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News alongside me, the Bank of America, Chaef Bron, Moynihan, Bront, Good afternoon.
It's great to be here. It's a nice, nice place that you.
Know that it's not bad. It's going to see you.
It's somewhat different President Macron. Is he trying to sell you a French bank? What's happening here?
No, he's not trying to sell us a French bank. What he's trying to sell us all on is doing business in France.
Choose France.
And you know, we have moved from one hundred people here at about seven hundred and fifty people under Vanessa Holtz leadership for our European Broken Dealer trading operations, and they've been great and accommodative and the rules and stuff. It's been a great experience for us.
What have they changed? What have they done to attract that investment from you?
Well, we needed a talent because we're locating a lot of jobs here. Some people move, some people didn't. So they have a lot of talent. They have a lot of great people. They know the trading business because of the large French banks and the regulatory framework and so they've made it accommodative to bring it over, and then they've made some work real changes specific to our ployees and a financial services business made it easier and they're always ready. Now they're trying to say can you move
a back office and other things here? So they're pitching a different style of economic development. But they've done a good job in changing France's reputation around the business community. There's a few hundred CEOs out there, all of whom have expand their operations in France.
The reputation used to be pretty terrible.
In fact, you know what the perception was, why would you hire anyone in France when you can do that in London. Was it Brexit that changed that in the last ten years? Is it something else as France actually got better as opposed to the UK get and worse.
Well, I think what they did is they made their accommodative.
They had the talent, they had the capability, schools could expand and take people. Those are real things, But what they really did is they said we need to be attractive, save lower tax rates.
They've worked on some of the work rules.
Those are longer term strategies that will help the country.
They're trying to close the gap clearly with the United States. Let's talk about the United States as well. I got a note from the Bank of America Institute from Liz the great work they do over there, And I was looking at the average balance for a customer compared to the average back in twenty nineteen, and for lower income the numbers that you've got show it up close to sixty percent. What on earth is going on? How are the balances that much high now versus say, five years ago.
Well, the thing is that count that was here in nineteen, lived through all the stimulus benefits and all the deposits within has also been ostensibly.
Working since nineteen.
Therefore they've gotten a wage increases and will inflation is tough on people, especially in the lower medium incomeing down in terms of increases. The wages have been growing. They just grew first, honestly, and then the prices grew after. So people remember the price growth, don't remember the wage growth so much. But I think, you know, it shows
the brasilience the American consumer. And if you look at the spending through the month so far in May, they're spending about three or four percent more than they did last May.
In the first part of May April was similar.
It's slower, it's more consistent with lower growth, lower inflation economy, but it's still positive and positive means people are spending more.
That means our economy is growing.
And you know, in the rate structure, maybe higher and we can talk about that, but the reality is it's in decent shape. There's a thousand things that can go wrong tomorrow. For right now, everything's in pretty good shape.
Are we living pretty well? Then? With interest rates not to five percent.
We're living pretty well with them, and people are getting.
Used to it.
But the reality is, at some point I've had asked to bring to frontend rate to get to a normalized curve, because an inverted curve forever doesn't sort of economically compute.
But I think our.
Team thinks that the terminal rate, the end rate that they'll get to, will be more than a three and a half percent range as opposed to fifty basis point range or one percent range. And we haven't really had that since before the financial crisis. So there was a moment in sixteen seventy to eighteen when they raised rates and they already started bringing them down nineteen. So frankly in our team, I say, if you're under forty, you've never seen this kind of rate environment, and this is normal.
And so three percent front end, three and a half, four and a half percent tenure, and.
People will get used to it because America did a.
Lot of economic activity prior to two thousand and seven for the two hundred plus years of existed, so people have been used to it. It's just we're in a very unusual time and so the adjustments are taking place and it's running through the economy.
We're hearing from some companies that maybe the ross and cracks we had from Stobucks McDonald's offering a similar view on the US consumer. You've got some sixty nine million customers, what do you see? Do you see those cracks that so we're starting to emerge this year.
So if you think about it, where were the cracks emerged?
You talked about the average account balance is there're still especially for household seventy five one hundred thousand and below, the account bouncers are higher than the pandemic by a lot. If you think about the spending, the spending settled into a more normal where it was in sixteen, seventeen eighteen, the FEBEs raising raids inflation, they're pushing inflation was higher, they're pushing it down or holding it steady, you know. So that's normal. And then on the credit side, we're
just normalizing to where we were nineteen. So in twenty nineteen is a fifty year low on credit customer company and basically last quarter we were a little bit higher than that, and so we're normalizing. So it's increasing off a base and people say, oh, your charge offs are going up, but they're getting back to where they were in nineteen and frankly, people thought that was a very good credit and it actually was. And so the question is where they go next. The good news is we're
starting to see delinkednies flatten back out. Are you either not growing anymore? They normalize and then they're staying. That's good news on the consumer side, So it's all okay. It's just higher rates are tough on people on a mortgage market we you know, mortgage originations or way down. Higher rates are tough on corporations using their lines a little bit less because you know, small medium sized companies because it costs more and if it costs more, you're
going to be more gedicious about it. So that kind of adjustment, what the FED is doing with rate structure is having the impact they want. On the other hand, the economy's kind of there, and now we got to be careful we don't overshoot the other way.
It's right now we have a no landing.
Honestly a two percent growth right because you can't say it's a soft landing, but that's been pushed out and pushed out to when it occurs, and we got to be careful that we don't overshoot. Because you see the consumer confidence numbers tipping download it. That's what you got to be careful. The consumer leaves the game, it's hard to get them restarted.
So when I look at your consumer and whenever we repay, report on your numbers Q one, Q two, Q three, Q four. We look at the average FIICO score of some of the lending that happens, and it's really really high, like close to way one hundreds for vehicle lending.
Can you tell me whether your.
Experience is a decent snapshot of America or whether you're just catering to a much higher quality consumer.
On the lending side, were prime, super prime, and auto for example, So there's a broader base of consumers out there. Eighty twenty rule prime versus subprime, and we don't play in the subprime at all, and that's because of.
History and how we got here. On the deposit site completely different.
We open accounts for anybody that really wants an account, and then we are a great started place for people to open the first back account and then grow with us, and we open a million of them basically over the last twelve months a million net new accounts. They started three thousand, they grow to seven thousand. So that's pretty representative America. And we're ninety percent plus the corehousehold account, meaning it's use for all.
The day to day flows. We got pretty good data there.
On lending side, we probably till just a little higher, but it's still strong.
But eighty percent of America is prime space, so it's.
Not like it's so the difficulties you're hearing about I can't really reflect on, but there tend to be in the subprime space.
That's the consumer.
Let's talk about businesses seeing a ton of debt issuance supplies for the roof that you want, what do you think that is. We've been trying to work out whether that's pulled forward from the back end of this year or catch up from the back end of last year.
Which one is it.
Well, I think if you did a lot of financing and it's coming up in the next couple of years.
Your hope would be rates would follow and you get a.
Lot more nominal rate because you may have done it, you know, in twenty twenty or something, when there's a massive amount of issues. The problem is it's not clear that's going to happen. So now people are saying, I don't want to run to the wall and then find out the market closes because some external event or something. So people are just financing it forward. They're probably was some pull through of the year when people said all rates may not go down, that won't we just get it done and.
Get it over with. You know. The market's business is kind of fascinating.
The first half of the year is always much more active in the second half a year, And he keeps saying, there's four quarters. Why wouldn't space out. It's just natural human behavior. People like to get things done. But I think it's been pretty strong and we feel pretty good about it. We had a good investment banking fee first quarter, which reallyflects financing activity, equity and debt. But I'm not.
Sure there's any right answer there.
But the reality is that it was very high, so the assumption would be go lower. But on the other hand, there's people have to look forward and say, am I going to wait till twenty twenty six to refinance that debt? Or frankly they're investing. You know, there's lots of capital improvements going on. People want to turn that out. There's lots of M and A is starting to kick up
a little bit. People want to pay for those deals, So there's stuff going on too that requires them to raise incremental new money.
Can we touch on M and A.
We talked about this a few months ago when we visited you, and you talked about the reality for some companies that they can't make deals right now because they don't know if those deals will close. Do you sense that there is some momentum in the business now going into November or is there a sense that people are just going to wait to see how this washes out.
The activity going on in the business is very high. A lot of conversations a lot of deals being signed up, there's still the concern still applies of whether deals which would appear to any in the past so to speak, have gone through without challenge out delay. To stay with the deal for a year plus takes a lot of intestinal for it to A lot of things can happen in your company, can happen the other company, People can
lose enthusiasm for the deal. All things can go on, and so people have to sit there and say can I do that?
Large companies can.
Hang on longer because they just have more resiliency, especially if they're buying a smaller company. But a companies buying a company might be thirty forty percent of the size. They have to be very careful and they're cautious. They want to do it. The questions can they get it done? And that's one of the things we say to policymakers is clarify the rules and let people get through because in that men transaction, people think, well, it's just about
getting bigger. Remember, on a sales side, that's obvious. The payment goes out to the shareholders and the employees a lot.
That's good for them.
But on a buy side, what does it mean that companies make an acquisition, getting bigger, going to dominate the world. We're going to go over and we're going to become the best at X, Y or Z. Without being able to make acquisitions, they can't.
Get that strategic growth.
So it's especially when you're talking to America. Only those American companies are looking to be the best companies in the world, and M and A is one of the ways they do it. If you stop them, you're stopping America's prosperity and growth.
And I think, frankly, the.
Theme here in Frances need business, we need labor, we need government, we need all work together. We need green we need oil and gas, we need nuclear, we need all work together.
That idea of trying to figure out how it all works.
Together because the end of the day, the numbers of employees for our companies and us growing on a worldwide stage is critical to health of America.
Do you know get that message from Washington right now? You get it.
It's mixed, It's mixed, And I think that's been the debate is how do you America is has a chance to win like it's never had to win because of the resilience of our economy, So when you look at two thousand and seven to now, you look at the size of European economy US a conment back then roughly the same size. Now America's fifty to sixty percent bigger.
That's the resiliency of the American economy. So we have to have capitalism done right, and I think policies that promote that are what's going to drive America to stay great and be great. We can solve any problem and get through everything if we're growing. And one of the ways we grow is by letting them and a happen, by letting our companies do it fairly with the consumer, fairly with other companies, but.
Do it the right way.
You sound like a policy Mica.
I just look, I've been at this a long time now, and I've seen ups and downs, you know. I think it's really interesting when you think about countries companies around the world, they want to.
Invest in the United States.
Talent work rules, uh, big market, you know, huge market, And I think there's real opportunity for American companies if we get this right.
Every time we talk, the interview ends in the same place. Treasury Secretary thoughts on Washington.
I have the greatest job in the world, and I've got a lot of work to do for Bank of America, so I'll let somebody else.
Have that honor.
I imagine that was a bottled answer ready the guy Brian.
It's good to see it. Thank you.
Sir Brian had that the Bank of America Chief Executive