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00:00So what did you do to make the Bank of America now the largest consumer bank in United States. Basically it was to pare the company back to what made it great. You had to go call a man named Warren Buffett. Warren called us. My teammates went back to work the next day saying the smartest investor in the world . You put five billion dollars overnight in this company. So if the president United States called you someday and said the country needs you to be secretary treasurer chairman of the Fed you would say call Mr. Rubenstein . Would you fix your tie please. People wouldn't recognize me if my tie was fixed but it just seemed to swipe . All right . I don't consider myself a journalist and nobody else. I consider myself a journalist. I began to take on the life of being an interviewer even though I have a day job running a private equity firm . How do you define leadership . What is it that makes somebody tick . Let's talk about your career at Bank of America how you rose up and how you actually became the CEO. Because I think it's quite interesting. So to go back to your background you're from Ohio and your father was a chemist. My father was against you and for Dupont. Very funny. So you are the sixth of eight children . Right. And you have eight children. I guess you share a lot and so forth. So you'd make sure you you have to be very aggressive. At least getting your share let's say. OK. And so you went to Brown University and you were the co captain of the rugby team. Right. So rugby is a tough sport. I assume that's not as tough as banking or banking. Tougher than rugby . There's nothing more powerful to see one of those scrums push . And I didn't was never in there because I wasn't big enough to direct that which was one of my roles I played on the team . It's a fantastic you know teamwork game. And I think that's the consistent you learn a team recall 15 players participate fully in rugby. It's a different kind of game. Never break any bones or anything. I got got knocked out once by my own teammate which irritated me because I was writing a score and a guy kicked me in the head on my way. The goal. OK so you graduated and you went to law school at Notre Dame. Correct. You played rugby there. You played rugby there too. So where were you more of a star at Notre Dame or at Brown. I don't know where I was a star but we had fun at Notre Dame playing to you then went back to Rhode Island practice law. And you were a corporate lawyer or corporate securities emanating private equity deals . The highest calling of mankind private equity. Right . So it's interesting because one of the one of the reasons why I quit being a lawyer was I had worked with our private equity firm at the private equity firm the company on fleet equity which became not OK now but in a structured deals with them. And that's what sort of led the CEO at the time Terry Murray saying come work with us. Quit being a lawyer outside. And I went to work with patient fleet was an acquisitive bank. And it ultimately that a merger with Bank Boston is that right. Then you stayed within a buying company. And then when the CEO of Bank Boston took over Chad Gifford . He ultimately sided the bank. Even the combined bank wasn't big enough. And so we ultimately discussed selling it to a number of other people. And ultimately it was bought by Bank of America. Is that right. Right. And you know that goes to the scale banking and what you could achieve. It was ultimately the first nationwide bank. And that's something that we had no one else has right now. When Bank of America came in what was your job in the new bank company. I had the wealth management businesses of Columbia Asset Management and the brokerage business the private banking business. So I had a group business called G when most people came global wealth investment . And then for a while you became the general counsel of the entire Bank of America for 40 days. 40 days. And December 2000 to January of 2009. So it's 40 days 40 days and 40 nights. And there was a flood or anything. Not fabulous was there. Was there was a Merrill transaction and a little few other things . So in the second round of TARP and a few other gems. OK. And by that time the United States was in a middle of a financial crisis. All banks were in trouble. I think it's fair to say Bank of America was doing a favor I guess for the United States government. My was told it should buy Merrill Lynch. Is that right. There was a scramble going on to try to stabilize the firms that were less stable. Know J.P. Morgan Bear Stearns ourselves of Merrill Lynch etc. And no one. We couldn't stabilize Lehman and we even looked at it as a company. But at one point they were looked at the CEO of Bank of America was leaving. And they need to get a new CEO. And how did they pick you. You were the general counsel at that time. It wasn't. So I was general counsel for a short time. Then after that I had a run in the brokerage business the commercial banking business and the investment banking business. But I couldn't keep a job for a while there. Let's just say that I had probably five jobs in a year but it was largely we were doing deals and things were shifted around and that was a little interesting. But day in the fall the late summer early fall of two thousand nine as Ken Lewis the CEO told the board you want to leave at year end and they got through a search process. It was it was something I told our board I'll never leave you in the position to have to do so. I owe them a successor at all times. Not only now but also sometime in the future. And it was a relatively difficult process for all involved in that descent. In mid-December they finally concluded that I'd be CEO and I've been CEO since January 1st. So since you've now I've been running it for almost 10 years. The market capitalization is up about 54 percent. The stock price is up about 76 percent . So what did you do that made these events happen and make the Bank of America now the largest consumer bank in the United States. It was a fairly straightforward thing and there was some additive stuff that made it a little more interesting. But basically it was to pare the company back to what made it great and what. Greatest the lines of business. In the simplicity . And so we got rid of about 40 different units that we didn't need. We got out businesses like outside the United States wealth management business which we didn't make a money on. The issue that got in the middle that made it more interesting I said was that the default some mortgages kept building. And so taking care of that issue was unique. And the question was you just had to take that stuff and get it away. And you know that the vision was to have you know everything a customer or a company or an institutional investor needs to keep it to that and not get into straight business like we got it. We had we had 70 billion dollars of funded private equity investments . When I took over we have probably less than a billion or two . You can't have too many funded private equity shares in my view . That's your number. That's your business. Our job is to help you do it not to be competitive. And that's those are major changes. Before you were the CEO the bank made an investment in Countrywide and then they made an acquisition of Countrywide . And ultimately it turned out to cost the bank maybe 50 billion dollars or something like that. So maybe one of the worst acquisitions in the financial services world for quite some time . So they weren't. They got in trouble countrywide because of subprime mortgages among other problems. Are you making a lot of subprime mortgages today. Is the bank doing that. The reality is what we were is we are 20 percent the mortgage market of which about 15 percent of it was done through other people brokers and corresponds. We don't do any of that anymore. So the only way a person gets a mortgage on a Bank of America is sitting in front of a Bank of America team and or digitally directly with us. We don't buy mortgages from other people . That's left us about 5 percent the market. And so it's a much more stable environment for the banks. Future looks very strong . But at all times it wasn't so wonderful. And at one point during the crisis the bank needed some more money. And you had to go call a man named Warren Buffett. Was that easy to make that call. And did he say anything you want any terms you want is fine or that work. Warren. Warren called us. He did so . So he called in this story. I've heard from warm. But as far as I know he called and he got into the call centers and asked to speak to me. And of course they don't transfer. Everybody calls a call centers to the CEO's line. I didn't get hold of you. And so he found one of our investment bankers. They worked with the CFO Berkshire and they call it and I talked to him and he basically said Brian I want to make an investment in a company. And I said to him we don't need a capital. He said I know that's one call. You need stability. You need an promoter. And in the capital will do you good. And that was in 2011 when the world was kind of interesting because remember the government was almost in default. You had real uncertainty about this. You know the litigation risk around the industry mortgage industry and you put the money in. And from that day forward you know the company my teammates went back to work the next day saying the smartest investor in the world. You put five billion dollars overnight in this company. You literally called me. I talked him first time my life on Monday at 11:00 . And we had the agreement signed on Tuesday it by 8:00 or 9:00 a.m. and we had the money by Thursday. And so he you know he just does that. And so we took Hook. Now the interesting is that you're a common shareholder but that day you would have fared as well as he did. It's just you had have the courage and he had five billion dollars at a time when other people didn't have. So he bought stock at a time when the stock was less than half of where it is now. I assume that was his conversion price with 714. It was like 15 20 percent. So if I had some extra money today and I wanted to buy stock in a bank should I buy your bank stock. And that bank America and I do. Well you would do what you would do. I mean if we have we have the best franchise across all the businesses and financial services the largest economy world United States and around the world we have the top two or three franchises dealing with the companies of global companies. So what more do you want invest in. You think the Dodd-Frank legislation is working or would you modified it with the capital liquidity. Most of all the stress tests those regimes are critical. And the reason why the U.S. banking system is strong and active and growing . But during the Great Recession you spent a lot of time in Washington more than probably you wanted to. And you've very often testified and so forth. Do you think that the attitude towards banks today in Washington is more favorable than it was when the Great Recession was going on. I think that too . Towards banks generally is more favorable because in Anna Edwards America's prospering the economy is growing . Unemployment's low. And that's a better backdrop than severe delinquency in homes and housing and the foreclosures that were going on in this. And the unemployment 10 percent our brands at an all time high. Our customer service scores are at an all time high. Our growth is actually exceeding the industry. And so those are all very good things for a company. But that was built through a lot of tech tactics we took. But the general atmosphere is better at large. And because people see that you know we're out there trying to help. I think it's fair to say that the banks were beaten up by the regulators and Congress and ultimately the Dodd-Frank legislation was passed. Do you think the Dodd-Frank legislation is working or would you modified a bit. The banking industry self-insured itself. And so if you're actually insured depository institution with insured deposits it's a co-operative. So when a bank fails we we pay 15 percent of it. And so we have a high interest in having the safest industry. What happens in times is you see the activity leak outside the industry. And that's really the problem with so most the major issues were companies that weren't covered by the core regulatory bill. Dodd-Frank changed it. That is a very good thing because now they have purview over the whole industry. Now we still struggle. Half the mortgage business is not in the banking system. And when it was not before that gave rise to Countrywide and some other gems. So you know I think I think overall Dodd-Frank is done. Correct. A lot of the issues . The question is underneath it there's pieces like the Volcker Rule which people talk about that sort of swung in a direction you're saying. I don't think that's what they were trying to do and we're trying to get them more rational. But the capital of liquidity most opposed the stress tests. Those regimes are critical. And the reason why the U.S. banking system is strong and active and growing and and supporting the economy and other banking systems aren't because we could we we got to it today . There are before me big banks the United States Citicorp JP Morgan Wells Fargo and Bank of America. Do you think that's a good thing to have only four big banks that are basically United States or you think it's working OK. I think it works well . But I think you know there's a large amount of the industry is in the hands of a lot of the 5000 banks and there's community banks. So you really have a much more varied financial industry . And so one of the things that makes our industry strong is the variety of participants. We have the largest market share. And along with those colleagues. But if you actually look at us as a percentage of the GDP relative to other countries this is completely unconsolidated business. We have the largest retail share market. We think we're about 15 percent. If we were Coke or Pepsi we think that's not a very good market share. Right . So there's a lot of room to go to grow here still. What percentage of your profits or revenues are from outside the United States. Is it a large percentage. About 15 to 20 percent. Are you reasonably happy with that or you think that where you're expansion can come. Well we're expanding outside the United States. And so we have a business which is in all the major trading venues which is doing capital markets and trading for the big asset managers and other other firm. And we have a company that does corporate and commercial banking investment banking and treasury services around the world. And we're investing tremendously in those by adding people. It doesn't mean you have to make acquisitions you just adding more and more people and the opportunities and whether it's in Asia or whether it's Latin America whether it's a Middle East or wherever you know Europe et cetera we can grow because basically the connectivity of the two or three thousand largest companies . And then secondly the connectivity of midsize U.S. companies which were the largest provider of services to around the world in the supply chains everything it needs people like us and we are happy to do it to help them transact and engage in trade and import export all that stuff. It's a great business. In the old days 20 years ago or so if I wanted to get some cash I would take out my checkbook. I go to a bank and write out check and they probably would cash it if they could make sure I had enough money. They count. Do you really need banks physical banks these days. How many people actually walk in and cash checks that way. The numbers are surprisingly. How many physical facilities. Forty three hundred branches today . Forty three hundred at the highest point. We're probably six thousand one hundred. And but today those you have to be high touch and high tech in those branches. Over the next 24 hours about 18000 people come in and transact. And so but during the course of last quarter second quarter I think we have one point four billion consumer interactions. And one point three of them were digital. So people my age and my color hair are they the ones that are going into the banking branches and are the people doing online banking. Are they mostly younger than me. By a lot. I'd say . A decade ago the cohort would have been more determined. Now it's not now. Now if we had a 100 year old person sign up for mobile banking which is optimist optimism get a discount every 100 years old. I guess it's free so it's hard to give it away . But I think if you look so we do a great job on millennials. So we open accounts at twice the rate of Steven Mnuchin population . So we're gaining share and millennials. But on the other hand we also hold a lot of money and transact a lot of people our age . The most common dollar currency that used is that the hundred dollar bill is at the most frequently now. The 20s are still on his heart. OK so what about crypto currencies. Are you a believer that they will replace U.S. dollar currencies or just supplement that if you separate two different thought process . One is one is the moving money digitally . Fifty five percent of all the payments by this consumers at three trillion dollars. Most digitally today the United States is still cash aside. So what you're trying to do is digital is trying to move paper move from currency currency to an anonymous currency is a separate question. And so that doesn't work so well. But the idea digitizing cash you know we spend about five billion dollars move cash coin in currency around the company in cheques your work. There's no one hire more highly interested in that. And we're driving that down. It's just that Americans still use it and it's still better than another bank in the United States. JP Morgan you've heard of them that they were thinking of having their own kind of crypto currency. Is that true. And are you doing something similar. Well we have. So you get the block chain is sort of the connection between that . We have I think 40 45 patents issued on block chain already. We have another 45 in process. So we believe in the idea of distributed ledger technology and ways to move money and users of it around trade. We use a lot of information and money at the same time and in documents those are good uses for it. Well I don't know whether I call it a cryptocurrency. I call it it's still U.S. dollars is still fiat currency distributed electronically. That's going to happen. So if I'm a college student watching this discussion and I'm getting ready for a Bank of America interview what should I do. I should dress appropriately right. Make sure you demonstrate curiosity and make sure you demonstrate that you really want to help people . So I don't think the people watching this show or generally bank robbers. But for those bank robbers they might have tuned in . Is it easy to go to a bank today put up a gun and get some cash out and escape. Or is that harder than ever. It's harder than ever. Because because you it's just not a very fruitful. A lot of people doing that anymore. Basically it doesn't happen very often. I mean it is still it still happens. You catch the people. That's the turn. And you know we have our teammates . There's you know once I went to we have cameras at work all around the firm and branches to record things. And I went to go see it and they were gonna show me what a bank robbery looks like. And they were actually was a robbery at that time a live robbery . And there's nothing worse than seeing someone pull out a gun and pointed at one of your teammates. And so we do everything we can to make ourselves less attractive to that activity and the team setting. Now you've used the word teammates a few times . So a teammate is like an employee or a colleague. Why do you use the word teammate. Because we're well in competition to know the craft that everybody else. And that's where teammates help you do. How is the diversity among your teammates. We're half women. OK. And minorities is representative of that population levels for various Democrat ethnic breakdowns. We've got work to do in terms of seniority in some way. Some like the traditional financial adviser work in terms of women. We got those areas we've got to work on. We know those four drive and Adam but we measure you know very carefully but have six board members of women and half my management teams women basically . And so from top to bottom right. About half your management team is women. Are they better than the men . I think you'd have to ask them. So today if I wanted to graduate from college and let's say get a good job why should I want to go to a bank as a bank. A good career. And do you think that young people graduate college or business schools are coming in in greater numbers or lesser numbers to banks. Well we we we bring in you know under the core training program we bring in a thousand plus kids for the summer. We hire about we bring a fortune over the summer. We hire about a thousand a year just in a core training program. Markets investment banking commercial banking. And if you go more broadly in the company go higher. About 40 500 college graduates recent college graduates a year in the branch system and everything . And so there's no doubt that people want to come workforce. And it's a great career. It's a chance to help people. You know people come to work for a company because they want to help . You have three children. Jihye Lee recommend banking or financial services your own children to American finance. And they and they like it. One's been in for five years now. They own three years and then they work at competitors because they can't can't work for a company and they like it. So if I'm a college student watching this discussion and I'm getting ready for a Bank of America interview what should I do. I should dress appropriately. Right and cut my hair a little bit maybe in my mind. It's the same thing . Make sure you demonstrate curiosity and make sure you demonstrate that you really want to help people. The Bank of America has a very large charitable undertaking an effort and you have a good sized team doing it . What are your areas of focus and how important is that to the Bank of America. There's a pure charity we work with. We have it's about 10 to 15 million dollars a year giving. There is the community development low and moderate income development work which is about four and a half billion dollars to go into low and moderate income housing and in development areas. And then there's a volunteer which is 2 million hours a year on top of that. And then there's a play giving on top of that. So you're you're working all these things. And so the areas we work in are largely around economic development environmental work. We have a 300 million our environmental commitment that we just renewed. We've done about one hundred twenty five billion so far . Some people say CEOs because of their prominence should take more public positions on issues of public policy . And do you agree with that or do you try to stay out of public policy or public controversy. I think there's two parts to that question now. We firmly believe that we have to both produce great profits and returns for our shareholders and we have to deliver what society needs because as a bank you know we're only be successful society. Our decision about guns and things like that which we made two years ago now a year and a half ago whatever it was was driven by the fact that the time we have well over 100 people though were in the venues where these horrible tragedies have taking place inside the Post nightclub in Las Vegas. And so you just the teammates are saying you know we need to do something here. So what are the leadership secrets. Is it hard work intelligence luck and persistence . What is it that you would say enabled you to rise to the top . And what would you say that somebody who's looking at you as a role model should look at you and say this is what I did to get where I am. But I think it's all those things and then let the intelligence be decided by other people. But it's all those things that you have to work hard. You have to find out what's important. The company you have to be successful in the areas that have impact. But the number one thing when I talk to young teammates is speak curious and keep learning. Now you've been the CEO of Bank of America roughly almost 10 years now. At some point would you like to come to Washington and be secretary of treasury chairman of the Federal Reserve member of Congress or some other position of government . I think I have the honor of having one of the best jobs that you can have. So I am completely happy and I plan to do as long as my board well. So if the president the United States called you someday and said the country needs you to be secretary treasurer a chairman of the Fed you would say call Mr. Rubenstein . I think that call is unlikely to happen .

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The David Rubenstein Show: Bank of America CEO Brian Moynihan

Bank of America Chief Executive Officer Brian Moynihan talks about why banking is still a good career choice, Warren Buffett investing in the bank, his plan for a successor and financial regulation. Moynihan appears on “The David Rubenstein Show: Peer to Peer Conversations.” The show was recorded Oct. 8, 2019 in Washington. (Source: Bloomberg)

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