Speaker 1: firms have become private credit firms as well. And private
• 8:51
  Speaker 1: credit firms they lend money, but they're not regulated quite
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  Speaker 1: the way you are. So is that a source of
• 8:57
  Speaker 1: concern that we can lend money and we're not as
• 9:00
  Speaker 1: highly regulated as you are, And you're lending money but
• 9:02
  Speaker 1: you're highly regulated.
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  Speaker 4: You know, I think I care about your firm.
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  Speaker 3: But look in a day, the private capital has grown
• 9:16
  Speaker 3: because they can do something we can't.
• 9:18
  Speaker 4: Along a couple dimensions.
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  Speaker 3: One is they can finance companies that may have more leverage,
• 9:24
  Speaker 3: and we are basically stopped out at six times leverage.
• 9:28
  Speaker 3: And that used to be a rule, then it was
• 9:30
  Speaker 3: taken back then it was a guidance, and then it
• 9:32
  Speaker 3: was like wait till we examine you so and we
• 9:34
  Speaker 3: do go above it for certain credits and stuff like that.
• 9:36
  Speaker 4: So that's one thing.
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  Speaker 3: The second thing is the ability to bring the whole
• 9:39
  Speaker 3: capital structure, debt, equity, the mezzanine, whole nine yards. That's
• 9:43
  Speaker 3: hard for a bank because we don't engage.
• 9:45
  Speaker 4: In the equity business.
• 9:45
  Speaker 3: But on top of that, you know, we have a
• 9:48
  Speaker 3: trillion dollars a commercial loan commitments, a half a billion
• 9:51
  Speaker 3: plus of drawing loans. We don't fear any competitor, and
• 9:54
  Speaker 3: we work with those companies, including yours, to generate assets
• 9:56
  Speaker 3: for them.
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  Speaker 4: But it's just a different style.
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  Speaker 3: I think the the world should be concerned to make
• 10:01
  Speaker 3: sure that those enterprises making loans to you know, billion
• 10:06
  Speaker 3: dollar operating company, have the ability to work with him
• 10:09
  Speaker 3: times of stress. That that's going to be a interest question.
• 10:11
  Speaker 3: We haven't gone through a stress period with this practice
• 10:13
  Speaker 3: out there.
• 10:14
  Speaker 1: Let's talk about in your background, I am an only child.
• 10:17
  Speaker 1: You have how many siblings?
• 10:19
  Speaker 4: Seven?
• 10:19
  Speaker 1: Seven, so you know, growing up with eight people in
• 10:24
  Speaker 1: a family, wasn't that crowd at a time.
• 10:26
  Speaker 3: So I was set up to get my own bedroom
• 10:29
  Speaker 3: for the first time in my life from my younger
• 10:31
  Speaker 3: brother decided he wanted to move into the bedroom because
• 10:33
  Speaker 3: he was scared to sleep alone. Probably when I was
• 10:36
  Speaker 3: in college, his first time I ever had a bedroom
• 10:38
  Speaker 3: to myself.
• 10:38
  Speaker 4: So, yes, it was grod.
• 10:39
  Speaker 1: What did your father do to support eight children? See
• 10:43
  Speaker 1: him private equity or something.
• 10:44
  Speaker 4: That he was He was a research chemist for DuPont
• 10:50
  Speaker 4: and so he spent his whole life on plastics.
• 10:54
  Speaker 3: So the graduate, you know, plastics young man, my dad
• 10:56
  Speaker 3: was at So that's.
• 10:57
  Speaker 2: What he grew up in Ohio.
• 10:59
  Speaker 1: And then you went to college in the East Coast
• 11:01
  Speaker 1: and at Brown. Yes, and you were the co captain
• 11:04
  Speaker 1: of the rugby team.
• 11:06
  Speaker 4: Yes.
• 11:07
  Speaker 2: And do you still play rugby or not so much?
• 11:09
  Speaker 3: I played rugby at Brown, I played rugby at law school,
• 11:11
  Speaker 3: and I played rugby after. It's a great sport. It is,
• 11:15
  Speaker 3: in a way the most intense. It looks like this
• 11:17
  Speaker 3: organization out there is extreme, ill organized, but it's unique
• 11:21
  Speaker 3: in that it's.
• 11:21
  Speaker 4: Physical and tackling, you kick, you run.
• 11:24
  Speaker 3: Everybody gets to handle the ball and you run for
• 11:26
  Speaker 3: eighty minutes, and so it's a very demanding game.
• 11:29
  Speaker 4: It was a lot of fun.
• 11:30
  Speaker 2: Okay.
• 11:31
  Speaker 1: So now you are the chancellor of Brown University, which
• 11:35
  Speaker 1: means the chairman of the board essentially.
• 11:37
  Speaker 2: So how do you have time for that?
• 11:39
  Speaker 3: I've been on the board for fifteen years and at
• 11:42
  Speaker 3: the end of the day, the chair of the board,
• 11:44
  Speaker 3: Chris Packson runs university, doesn't spect calcular job.
• 11:47
  Speaker 1: After you graduated from Brown, you went to law schoo
• 11:49
  Speaker 1: at Notre Dame, Yes, sir. Then you went to practice
• 11:51
  Speaker 1: law back in Rhode Island. You're from Ohio. You went
• 11:54
  Speaker 1: to Notre Dame and the Midwest. Why did you go
• 11:56
  Speaker 1: back to Rhode Island?
• 11:57
  Speaker 3: Well, none of the Boston law firms would hire a
• 11:59
  Speaker 3: person from Notre Dame in law school, so I had.
• 12:02
  Speaker 3: So I ended up in a great law firm and
• 12:03
  Speaker 3: had a great short.
• 12:05
  Speaker 4: Legal career there.
• 12:06
  Speaker 2: How did you escape from being a corporate lawyer? What
• 12:08
  Speaker 2: did you do?
• 12:09
  Speaker 3: One of my mentors is named Terry Murray, who ran
• 12:11
  Speaker 3: Fleet and I was.
• 12:12
  Speaker 4: I did corporate law.
• 12:14
  Speaker 3: A lot of work I did for Fleet and then
• 12:17
  Speaker 3: Terry after we did a transaction called the bank Canoeing,
• 12:20
  Speaker 3: a transaction with KKR put money into the bank industry,
• 12:23
  Speaker 3: and we bought the Banknoeing and I mean you. Fleet
• 12:24
  Speaker 3: bought the Banknoeing And from the federal government in the
• 12:28
  Speaker 3: early nineties.
• 12:29
  Speaker 4: After the real estate crisis.
• 12:32
  Speaker 3: I'd structured that deal in a way that I'd structured
• 12:34
  Speaker 3: private equity eels for our bank private equity firm, which
• 12:37
  Speaker 3: was a thing called dual convertible per hered stock. It
• 12:39
  Speaker 3: converted into parent company stock or bank stock. Never been
• 12:42
  Speaker 3: done in the public array. Terry said to the General Council,
• 12:46
  Speaker 3: he's too smart to be a lawyer, which I never
• 12:47
  Speaker 3: figured out what the General Council thought about. He was
• 12:49
  Speaker 3: a brilliant guy, and he said, get him in here
• 12:52
  Speaker 3: and we'll figure out if he's gonna do something.
• 12:53
  Speaker 2: Work at Fleet, which is headquartered in Rhode Island.
• 12:56
  Speaker 3: I just went to work for Fleet, and I was
• 12:57
  Speaker 3: deputy general counsel for like three months, and I went
• 13:00
  Speaker 3: a special project to re engineer the company and came.
• 13:02
  Speaker 2: And Fleet ultimately merged with Bank Boston.
• 13:05
  Speaker 3: That was the last deal I did is I was
• 13:07
  Speaker 3: a head of M and A and strategy, and Terry
• 13:10
  Speaker 3: Murray and Chad Gifford put together that deal. Chad ultimately
• 13:13
  Speaker 3: took a liking to me as a great mentor and said,
• 13:15
  Speaker 3: you got to run a business, and put me in
• 13:17
  Speaker 3: running a business. And we were merging two companies together.
• 13:20
  Speaker 3: And I survived and ran the wealth management business for.
• 13:24
  Speaker 1: If we ran the wealth manager business for the combined
• 13:26
  Speaker 1: Bank Boston Fleet, and then Bank Boston Fleet combined company
• 13:31
  Speaker 1: was sold to Bank of America.
• 13:33
  Speaker 2: But then you became the general counsel.
• 13:35
  Speaker 4: For forty days for.
• 13:38
  Speaker 2: How long?
• 13:38
  Speaker 4: Forty days and forty nights.
• 13:40
  Speaker 1: All right, So we became the general counsel of the
• 13:43
  Speaker 1: combined Bank of America.
• 13:44
  Speaker 3: Yeah, and then well then, so what happened was in
• 13:48
  Speaker 3: December of two thousand and eight, Remember we bought Marylyn
• 13:53
  Speaker 3: the Lehman Weekend and everything. So we were originally trying
• 13:55
  Speaker 3: to buy it Lehman. We said we couldn't do it
• 13:58
  Speaker 3: as a company. I was running that point the corporate
• 14:01
  Speaker 3: Investment Bank and other parts of Bank of America.
• 14:04
  Speaker 4: We couldn't do that.
• 14:05
  Speaker 3: And then over the weekend that's when the world became
• 14:09
  Speaker 3: very ugly, and so we bought Merrill. And then around
• 14:14
  Speaker 3: the time Merrill showed up without with a seven billion
• 14:17
  Speaker 3: dollar loss in the quarter, and with a lot less
• 14:20
  Speaker 3: capitainer's supposed to have, we started telling the government we
• 14:22
  Speaker 3: couldn't do the deal and stuff, and so Ken asked
• 14:25
  Speaker 3: me to be a general counsel because we were limiting
• 14:27
  Speaker 3: a lot of jobs, and I actually eliminated my job
• 14:30
  Speaker 3: and I was basically out of the company. Said you
• 14:32
  Speaker 3: know what, stay and become general counsel because we need somebody.
• 14:35
  Speaker 4: And from December ninth to.
• 14:37
  Speaker 2: Came the general counsel the Combined Bank of America.
• 14:39
  Speaker 3: As we as we negotiate with the government to figure
• 14:41
  Speaker 3: out how to get the Meryl deal done.
• 14:43
  Speaker 4: And then I went back in business right after.
• 14:45
  Speaker 2: But then you left after that for a while.
• 14:47
  Speaker 3: So then in early mid January of nine I took
• 14:52
  Speaker 3: over a bunch of the businesses after John Thane left
• 14:54
  Speaker 3: and went back into business.
• 14:55
  Speaker 4: And then by the end of a nine MCU.
• 14:57
  Speaker 1: Let's talk about the beginning of Bank of America. So
• 14:59
  Speaker 1: Bank America started as Bank of Italy. So who started
• 15:04
  Speaker 1: Bank of America and why did you name it after
• 15:05
  Speaker 1: Italy as opposed to America.
• 15:07
  Speaker 3: Well, apg And who was Italian descent, started the Bank
• 15:11
  Speaker 3: of Italy when he came to the country in San
• 15:12
  Speaker 3: Francisco to help the local the Italian community that emigrated
• 15:16
  Speaker 3: to San Francisco, and he became famous in the San
• 15:20
  Speaker 3: Francisco earthquakes and fires in the early nineteen hundreds by
• 15:24
  Speaker 3: setting up a barrel and starting lend money. And then
• 15:28
  Speaker 3: fast forward to nineteen ninety nine when Nations Bank, which
• 15:33
  Speaker 3: was the North Carolina Bank which is the bank the
• 15:37
  Speaker 3: bank today, and the Bank of America merged. You had
• 15:41
  Speaker 3: two good names.
• 15:42
  Speaker 1: Now on the personal side, you've been there fifteen years.
• 15:46
  Speaker 1: You haven't announced any time, and you might step back
• 15:48
  Speaker 1: and you're not prepared to announce that today, right, No,
• 15:50
  Speaker 1: I don't, so I'll tell you first, Okay, So have
• 15:55
  Speaker 1: you been able to convince your children to go in
• 15:57
  Speaker 1: the banking world.
• 15:58
  Speaker 3: My oldest son's and investment b anchor for a different firm. Obviously,
• 16:01
  Speaker 3: in my uh, my middle child is a risk manager
• 16:06
  Speaker 3: for another for in financial services, and my youngers and
• 16:09
  Speaker 3: communications and other stuff. But they look, being a CEO's
• 16:12
  Speaker 3: child is not the easiest thing being a CEO's spouse.
• 16:15
  Speaker 4: And they saw me work in different ways across the years.
• 16:19
  Speaker 3: And ye, so it's their decision with their careers and
• 16:22
  Speaker 3: and it's it's nice.
• 16:24
  Speaker 4: My son, he's a deal doer, he's an m and
• 16:26
  Speaker 4: a type of guy. So it's it's fun. Because I
• 16:28
  Speaker 4: used to do that, I haven't done that long time.
• 16:29
  Speaker 2: So let's say ask i't ask you about this banking today.
• 16:34
  Speaker 1: Why do we need all these bank facilities, bank branches, buildings,
• 16:39
  Speaker 1: financial centers because everything is done online, it seems do
• 16:42
  Speaker 1: you actually have a lot of buildings? You really need
• 16:44
  Speaker 1: all those buildings you have where you have your bank.
• 16:47
  Speaker 3: This is this is the classic do as I do,
• 16:50
  Speaker 3: not as I say, Because in the day between this
• 16:54
  Speaker 3: morning when the banks open up to tomorrow morning, four
• 16:58
  Speaker 3: hundred thousand people come into a branch. So this idea
• 17:01
  Speaker 3: nobody goes to bank branch just is not true. The
• 17:03
  Speaker 3: idea nobody uses cash. We'll have about a quarter billion
• 17:06
  Speaker 3: dollars and we'll go out of our ATM machines in
• 17:08
  Speaker 3: the next twenty four hours, the idea, but nobody writes checks.
• 17:12
  Speaker 4: There were one hundred millions.
• 17:13
  Speaker 2: How many How many banks do you have around the
• 17:15
  Speaker 2: country an hour?
• 17:16
  Speaker 4: You have three thy seven hundred.
• 17:17
  Speaker 2: What about ATMs? You have a lot of them, We.
• 17:19
  Speaker 4: Have about fourteen thousand of them.
• 17:21
  Speaker 3: At the high point, you had eighteen thousand, and that's technology.
• 17:23
  Speaker 1: How has the world of technology affected the banking world?
• 17:28
  Speaker 1: So right now so called fintech. Has fintech dramatically changed
• 17:32
  Speaker 1: the way Bank of America operates.
• 17:34
  Speaker 3: It's so we invest about four billion dollars in new
• 17:38
  Speaker 3: code every year. Every weekend, we'll have a couple million
• 17:41
  Speaker 3: lines of code go in to amend our systems and
• 17:43
  Speaker 3: change our systems or add new technology that's not to
• 17:47
  Speaker 3: run the systems. That's another eight or nine billion dollars
• 17:49
  Speaker 3: that is just new activity.
• 17:53
  Speaker 4: So the impacts have been unbelievable.
• 17:54
  Speaker 3: So in the mid nineties, when I was the head
• 17:56
  Speaker 3: of strategy to the company, I remember, you know, consultants
• 17:59
  Speaker 3: coming in saying twenty years will be no bank branches.
• 18:01
  Speaker 3: Well it's thirty years and guess what we still have
• 18:03
  Speaker 3: thirty seven hundred. And the reality is people wanted all
• 18:06
  Speaker 3: the ways.
• 18:07
  Speaker 4: So but the.
• 18:07
  Speaker 3: Impact of the phone iPhone in particular was so different,
• 18:13
  Speaker 3: and we were the first app available on the iPhone.
• 18:17
  Speaker 3: You now have forty million consumers who bank digitally with
• 18:20
  Speaker 3: us all the time.
• 18:21
  Speaker 4: Last year we had about you know, about ninety.
• 18:26
  Speaker 3: Plus percent of our interactions with consumers are digital.
• 18:29
  Speaker 2: So if I want to go to using ATM and
• 18:31
  Speaker 2: I have a Bank of America ATM CAR, but I
• 18:34
  Speaker 2: don't see any Bank of America ATMs. I go to
• 18:37
  Speaker 2: some other bank ATM, I pay a fee.
• 18:40
  Speaker 3: Is that you wouldn't, David, Because you're right, you wouldn't
• 18:43
  Speaker 3: that other people might.
• 18:45
  Speaker 1: I thought that to pay a fee pray fee? I mean,
• 18:47
  Speaker 1: is that a profit center for banks? Those fees are?
• 18:51
  Speaker 3: You know, at the end of the day, we get
• 18:53
  Speaker 3: fifty five percent of our revenue or one hundred million
• 18:56
  Speaker 3: dollars of revenue last year, fifty five percent came from
• 18:59
  Speaker 3: interest five percent fees. The dominant part of those fees
• 19:03
  Speaker 3: are trading revenue and asset management fees and things like that.
• 19:08
  Speaker 3: We have consumer fees, but they've come down dramatically because
• 19:11
  Speaker 3: basically you said that the consumers, you keep changing your behavior,
• 19:14
  Speaker 3: We keep driving on the cost to serve, and we'll
• 19:16
  Speaker 3: give that back by low and lower fee structure.
• 19:18
  Speaker 2: And do you think we will have in our collective
• 19:21
  Speaker 2: lifetime no more currency, Everything will be digital or you
• 19:25
  Speaker 2: think that's.
• 19:26
  Speaker 4: Not likely, not in our lifetime?
• 19:28
  Speaker 2: What about a.
• 19:28
  Speaker 1: Digital currency which doesn't preclude other things, but a digital currency.
• 19:33
  Speaker 3: It's pretty clear there's going to be a stable coin,
• 19:34
  Speaker 3: which is going to be a full of dollar backed
• 19:37
  Speaker 3: type of thing, which is no different than a money
• 19:39
  Speaker 3: market fund, a check access is no different than a
• 19:41
  Speaker 3: bank account really, and so if they if they make
• 19:45
  Speaker 3: that legal, we'll go into that business. So you'll have
• 19:47
  Speaker 3: a be a Bank of America coin a and a
• 19:51
  Speaker 3: US dollar deposit, and we'll be able to move them
• 19:53
  Speaker 3: back and forth, because now it hasn't been legal for
• 19:56
  Speaker 3: us to do it, but it's just then like another
• 19:58
  Speaker 3: foreign currency. The question of it's useful for it's going
• 20:01
  Speaker 3: to be interesting.
• 20:01
  Speaker 1: So if I wanted to buy and make an investment
• 20:04
  Speaker 1: in a bank stock, would you say it's a good
• 20:07
  Speaker 1: idea to invest in bank stocks?
• 20:09
  Speaker 3: Now our valuation difference to the SMP is lower than
• 20:14
  Speaker 3: it's been, and I think our company is a great
• 20:16
  Speaker 3: value and US the banks are pretty good value.
• 20:18
  Speaker 4: Hey.
• 20:19
  Speaker 1: So now there's an acronym today that some people in
• 20:24
  Speaker 1: Washington don't like, called DEI.
• 20:27
  Speaker 2: Do you have a DEI policy or not? Anymore?
• 20:30
  Speaker 3: We've always been as a bank of opportunity, So we
• 20:32
  Speaker 3: think about creating an opportunity for our teammates, and.
• 20:36
  Speaker 4: How do we do that. We go out and.
• 20:38
  Speaker 3: Hire from all areas and bring people into our companies.
• 20:42
  Speaker 4: So we go to four hundred different schools to recruit kids.
• 20:44
  Speaker 4: We go. We have a path program we called Pathways.
• 20:48
  Speaker 3: So Pathways we announced in twenty eighteen we said we'd
• 20:50
  Speaker 3: hire ten thousand people from low and modern income neighborhoods
• 20:53
  Speaker 3: to come work in our company. So once we have
• 20:56
  Speaker 3: a very diverse company in terms of representation from all
• 20:58
  Speaker 3: economic status, all races as, once they get in, the
• 21:02
  Speaker 3: opportunity is.
• 21:02
  Speaker 4: There of a lifetime.
• 21:04
  Speaker 3: We equal pay for equal work, the ability to promote,
• 21:06
  Speaker 3: and so the idea is just great opportunity. So we
• 21:09
  Speaker 3: have a diverse team. We stress inclusion, so when you're
• 21:12
  Speaker 3: at our company, you can be who you want to
• 21:14
  Speaker 3: be and be successful. Including we have three hundred thousand
• 21:18
  Speaker 3: memberships in our employee resource groups, of which about sixty
• 21:22
  Speaker 3: percent of people are in one.
• 21:23
  Speaker 1: A young professional, young person's graduate in college. Why should
• 21:26
  Speaker 1: they go into the banking profession as opposed to private
• 21:29
  Speaker 1: equity investment, banking, healthcare?
• 21:33
  Speaker 2: What's the appeal of working in a bank?
• 21:35
  Speaker 3: Well, when we bring the two thousand kids in and
• 21:39
  Speaker 3: I talked to them, I always say the same thing,
• 21:41
  Speaker 3: you can make a lot of money doing a lot
• 21:43
  Speaker 3: of things. You can have a great career, do a
• 21:46
  Speaker 3: lot of things, but if you're going to come to
• 21:47
  Speaker 3: our company, you really want to help people.
• 21:50
  Speaker 4: Our market position is what would you like the power
• 21:53
  Speaker 4: to do?
• 21:53
  Speaker 3: And I said, your job at this company is to
• 21:55
  Speaker 3: help people answer that question, whether it's a customer, whether
• 21:59
  Speaker 3: it's a teammate, whether it's a shareholder, whether it's a community, And.
• 22:02
  Speaker 4: You've got to come and want to do that.
• 22:04
  Speaker 3: You want to deliver a lot of profits done the
• 22:06
  Speaker 3: right way, with the purpose around it.
• 22:11
  Speaker 1: Thanks for listening to hear more of my interviews. You
• 22:13
  Speaker 1: can subscribe and download my podcast on Spotify, Apple, or
• 22:17
  Speaker 1: wherever you listen.