BofA’s Moynihan Talks Enthusiasm for Deals

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Hey guys, great to be with you day two of the World Economic Forum here in Davos, Switzerland. Mine's firmly elsewhere in Washington, DC, isn't that right, Lea? So twenty four hours of conversations about how great America is and how the rest of the world will struggle with the incoming president Donald Trump.

Yeah, every conversation here at Davos has been what's America going to do? How can I leverage myself to be in the best position possible? And oh yeah, what's the latest headline?

Brom Onehan alongside us, the chairman of CEO at Bank for America. We're going to cover all of that through the next eight minutes or so. There's an important occasion to mark fifteen years at the top of Bank for America.

Now, it's been an honor to lead to company, and we've had some fun and it was interesting to start.

For the last ten years or so, we've.

Been on a role just producing responsible growth and the team does a great job and we can take private. We've put the company to where it should be. Is one of the big great companies in the world.

Beyond interesting fifteen years ago was the absorption of countrywide Financial It was Meril. It's a very very different bank and a very very different moment. That phrase you use is one you've used so many times, responsible growth. There is a feeling that maybe we move towards something house in the world of banking over the next few years. Some might say it's sort of reckless growth, which is going to go for it? How would you describe the future?

So what you're hearing is an enthusiasm for in the investment banking side of particularly transactions right for a long time, for the last couple of years, it's been hard to get a transaction through. And what stops a seller from selling or a buyer from buying is this thing is delayed.

I'm exposed and so what they'll do is they'll push it through.

So there's a lot of enthusiasm that they'll be better growth in United States. There a lot of enthusiasm by the bankers saying these deals can get done, so I can go have this future conversation. It's just not another idea that goes through the system. Everybody says that's a great idea, but it now can be a great idea.

Let's go do it, or a great idea.

I don't want to do it, but it's a more of a substance space than it is more of a worry about the environment around us.

Are you basically saying that there's more enthusiasm, that there is conviction and will to actually get stuff done.

Yeah, I think you saw some deals getting announced and you'll see more deals geting announced in our sector. In banking, especially in the United States, the consolidation is still far away from being.

Done.

There will always be big banks or always be small banks, but you'll let people make a decision what they want to do. And there haven't been a lot of bank deals done. Bank to bank deals we can't do them, it's not legal, but as investment banking, we can help other people do them.

And it haven't been a lot done because just uncertain.

You're getting caught in a transaction and having issues. So the belief that they should promote the banks consoliding and getting more efficient, passing that through to customers, passing that through to small businesses, et cetera, is different.

Will be a change.

Well, there's the banking sector specifically, and some of the deregulation and whether some of these mergers in consolidation will be allowed, and.

Then there's a broader corporate sector.

As some of the enthusiasm we've seen and we've heard from the cities, a head of banking from JP Morgan, how much do you see that being maybe a little premature based on some of the policies coming down the pike and the uncertainty around debt, deficit and rates.

Well, I think you have to divorce a little bit some of the fiscal work that has to be done, and in coming Treasury or Secretary and others have to take very seriously this question of how do we manage the revenue stream, the expense stream and the amount of debt and get.

It all to work out.

That one of the ways that that becomes easier if you have more activity and more things going on.

So I think the enthusiasm.

You're here when the bankers is more structurally that the belief is that even starting yesterday, you don't have you don't have the constraint that you have, so you can go if there's more that enables more, that's good stuff, but right now it'll stop it going in the wrong direction and look hard, medium small sized businesses their biggest.

Complaint last summer.

Last time I was here and we talked to the to the administration about it was the biggest complaint was you're in my pocket. You're slow me down. I can't get things done. I want to permit to do something it takes forever.

I want your labor rules.

All this stuff was going on just over and over, and small medium sized business don't have the thousands of people that big companies have to figure it all out, and they're figuring out their own. The same person's running the business at nice sittingers say, so, what does this new taxation strategy on so security mean to me?

How does it apply? How I have to change all my systems?

And so they're just saying, if you just stop, you know things will get better.

So you're on the number one lender to small businesses in the United States, give us the read on things right now. Are they already making those decisions to make a move to make those investments that they were on hold over the last four years doing? Are they already making that move?

So if you come over the last say, six eight months or so, that it went from regulation and inflation, the inflation.

Has kind of come down as their worry.

Right now, what's actually interesting is they're going back to labor shortages and rightly.

Now the interesting thing.

About that that has a question about immigration and all this stuff going on. But what they're feeling is demand. I need people to do things. And so they're starting to feel the demand steady. Remember when the Fed was raising rates, hid their cost of.

Barring went up a lot.

They went from three hundred basis points over an index that went up by five hundred basis points. That's a big number, and so that cause them to say, let me be careful and then if as the rates come download but they feel a little better.

And now let's say, okay, I have the opportunity to grow, but can I get the people?

And remember that was the twenty twenty one twenty two timeframe, so in there there's got to be a solution this immigration.

It doesn't constrain those small medium.

Sized business for growing or they're going to start letting.

Would you say, just to jump in, would you say we are supply constrained. Do you think we are prone to have these bursts of inflation?

Yes and no, And.

We don't know honestly, because because of stimulus after the.

Pandemic, there was so much more than there maybe had to be by technical economic.

Discussion, you know, it's hard to say whether we're supply constrained and other things. And it were supply constraints because it cut off a supply and the stoppage of goods coming in the country and shipping and all that stuff that we went through. So you haven't gotten to a real normalized side of that yet. But that's the blame

Impacting supply and things.

But I think people the second sourcing has gone on, people are finding places to get stuff. So I'm not quite sure that's going to be the issue, but a lot of what we think it was the issue is actually the pandemic, the stimulus and the impact the pandemic on supply.

That's worked a suit of system.

So John started with the fact that you've been a Bank of America for fifteen years. We keep hearing about succession plans in different places. What's your succession plan?

But you're trying to throw me out.

No, no, not at all. I'm just wondering because this is something that we.

Lost.

Questions are the way the fascination with all this is interesting, and one just means we're all getting older.

So what they'reality is run.

We run across in our company through the top three layers, including for the CEO succession. Every six months, we go through everything who the media successors, for every one of our teammates jobs, and we have a slate and we go from a slate because if we run a company, people leave for a whole, they retire, they get another job, whatever, and you're always filling jobs.

And so with the way, the board will make.

A choice at some point, I'm not going anywhere unless they throw me out. They know that. But my job, and one of the biggest jobs I have, is preparing people for the what it would be like to run this company out there, and that's important. So we do a lot with our team to get them used to experiences and get them to learn more about the.

Trade offs you have to make at the top of the house.

Because if you come through a business or come through a function, you haven't made those trails. That's part of our general strategy, and so we talked to our board. But you'll never hear us discuss A is in and B is. That to me is the worst thing you can do. I went through that process and the end of two thousand and nine. Whether it's DAI to day speculation, that's not.

The way to do it. Well, thank you for that very much. You'll be the first person.

Okay, thank you.

I appreciate that we only have about thirty seconds. You said something to us when we were at Bank of America that AI would basically keep the staff the same size but increase the footprint of business. Do you stand by that?

Yeah, there are two facts I'll give you. One is we run the company on the.

Nominal amount of dollars of expenses we did ten years ago almost now nomena not not inflation, just and we run it on thirty thousand less people. That is all digitization, and AI is an extension of automation, digitization models, et cetera, automating work, taking out work and automated. Therefore you don't

Ron gent And you've been super generous with your time and you show me up every year because you always come out here with a suit jacket on and I'm sitting here with like a winter jacket. Yeah, but I have Yeah, I know, I know you've been influenced by Brian.

No, it's actually just a lot warmer.

Thanks for America, CEA, you and Chairman, thank you.