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00:00Joining us now is the Bank of America chairman and CEO Brian Moynihan. Brian, good to see you.
00:03Good to see you. Howard and I were on a panel yesterday and then yesterday, yeah, the day before yesterday, then lunch today and actually we're going to do another public venue where we're talking about how you raise the money to do all those investment he was talking about. So he's he's he's bullish on America and he watched part of the interview. It sounds like he said that. You guys are too. Yes. So let's start the GDP forecast. Sure. So our research team that our research
00:29is one of the best in the world, led by a woman named Candace Browning Platt. They all come out and they raise their GDP for the U.S. to 2.8 percent growth for the 26 right before we came to Davos.
00:42The world about three and a half. They raise a point point one. And the important things, I think, to think about the U.S. is you think about the travel last time from last time we were here.
00:50Last time we were here, we probably had two and a half percent for 26. Then Liberation Day, it drops all the way to one and a half.
00:57And then as a settling in of the four primary policies of the Trump administration, trade, trade and tariff, tax, immigration and deregulation started settling in.
01:09We've raised it back to two six and now two point eight. And that's so that's bullish.
01:14And then underneath it, we see what the consumer really does. And if we could talk about that, you know, the consumer spending was strong in the fourth quarter.
01:21When I talk about that, it's four and a half trillion dollars are 70 million consumers, which we're blessed to have put into the economy a year.
01:26And that for the fourth quarter, that grew about five percent over the 24th fourth quarter. And so far in January, it's growing a little faster than that.
01:34Now, you've got to be careful about two weeks. Don't make a quarter. But it's staying up there strong.
01:37Well, let's pair that GDP forecast with the bank and the business lines then. What position are you in to take advantage of that better growth story in America?
01:44And what do you expect it to show up? Well, because of who you are. And we've been part owners of this company a long, long time ago.
01:51And Mike's built a good thing around the markets business. That's what you're always interested in, even though there's all this other stuff that makes a lot of money.
01:56But look, if you look at Jim DeMar, who's now co-president of the company, but his team and markets this year had their last quarter had the 15th consecutive quarter of year over year growth.
02:06They just keep walking up 10 percent up for the fourth quarter. If you look at investment banking, which is kind of interesting.
02:12So Matthew Coder and team, you know, early in December, we thought we were about a billion and a half. And I went out at a conference and told people that.
02:18And lo and behold, we ended up a billion six, five. And that made 2025 the second best year of investment banking fees in our company's history.
02:28And in the end, there was a pandemic when everybody did a lot of financing. And next year, we think we're bullish because the pipelines are full.
02:34And the broadening out of the revenue stream into the IPO markets and other things, which got started a little bit this year, but have been pretty depressed for a while.
02:42So that's coming in and deals, you know, just the deal flow. People can get deals done.
02:46When I was here a couple of Davos ago, you know, the regulatory burdens were getting so high that you couldn't honestly tell a client who's trying to do a five billion dollar deal to do it.
02:55Because you said, if you're going to stabilize your company for six months, a year trying to get this through and you don't get it through, is that worth it?
03:03And that's sort of off the table. And even our industry, even though we can't do anything, six months approval timelines are back to where they should be.
03:09It seems like there is an incredible amount of bullishness here at Davos about deals, about IPOs, about all sorts of transactions and some of the issuances of debt and equity.
03:19At the same time, there's a real concern about affordability. There's a concern about how well the consumer is going to be able to face off with inflation.
03:27I'm just wondering if this is the year that we see the two come together, because last year they didn't come together.
03:31We saw the same kind of joblessness in terms of the growth, and we saw the same kind of lack of enthusiasm in sentiment surveys.
03:38Yeah. So if you look through the if you think about last year, think about how bullish people were last year,
03:44because about the United States and the change in regulatory regime and things like that, you know, in April, things change.
03:50And then by the end of the year, it changed back. And so I think that had a lot to do with if you look at the consumer and what we see,
03:56that spending level is not consistent with people who feel they're threatened in the future and in their spending on all kinds of things.
04:04Now, if you look at the research team, the Bank of America Institute, if you look at the work they've done of if you put, you know,
04:10three groups of customers, lower income third, middle income third, upper income third, they're all growing, but the middle and upper growing faster rate.
04:17And frankly, that drives a lot of the growth. But if you look at what everybody's spending on, they're spending on going out to eat,
04:22they're spending on booking vacations, they're spending on essentials.
04:25So what's the affordability? It's the inflation that people remember.
04:28And that is going to take a while for people to kind of put in the rearview mirror because people can remember.
04:33It's not too hard to remember five years pre COVID where X was cost you, you know,
04:37the milk cost you this, the gas cost you that, your rent was this.
04:41And with that explosion in prices, wages also went up.
04:45But the consumer thinks more about the price side.
04:47And then the question of will it turn over and get back in sync?
04:50And that's what's in those surveys.
04:52But if you watch your activity, and I'm a big believer, they'll tell you one thing, watch what they do.
04:56And that's what they're doing as of last Friday in the consumer base across 70 million people, which is a pretty good sample size.
05:01They're spending a lot.
05:02Maybe they would spend even more if there was a 10 percent cap on credit card rates.
05:05I mean, look, this proposal got a lot of attention about a week ago.
05:08It feels like three years ago.
05:09And people pushed back and said it wasn't realistic.
05:12It wasn't feasible.
05:12We had Jimmy Diving come out and discuss about how try it and see what happens.
05:17What's your take on that?
05:18How realistic are you seeing those proposals as being?
05:22So if you step back, you know, we're all for affordability and financial products.
05:26So you guys have thought over the years of what we did on overdraft fees, taking down by 90 percent over the course of 15 years.
05:32What we did on having a $500 loan account of $5, no interest rate, you could borrow an emergency loan of $500.
05:38Eight million customers have used that over the last several years, to give you a sense.
05:42And then we have no froze credit card, no rewards, and other stuff that people might attribute.
05:47That is lower rate.
05:48It's not all the way down at that rate.
05:49So I think the question is, can we figure out a solution where you can avoid the equal and opposite reaction?
05:56As our friend Lafayette said in the Hamilton song, you know, every action has an equal and opposite reaction.
06:01So the equal and opposite reaction we all talked about last week, if you actually make this a policy, you can reallocate credit.
06:06That will slow down spending.
06:08It will slow down credit availability.
06:10And that might not be what you're trying to achieve.
06:11So can you do something on a go-forward basis, on the limited things?
06:15And even one year, if you had to go reshuffle the whole deck, that would be pretty interesting.
06:19It would cause a lot of change in people's views of what they have available for credit.
06:24You want people to have available for credit because that gives them the courage to spend.
06:26And so we're trying to figure out, we're all working, trying to figure out, okay, given the affordability, given the thought process,
06:32there's a way that we can do something that might help without having that equal and opposite reaction because that would not be good.
06:37Our point is to get the credit losses down to the point where you can afford that rate, you actually can never have a charge off.
06:45And you start to think about who can get credit.
06:46And that's the thing.
06:47So we're working hard.
06:48We're trying to cope with solutions like we are in some of the proposals around mortgage and 401k usage and trying to think of how you maybe can move the transfer wealth faster
06:56by giving people in my age bracket the ability to move a 401k balance to help their kid buy a house or something like that.
07:04We threw that out to Howard yesterday.
07:08These ideas of letting people use their own 401k with less, they can borrow from today, but there's a way you can actually just take a withdrawal
07:15so they don't have the added debt burden.
07:17And then you've got to work on the supply side of housing.
07:19And, you know, the president was interested in, yes, he's sensitive to the issue if you bring down house prices to make it affordable.
07:24Is that the right answer for everybody?
07:25But on the other hand, when you have the kind of overdemand in some of the cities we work in, 30,000 units in Charlotte, 20,000 in Boston, 30,000, 40,000, 100,000, whatever in New York,
07:36you could build a lot before I think you'd have a major impact on the downward trend of prices.
07:40Well, the DJT imposed deadline of January 20th has come and gone for the credit card caps.
07:45Have you spoken to the administration about this issue and talked to them about the potential counterintuitive problem with a 10 percent cap?
07:53The team and I talk to the administration all the time about these policies and stuff.
07:58And they listen and they're trying to figure out the same issue from their side.
08:02How can they make America more affordable?
08:04And I think the number one thing we can do to make America more affordable is keep everybody employed in earnings growth.
08:10In our client base, across 70 million people, we see a lot of paychecks come in, and that's growing at 3 percent, 4 percent.
08:17And that's a good number.
08:19And so, you know, that wage growth continuity will ultimately make people feel different about it.
08:26It's completely understandable why they feel this sort of anemious of how these things came to their household and then what they want to do about it.
08:33And then rent affordability, we've given the types of ideas I talked about.
08:36We need to see some better hiring as well.
08:38Can we talk about hiring?
08:40The AI story, it's difficult to understand what's happened with hiring in this country, in America, over the last 12 months.
08:46What do you think has happened?
08:47What's your understanding of this drop-off in hiring?
08:49Is it a supply-side story?
08:50What do you think it is?
08:52I think there's a concern of availability of labor because of the population growth, immigration dynamics,
08:59that I think, again, the administration is trying to get much more fine around exactly what they're doing
09:04and not threatening people who've been naturalized citizens and things like that.
09:08And that was never what they intended to do, but people started reading it.
09:11And so I think, you know, if you look at our small business surveys, labor availability became an issue again and hadn't been for a good while.
09:17And so I think that that's something we've advised the administration to be mindful of because you don't want that to become a constraint on people's views of growing.
09:25Now, the big hiring story here where Davos and everybody keeps saying this year is about AI, last year is about AI, the year before it was about AI, the year before it was about AI.
09:33And in 2019, the premise was the fourth industrial revolution, which was AI without just saying it.
09:38And so it's not a new theme.
09:39And so I give you, since the first time you probably asked somebody, leave aside the pandemic, say post-pandemic about, is AI going to cause you to change your hiring?
09:50Let's call it four years.
09:51Let's call it three years.
09:52We hired 65,000 people, Bank of America, 2,000 kids out of school, plus out of school every year.
10:00Now, and that's for the turnover rate, 8%.
10:02We got to hire, in the month of January, we'll hire like 1,300 people and we'll have the same head count we had the month of December.
10:08Are there people doing exactly what the people left?
10:10Sometimes, sometimes those jobs got eliminated.
10:12But that's what management is challenged, is how do you think to make the changes we've got to make, the transformations, to make the customer experience the best it can be, to grow the company and to manage the expense.
10:25And that means you have to really pay attention to the head count movement, and that's why we watch it carefully.
10:29That's where the tension is, though, I think, for a lot of people.
10:31You've got the societal problem on the one hand, and on the other hand, you've got the opportunity.
10:35And the opportunity is to do even more with what you've already got.
10:39And that's the productivity story.
10:41And that's what you're selling to investors.
10:42That's the pitch of the moment, isn't it?
10:43So we had 285,000 people in 2010 when the team took over.
10:48We have 212,000 people today.
10:50And you never heard anything about labor dislocation because we just kept planning ahead.
10:55But that's the application of technology.
10:56Just take the consumer business, and I showed it yesterday, 100,000 people to 50 and make it simple.
11:01And if you look at that, the business is three times as big in terms of transactions and activity.
11:07But that's the power of all you've got, eight devices sitting on the tables in front of you and the internet connectivity and what you'll do.
11:13Just two.
11:14It's a combination of AI plus alerts and things like that, people that get focused on just, you know, Erica growth.
11:19In our case, you're saying, no, there's literally a billion alerts that go out, which is basically artificial intelligence.
11:24People set up in advance to tell them things go on.
11:26You don't need them to go into Erica to ask if a check went through my account above $2,500 if you set the alerts.
11:32You said something that we reflect on a lot on our show.
11:35You said a lot of things.
11:36But one thing in particular, that the business would grow, but that your staff would stay about the same size.
11:42And you said that about a year ago, maybe two years ago.
11:44That's a near-term phenomenon.
11:46Yeah.
11:47In five to ten years, will it be the same, or will it start to change in terms of actual shrinkage?
11:53Well, if Howard's right is his view of growth, we'll need a lot more human content to keep up with it.
12:00I'll give you the historical context.
12:02In 2019, I was in a room downstairs, and the people were wringing their hands, and it's the way they do at Davos, that all this technology is going to take away the jobs.
12:11And so in preparation, I said, I've got to give some hope here.
12:14So I went and did the research.
12:15In 1969, America employed 80 million people.
12:18In 2019, we employed 160 million people.
12:20I think there was a lot of technology and change that came from 1969 to 2019.
12:27None of that stuff in front of you was available.
12:28You wouldn't have a computer at work.
12:30You wouldn't have email accounts.
12:31You were still getting charged by the minute for phone calls.
12:33And think about that change.
12:35And think about we absorbed 80 million more people working.
12:38So I don't want to be Pollyanna about it, but I think you have to be optimistic that if we can grow the economy and grow the thing, we will absorb.
12:45And, by the way, the population of the U.S. is very modest without immigration.
12:51And there's a natural 2-plus percent of the people, whatever it is, die every year.
12:55It's morbid, but that's what happens.
12:57And so you have births that kind of replace it, and people retire.
13:01And so that's why I think management's core challenge is to manage this through and get employees to take the spirit of it and help drive the growth in the company and be a part of the solution and help us make it happen.
13:11And my guess is, yeah, it might incrementally move headcount, but if we manage it through attrition and retirements and stuff, we ought to be able to manage the outcome.
13:18How did we ever live without the Bloomberg Terminal?
13:20What was that ever like?
13:20I don't think I ever did.
13:22Brian, just a final question for us.
13:23You mentioned Howard.
13:25We talked about it, we joked about it at the start of the conversation, the relationship with the White House.
13:28How would you characterize it, in your own opinion, right now?
13:31Oh, look, you always want to get an invitation.
13:33This is Davos, the place of invitation.
13:34So we invite you guys to the place you want that invitation.
13:37So the relationship's good.
13:39We do continue to give lots of ideas, and it was ironic that what was fun, we had a client dinner last night, and Howard came to talk to the clients.
13:46It was delayed as they finished up the news on Greenland, and he was able to come in and talk about what happened.
13:52And those were international clients who admittedly were confused for 48 hours.
13:56And what I've tried to do with the administration's policies and talk especially to people outside the United States to say, listen to what they're saying.
14:04You can figure out what's going to happen.
14:05But don't confuse security with a trade policy.
14:08They wanted to get action, and they did.
14:10And that's a great thing.
14:11And you saw, leave aside the market reaction, which can go up and down on a day.
14:15What you saw is the clients say, okay, I got it.
14:17Now let's go set the business plans that will help have that growth in the future.
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