Brian Moynihan: Inside the Mind of America’s Banker

Summary

The Master Investor Podcast with Wilfred Frost
Episode: Brian Moynihan – Inside the Mind of America’s Banker
Date: December 8, 2025

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Episode Overview

In this episode, Wilfred Frost sits down with Brian Moynihan, Chairman and CEO of Bank of America. They explore how Moynihan’s leadership at one of the world’s most significant financial institutions shaped the bank’s post-crisis transformation, sustained growth philosophy, his legal background’s unique perspective, and insights on the U.S. and global economy. The conversation covers responsible banking, risk management, capital markets, economic trends, regulation, AI in finance, and key leadership lessons for the business world.

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Key Discussion Points & Insights

1. The Bank of America Brand and Responsibility

• Bank’s Name & Its Significance
  Moynihan opens with reflections on the weight and opportunity of the “Bank of America” name, tracing its origins and emphasizing the responsibility it imparts.
  • “It not only presents an opportunity... but it comes with responsibility and a responsibility to run the company in a way that they can be proud of it every day.” (01:00)
• Customer-Centric Approach
  The bank’s operating ethos revolves around the question: “What would you like the power to do?” that defines interactions across clients, employees, and communities.
  • “We’re in a service business... our job is to listen... and fulfill that answer and help you live your financial lives.” (03:16)

2. Main Street vs Wall Street: The Bank’s DNA

• Moynihan distinguishes Bank of America from its peers by describing its broad reach across consumer, commercial, and investment banking, embodying both Main Street and Wall Street aspects.
  • “Our biggest business is our consumer business, but... we’re also the largest small business lender... the third largest investment bank globally…” (05:00)
• Cites the Merrill Lynch brand’s positioning, highlighting their unique blend and scale, and insists on the importance of integrating these different customer bases.

3. Moynihan’s Legal Background & Its Impact

• Moynihan discusses how his transition from law to banking shaped his approach to leadership, decision-making, and risk management.
  • “Critical thinking, the learning, the curiosity, the desire for knowledge, those are all great skills that play in any field.” (06:55)
• Points out the prevalence of legal training among major bank CEOs and its value in a highly regulated industry.

4. Culture, Talent, and Internal Mobility

• Describes early-career development at the bank, focusing on critical thinking, broad skill-building, and cross-functional experience.
  • “The skills they learn in the first three years are just really critical thinking skills... those skills play into everything, including audit and HR…” (08:20)

5. Post-Crisis Transformation & ‘Responsible Growth’

• Moynihan recounts taking the helm in 2010, inheriting vast post-crisis challenges but always believing in the bank’s core strengths.
  • “I never thought we weren’t gonna last it... you had underneath there an incredible array of businesses.” (09:54)
• Explains the importance of time and persistence in executing a turnaround, crediting strong frontline culture and systematic focus.
  • “If you ever wanted to have a good day, you just went out and talked to the people in the branches and how fired up they were to help people in those tough times.” (11:13)
• Legal training came in handy during litigation: “Litigation is an expensive habit, people.” (12:05)

6. The State of the U.S. Economy (2025–26 Outlook)

• Offers granular, real-time perspectives based on Bank of America’s vast consumer data:
  • Predicts ~2.4% US GDP growth in 2026 and continued strong consumer spending.
  • “Consumers are spending more money in November 25th than they did in November 24th by 4 or 4.5%...” (13:04)
• Notes inflation’s differential impact, especially on lower earners, and the continuing “K-shaped” recovery.
  • “There’s issues about that affordability that’s gotta be straightened out... but I’m not telling you optimism or pessimism – I’m telling you what people did this last month. And it’s strong.” (14:08)

7. Capital Markets, Interest Rates, & Bank Performance

• On capital markets:
  • “More deals are getting done and the deals are getting bigger and that’s good news... next year should be better for deals and things like that.” (16:25-18:08)
• On a potential rate-cutting cycle:
  • “Lower rates are not as favorable for banks. But lower rates with good growth, that’s fine... Lower rates because you’re in recession, that’s a much tougher time.” (18:38)
• Long-term debt risk and the US government’s fiscal position:
  • “The US debt is a serious issue, but that’s not new... but that’s probably one of the biggest sort of existential risks.” (20:09-22:16)

8. Asset Quality & Commercial Lending Risks

• Current asset quality remains robust; any increase in defaults is within historic norms.
  • “When people are saying, oh you’re back to where you were in 19, you’re saying 19 was a 50-year low in charge-offs in our company’s history…” (23:16)
• Private capital and commercial real estate have higher risks but are contained; fraud is more likely to be uncovered in times of stress.

9. Regulation and Industry Structure

• Expects regulatory changes to correct some prior excesses, hopes for enduring, bipartisan frameworks.
  • “The concept of materiality... is not an unknown concept. It’s gotten lost in a lot of years... the new regulatory people are trying to put it back.” (26:35)
  • “Back and forth is very hard to deal with.” (28:44)
• On capital regulations:
  • “Our capital went up by 20% requirements went up with no actual risk... we could have made $200 billion more loans...” (26:35)

10. Politics, the Business Community, and Administration Relations

• Moynihan insists on the bank’s apolitical, stability-focused approach:
  • “We work with every administration... we have one interest. If America’s strong, the Bank of America is going to be strong.” (29:24 & 30:42)

11. Growth Philosophy: ‘There’s the Right Loan and the Wrong Loan’

• Responsible growth remains central, prioritizing long-term sustainability over short-term gains.
  • “The key is always be growing... no excuses. Winning the market, you’ve got to grow. The second is do it with the right risk. And those two things always have to be in balance.” (31:23)
  • “The worst thing is if you get it too far extended and have to pull back, that’s when... your clients get really mad at you.” (32:50)

12. Artificial Intelligence: Opportunity and Caution

• AI is viewed as a means to enhance operational efficiency and augment human work, not replace it.
  • “What AI means to us is the process improvements enabling humans augment intelligence...” (33:32)
• Predicts a shakeout among “big tech” as winners and losers emerge.
  • “There’s clear winners and there’s probably clear people we don’t think are going to win as easily...” (34:36)

13. Leadership Advice

• Moynihan closes with two guiding principles for leadership and success:
  • Remain curious and never stop learning.
  • Always prioritize the customer, designing from “outside-in, not inside-out.”
  • “The basic leadership is how’s a person who’s actually been sitting in front of Will Frost as a customer do what they need to do from that idea? The idea is easy. Implementation is hard.” (35:14)

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Notable Quotes & Memorable Moments

• “Litigation is an expensive habit, people.” — Brian Moynihan (12:05)
• “I never thought we weren’t gonna last it... you had underneath there an incredible array of businesses.” — Moynihan (09:54)
• “We’re in a service business... our job is to listen... and fulfill that answer and help you live your financial lives.” — Moynihan (03:16)
• “We work with every administration. We don’t work any differently with a Republican or Democrat because at the end of the day, we have one interest: If America is strong, the Bank of America is going to be strong.” — Moynihan (30:42)
• “Be curious and think outside in, not inside out from a customer standpoint.” — Moynihan (36:15)

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Timestamps for Important Segments

• Origins & Brand Responsibility – 01:00–03:16
• Main Street vs Wall Street DNA – 05:00
• Legal Background’s Influence – 06:55
• Talent & Critical Thinking at BofA – 08:20
• Post-Crisis Turnaround Reflections – 09:54–11:13
• Economic Outlook & Consumer Health – 13:04–14:08
• K-Shaped Recovery & Inequality – 15:06–16:14
• Capital Markets Trends – 16:25–18:08
• Interest Rate Impact on Banks – 18:38
• National Debt & Fiscal Risks – 20:09–22:16
• Asset Quality, Defaults, and Fraud – 23:09–26:16
• Regulatory Change & Capital Requirements – 26:35–28:44
• Business and Politics – 29:24–30:42
• Responsible Growth Philosophy – 31:23–32:50
• AI in Banking & Market Dynamics – 33:32–34:50
• Leadership Principles – 35:14–36:15

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Tone and Style

Brian Moynihan’s comments throughout the episode are candid, precise, and practical, grounded in realism and a commitment to stakeholder responsibility. The conversation’s tone is optimistic but cautious, rooted in lessons from the past and a focus on preparing for the future.

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This episode provides both seasoned investors and newcomers deep insights into managing risk, growth, and innovation at scale—direct from the “mind of America’s banker.”

Transcript

[A]

And they picked bank of America. And that was a great name. And it does. It not only presents an opportunity. They think of, I'm going to open a bank account at the bank of America, but it comes with responsibility and a responsibility to run the company in a way that they can be proud of it every day out there. There's the right loan to make and there's a wrong loan to make. And so the key is always be growing. No excuses. Winning the market, you got to grow. That's the first principle. The second is do it with the right risk. And those two things always have to be in balance. And so in the goal of doing it with the right risk is you can sustain. The first thing is if you get it too far extended and have to pull back, that's when you take a lot more hits or your clients get really mad at you. But we got to make sure the capitalism and the business community works for all of American people. We work with every administration. We don't work any differently with a Republican or Democrat because at the end of the day, we have one interest. If America is strong, the bank of America is going to be strong.

[B]

Welcome to the Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business business leaders and politicians in.

[C]

The world, giving you, our listeners, the edge.

[B]

The Master Investor Podcast is sponsored by Interactive Brokers. Please do remember the views expressed in this podcast are for general informational purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes.

My guest today is the chairman and.

[C]

CEO of one of the biggest and most important financial institutions in the world, bank of America, which he has led since January 2010. Incredibly rare to lead a company of that size and import for quite so long, guiding it through extraordinary periods of our recent history and with it gaining extraordinary wisdom, which we are so lucky to be able to share in today. I am, of course, talking about Brian Moynihan.

[B]

Brian, welcome to the Master Investor Podcast.

[A]

It's great to be here. Wolf, good to see you again. Thanks.

[C]

It's really great to catch up after quite a few years. So many topics we want to get to. And I want to talk big picture, bank of America. Big picture. Brian Moynihan first. And what I find so interesting when we talk on this podcast is how you differentiate yourselves. And to what extent does being called bank of America make your job easier to attract customers than the many other brands that exist across the country?

[A]

Well, so there's a Little history of the name. So the name came from the California company that was bank of Italy and apg, and then he formed it became bank of America. It merged with a company called nations bank, which are both good names when you think about it. And they picked bank of America, and that was a great name. And it does. It not only presents an opportunity because when somebody comes to the United States to go to college from the uk, they think of, I'm going to open a bank account at the bank of America. But it comes with responsibility and a responsibility to run the company in a way that that name can be affixed to us and they can be proud of it.

[C]

And when you are making that proposition to someone arriving in the country or born in the country to bank with you, how do you sell it to them?

[A]

Well, it depends on the customer. We cover a kid opening his first account to wealthy individuals. We cover for small business to large business. And we cover investors from individual investors, the biggest investors. Well, so pitch is really, we have a question that frames how we go to market. What would you like the power to do? And our job is to listen for an answer and fulfill that answer and to help you live your financial lives. So that idea of customer in customer first is the way the company's culture goes to market. And so we've been consistent with that. It's the tagline in our advertising. If you look at my identification card, to get in the building on the back of what would you like the power to do? We ask it of our teammates, we ask of our clients, we ask it our communities, our shareholders. And that frames how we go about it. And then there's the product differentiation, the great talent, teammates we have to serve. That all comes, but the first is the attitude, which is to go meet the customer and figure out what they need to do. We're in a service business. We're not selling products. We're in a service business. What do you need to help you with your estate plan? And I got to figure that out and deliver it. What do you need to buy a company? Let's figure out why you want to buy the company, help you think it through and then do it. So it's a service business. So what we'd like the power to do is the way we frame it. Bank of America is a great brand and we invest heavily in it, but it helps carry the day.

[C]

What would you say the DNA of the company is on this? I'm getting to Wall street versus Main Street a bit. You've got the Goldman Sachs, Morgan Stanley's of this world, very clearly Wall street first, Wells Fargo and many regionals that are very much Main street first. You and JP Morgan, perhaps Citi two, you cross both of those avenues. Is it fair to say JP Morgan is more of a Wall street mindset, even though it's full service and you're more of a Main street mindset? I'm just interested in how you think about it.

[A]

I think if you look across the businesses, our biggest business is our consumer business, which is US Based business. But we are also the largest commercial bank in the United States. And we're also largest small business lender in the United States. And we're probably second largest wealth management firm in the United States. And then we're the third largest investment bank in the globe and the third, fourth largest capital market. So we're big in every business. So the balance is a little bit different. Other firms that you mentioned, but each business is great. We have eight sets of customers that we go after. The business model is discrete, but the key to make the thing really work is to knit it together. So the entrepreneur that sells our company is a private client customer. The entrepreneur that is starting to build up wealth, or the entrepreneur wants to start a company who is already a private client becomes a business commercial client. And so the idea is to knit it together, but it's discreet. I'd say people would think of our brand as being more of a broad brand and commercial and consumer banking just because of the heritage, how we got there. But remember, oddly enough, the Merrill lynch brand was about bringing Wall street to Main Street. That was the positioning of that company. And it has. Our branches are 3,700, but there's 600 Merrill offices out there. In my little town, I grew up in Ohio, there was a Merrill office, three people in it, but it was very much a Main street application of Wall Street. So it's a very blended thing, frankly. Wayward kind of. I never think of it that way.

[C]

It's funny you mentioned that aspect because we talked about that in the last episode with Greg Fleming. So I would refer our listeners back to that one as well. In terms of your career, Brian, which is not unique in banking, particularly in the U.S. but it's, I guess, a little bit rare. Your original training and your background until.

20 years ago or so as a lawyer more than initially as a banker.

[B]

Does that help you, do you think.

[C]

In the job today, did it give you some things you had to learn on top that you didn't have immediately?

[A]

Well, so two things One is I practiced law and then got invited by the CEO of one of the companies that ended up being part of bank of America called Fleet. Fellow named Terry Murray said you ought to leave. And that was 1993. So it's been a while. It's a while. The only other time I was practiced law again was for about 40 days around the financial crisis. So that can be thought of in a lot of ways. 40 days and 40 nights. And so I hadn't been in law. But look, as we sat around the table one night with eight of us, a large bank, CEOs, four of us went to law school. And so the critical thinking, the learning, the curiosity, the desire for knowledge, those are all great skills that play in any field. And I think honestly, when you get a topic like AI today, what should we teach kids? Well, if people are curious and learn and learn a lot about something, that then they can learn a lot about other things because they know how to take a subject apart, it's great. And I think law does that. I mean, you learn a lot about constitutional law, criminal law, in a way that most human beings would probably say, that's not what I want to know about. But because you learn that critical thinking, that precision of decision and words mean something and preciseness, it's clearly applicable in other things. And then in a heavily regulated industry, it doesn't hurt to understand the principles by which some of this stuff came about.

[C]

Interestingly for me, I started in finance and then left and went in other areas. And I kind of think in a similar way, finance helped me with that critical thinking in a different way.

[A]

Look, I think what's interesting is.

We hire 2,000 plus kids into our summer programs and then vast, vast majority of good offers, we hire another couple of thousand kids outside our summer intern type programs. But they come from all different types of backgrounds, MBA and undergraduate. But you can teach them a lot. And one of the challenges for us is how do we move them around the company. So the skills they learn in those first three years are just really critical thinking skills. How to model, how to learn how to analyze credit, how to analyze securities, types of activity, how to understand leveraging the company and the cash flows and spreading the statements. Those are all skills that play into everything, including audit and hr. You can't practicing HR in our company without understanding our business is a hard thing.

[C]

Yeah, I said at the top. Brian, Obviously you became CEO in January 2010 and I think one thing that has been key to your tenure is you were afforded time to turn around the oil tanker, if you will. Obviously, coming out of the financial crisis with a number of problems that you inherited, you could think about something similar, maybe with James Gorman at Morgan Stanley, in that you're both given time, both created amazing, and yours is continuing legacies for your company.

[B]

But the first period was tough.

[C]

The share price performance, the press coverage, the shareholder coverage.

[B]

I mean, how critical was it?

[C]

We're not just talking about months to turn it around years, the first four, five years. How critical is it that you were given that time? And how many times during the first four or five years did you think, I'm not gonna last this?

[A]

I never thought we weren't gonna last it. I never thought. Because if you looked at what we had, you had underneath there an incredible array of businesses. So the old adage, you know, Jack Walsh, you got to be 1, 2, 3 in the business. We were 1, 2, 3 in every business. They were big businesses, they were scaled, they had competitive positions, they had good operational brands. Most of the issues we had to deal with were like getting the mortgage business straightened out, because the mortgage crisis, United States, a lot of work with a lot of customers modified, tens of thousands of millions of loans, et cetera, that was a lot of work. But it didn't affect the corner line business. And so what kept you going was you saw that business every day doing great things for customers. We grew the company all during that time frame. We invested heavily because nobody knew it. So the stock price was about $15 when I was announced, and then it went down as low as 5. And then it's basically kept working its way up into the low 50s today. And it's been a great run. But the principles we started divining, the precision, which we thought about customer service, employee satisfaction, the way that we were going to cover investment banking on a combined base and commercial banking so it could really serve large companies around the world. The idea the markets business had to really help all the other businesses with research and execution, all those things we were doing all back then.

And so, yeah, it was tough. But when you looked, you ever wanted to have a good day, you just went out and talked to the people in the branches and how fired up they were to come to work every day and help people in those tough times in American society that the customer's going through. They always were saying, we can help the customer, we can help them through the financial distress in the aftermath of the financial crisis, et cetera, that was good stuff. Now some of the press and congressional inquiries and lawsuits and stuff that was probably not as fun as other stuff. But the reality is the teammates just kept you going. And every day you came in, they were fired up. We brought them up and everything. Customer scores, client scores, client growth, all that just really kept going in the right direction. And then we accelerated once we got a lot of the bad stuff behind us around 2014, and that's when the earnings took back off.

[C]

The legal training helpful for the lawsuits, I guess, as well.

[A]

Litigation is an expensive habit, people.

We settled a suit once and somebody said, why'd you settle? And I said, this is all about risk. Mitigation has nothing to do about liability. Are you going to go to trial, spend several hundred million dollars to potentially lose this, or you're going to settle for three times that amount? These are risk decisions. So they were business decisions. Now, it helped to have great lawyers that we had, but it helped to understand the reality is that going into a jury trial as a big bank, tricky.

[C]

I can imagine. Let's talk about the economy in the US and obviously you have a unique perspective. I think you serve 70 million consumers and small businesses combined. How do you frame the economy right now?

[A]

So, so we have a research team that's one of the best in the world, and they, they basically, the teammates look at it every way from Sunday type of thing. So their view of the economy for 26, because 25 is kind of over now, is it'll grow at about 2.4%, low tooth. The important thing is not that number. It's actually what's gone on over the last 12, 15 months. So this before the election last year, projections for 26 have been sort of one and a half. After the election, they moved up saying, okay, the administration was going to come in with lots of pro growth policies. Here we go. Then Liberation Day came and they started bringing it back down. The impact of tariffs, the uncertainty around that, et cetera. And then they started putting it back up. The odd thing is we've gone all the way around to basically back to where we were. And so their view and the team's view is economy grow at about 2.4% next year. And that's one part. But we also have bank of America is we can see what the 70 million consumers are doing. And the US economy structure is the consumer drive the economy. And those 70 million consumers are spending more money in November 25th than they did in November 24th by 4 or 4.5% level, depending on how you cut the days because the weekends fall differently. So very healthy, consistent with a 2% plus growth economy, spending it on all kinds of things. And over the.

Holiday weekend, Thanksgiving weekend, Black Friday, all the things that happen in the US in the context of holiday sales, strong sales. And so it looks pretty good. And then you look at credit quality, consumers, that looks good. Money in accounts, consumers have money in their accounts. There is a stress factor in the US which is the inflation has been causing affordability. And if you look at a third cut our customer base and a thirds of income just bucket one, bucket two, bucket three, clearly the growth rate and spending by the lowest bucket of income earners is lower than the higher mid and high. And so there's issues about that affordability that's got to be straightened out. It's going to take a little bit burning in. Some of the inflation is wearing off. Some of the wage increases came first in front of inflation, then inflation, then wage increases. But there's some work to do on that. So a lot of people say, well, that's an optimistic view. And I read the papers and the surveys. I, I'm not telling you optimistic pessimism. I'm telling you what the people did this last month. And it's strong.

[C]

And I mean, I'm interested in that K shaped economy factor that a lot of people talk about. Strong at the high end, struggling at the low end because you've got a pretty good cross section of the country. So is the negative part of the K shape behind us as well or is that still a risk?

[A]

The wage growth. When we look at our customers, the wage growth is solid. We look at our customers. The number getting an unemployment distribution versus a paycheck hasn't changed at all. The US unemployment rate is 4.4%. But inflation affects people differently. Higher prices affect people differently. And where you have to spend is inflated. If that's inflated, that's tough. That's the affordability question. If you want to spend, it's higher cost. You can decide not to spend or not. But if you're spending on oil, prices are now down, actually providing some benefit. But if rents are up, I've got to pay the rent. I don't have a choice. So that's what's going on in affordability. And yes, you see a growth rate difference. All the sectors are growing their spending, but you see a rate of growth difference between the lowest third of income in our customer base versus the middle.

[C]

And the higher third in terms of capital markets activity. It's been incredible of late. Is that sustainable do you think? Or next year will that tail off?

[A]

Well, capital Markets activity have to be a little care. It has multiple meanings. So if you look at the investment banking fee pool, it looks like it's going to be as big as it was, say 19 or something like that, one of the top ones. But you have to remember the economy is a third bigger. So you're saying, wait a second. Every deal you bought a company for $1 billion back then, it's a billion three now. So it's actually still getting back to the level. What's starting to happen is more deals are getting done and the deals are getting bigger and that's good news. So on the investment banking side, it's been a very, a solid year and we expected next year to be a very good year. The IPO markets opened a little bit. Assuming the economy performs like our team does, inflation stays under control and the Fed drops rates to the 3% level mid next year and sort of stops. That's kind of the base case. You'd expect that IPO activity in markets, market valuations is one thing, but then issuance and stuff is strong strategic activity. Buying companies is strong. And so the capital markets are open. On the trading side, it's been a very good year because all this up and down volatility is. Our job is to intermediate for our customers in the middle of all that and give them advice about how to do things. And customers have a point of view when there's topics to have a point of view about, when there's nothing to have a point of view about. Low growth rate, low inflation, the volatility goes way down. It's hard to make money in trading. So Jim demar and the team has had a good year in trading. We've had a good year investment banking. But next year should be better for deals and things like that. Just because the momentum to build back up after the uncertainty, after Liberation Day, getting the tax law embedded, which it now is, those policies fell in place. Now business can say, I can buy your company because I can actually think through your cost of goods sold, what the tax rate's going to be, the financing stabilized and goods, all that bodes well for good activity.

[C]

You mentioned the Fed and typically we wouldn't think of a rate cutting cycle as necessarily good for a big bank.

[B]

Is it?

[C]

I mean, particularly with the setup we've got, which may be the cuts come from, you know, managing a few factors on the employment side as opposed to facing a recession, as you clearly don't expect. Anyway, a few more cuts from here. Is that good for bank of America?

[B]

All Things considered well it's good in.

[A]

The end day we're going to follow the economic growth. Our credit quality is in great shape.

Even under stress it appears all the stress tests show it's in good shape. We're growing market share, the business is growing every dimension. 8% commercial loan growth in the third quarter, 30% EPS growth. So it's all good. The technical question is if you have like we have $2 trillion of deposits of which $950 billion are in the consumer business. So that's the consumer side business in US dollars and about half of that is zero interest because in checking accounts as rates come down it squeezes you a little bit. It doesn't happen as much for us now because we have such a reprice going. The asset side was more tech but generally lower rates are not as favorable for banks. But lower rates with good growth, that's fine. Lower rates because you're in recession, that's a much tougher time. So rates we disclose our sensitivity and stuff but we've given people that we'll be up 5% to 7% and then I over the next year and that assumes the rate structure comes down to.

[C]

3% in the front end and the rates coming down might affect some of your rivals a little bit more which will be interesting to see.

[B]

What about the long end of the.

[C]

Yield curve more broadly? I mean interesting to see what's happening in Japan over the course of this last week. Is that something that you think is a risk factor over the next 12 months? Whether it's triggered in the US for all sorts of reasons with the debt outlook or from elsewhere like Japan, possibly here in Europe. Is there a chance that the bond market long end people lose control of it?

[A]

There's always that chance in a lot of these economies. The big issue is what's going to happen in the US and so if you look at what our team thinks is we'll have a 3% front end rate in about a 4, 4 and a 4 and a quarter, 4 and a half, 10 year rate. So the yield curve would be normalized and steep and four and a half is not that high in historical context. I know it feels high from the last 15 years before the pandemic or so. That's all good. The issue of the US debt is a serious issue, but that's not new news. It has been serious issue. So the question is how do you manage to keep it growing at the same rate against the growth in gdp? And so a little faster growing economy even with a little Higher inflation in the US 5% gross growth to 2.5% net growth to 2.5% actually allows that to deteriorate and provides more revenue, tax receipts, et cetera. And so the higher cost of debts increase dramatically cost of carry by the government. But the faster growing economy will help offset that. And the key is then to manage the spending relatively carefully in every direction. There hasn't been a lot of will to do that, honestly, but I think the American people and I think American businesses are saying, hey, we've got to get this back in the box. We came out of COVID we were running trillion and a half trillion dollar deficits on annual basis, trillion 8 last year. It's got to start coming down on the annual operating loss, which then will help you reduce the growth rate of the budget and the GDP can grow out of it. It's all okay, but that's probably one of the biggest sort of existential risks. And will that affect everybody's bond market? Whether Japan moves From x to 10 basis points or Europe moves around a little bit, if the United States becomes a problem, it's a whole different kettle of fish. And by the way, going back to my first couple years in 2011, the United States had real debt issues, if you remember. And so they were the question of the debt ceiling wasn't lifted and they were shut down and whether they're going to be able to pay the payments. And they got downgraded at that point, the first time they got downgraded. That instability isn't what the US Stands for. And we got to be very mindful.

[C]

But just to round that off, I mean, you articulated all the factors very well. That's a low risk, low risk, low risk.

[A]

But it has to be managed because it's an accreting risk. And so every year you don't deal with it, it becomes a bigger the pipe's getting clogged and at some point explodes.

[B]

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[C]

I want to touch on asset quality, which you've already said is looking pretty stable. One of your peers used that phrase on the earnings calls recently that there's some cockroaches out there. Is it something again that you think is low risk?

[A]

So let's talk about a couple things at play here. First of all, in our company, our charge offs.

In the company were down quarter to quarter and the consumer charge offs of after you come down. But what was all the angst about? If you think about the last five or six years, you went from 2019 where the economy had really grown unfettered in the US from the end of the financial crisis 2010ish straight through to 20 to the pandemic. So 10 years is much longer than the average business thing. So the credit quality just got better and better and better. The unemployment rate got down into three, all that meant. So that was for Zeus to charge our phrase, about 40 odd basis points. We dipped down below that because during COVID people had cash coming in, there's forbearance on loans, people that couldn't spend money so therefore they kept their debt levels low. They're worried about what's going to happen next. So it came way down. And then the question was in 22 ish 23 and then in 24 is as it started rising, would it stop? And what's happened is in 25 for the prime issuers of credit cards or the prime lenders and mortgage, we've seen the consumer side come up and flatten out. For us, it's actually tipped down a little bit. So when people are saying, oh you're back to where you were in 19, you're saying 19 was a 50 year low in charge offs in our company's history. I had somebody go back and they're pulling out ordinary reports trying to find that day. So it's very good credit quality right now. And the only thing that's going to really hit that in the U.S. is going to be unemployment rates. And everybody's around the mid fours, low fours actually that is very low. In pre financial crisis we would have thought five and a half was normal unemployment. So it's pretty constructive. When you go on the commercial side, which the comments are more about and about private capital, it's a different case in that in our business two years ago you would sit here and say, what about this commercial real estate? What's going to happen? The work from home and all this, it all works through the system. So the banks are in very good shape on the commercial side. We test ourselves, we stress test ourselves. The industry's in good shape. What happened is the lending outside the industry is typically higher leverage. And it was new pools and new pools aren't mature. So two things happened. Higher leverage causes people to have a default rate that's anticipated to be higher and since there were new pools of credit, you hadn't seen a lot. You see some, everybody says, oh well stop. That's the debate going on in the private capital generally. And then you had some frauds. And frauds happen in times of stress and people don't set out and say I'm going to do something. And that's what you really watch out for. So what do you do when you see a fraud out there that even if we had no exposure, you say, could that possibly happen here? Go look at every possible outcome in that industry that we have that we wouldn't have the liens right and the collateral right. So that caused a lot of things. But you haven't seen that become a material issue either. Commercial defaults in the banking industry and even outside the bank industry. But the question for the private capitals could be will the returns be there if the default rate gets higher than they anticipated? Right now it's maturing up there. And if it's the defaults in recoveries aren't high enough, the returns in the underlying assets will affect the overall returns and investors will not like the asset class so much.

[C]

That's the debate on the topic of regulation or deregulation in the U.S. obviously it's happening. I guess just an overarching question on it for me, which is, how much is it going to affect your business? Is this tweaking around the edges or is it game changing in a sort of one or two year outlook?

[A]

I'd be careful about the argument about game changing. They're thinking about the way it should be thought of. The concept of materiality is not an unknown concept. It gotten lost in a lot of years. So when you're running a big company like ours, I had regulars sit there and said, well, you had 10 cases that we got to complain about. I said, you realize that goes on a million times a day. And I said, you, you got 10 over the course of six months. And they'd say, yeah, but we got 10, that means those people. And I said, first of all, you're assuming it's right, but secondly, it's not material. And so the idea of materiality and operational process and stuff, we just lost our way on. And I think the new regulatory people are trying to put it back and talking about to give you a recommendation, order, MRA and things that are technical, the banking, you got to have material to the financial condition and that's good. So that's sort of one that's a major resetting of the baseline. And then the second thing is really around capital and liquidity and the way the rules operated, they never actually operate in the way they're intended to. So things like the global systemic buffer and the United States G sib buffer so called was supposed to be indexed and they didn't. So our capital went up by 20% requirements went up with no actual risk. Relative risk to the society and relative. That doesn't sound a lot but when you take us 10% that would be $200 billion more loans we could make. 200 billion loans we could not make because they just neutered more capital by a mathematical calculation that was not indexed against the size of the economy. So that gets complex. But the world out there understand bank of America should have been able to make 200 billion more loans than it otherwise. Think of the competition that creates for credit and that's good for your borrowers. And so that's the thing. So they're fixing all that and it'll be good. But I don't think it's not a lot of it's done yet because a lot of the rules proposed are going through a detailed analysis trying to get it right and I hope that we get it back in the middle and then we get it done right so it sticks to the ribs and then after, no matter who's in power that the rules make sense, that therefore the next group can't just swing them back again.

Back and forth is very hard to deal with.

[C]

So takes up so much time I guess as well I want to touch on the politics. Obviously talked about it as it relates to the industry but I guess stepping back, looking at it from here, obviously I was covering your politics for a long period of time when I was out there, including Trump's first term. Is there too much kissing of the ring, if I put it that way, going on at the moment amongst the most significant business leaders in America towards the administration. I mean there was a high profile dinner recently of Wall street execs at the White House. I think you didn't go to. What's your take on all of that?

[A]

Look, the our company has been around for 250 years. I know that doesn't sound like it's old in the UK with a thousand plus year monarch family, but it's a long time and so we've been there literally since George Washington was president. So we always work with every administration, by the way every Prime Minister in this country. I've worked with every prime minister in other countries in my 15 years, 16 years now think of how many I'VE.

[C]

Worked with, we've had quite a few prime ministers.

[A]

I'll let you say that I can't say it as the American here, but the reality is, so we work with them. And so I think all business are taking that the good news are being heard and you're having a chance to have a dialogue. And so I think that's good. And I think, but we got to make sure the capitalism and the business community works for all of American people or else again, you're going to have this pendulum swing going back and forth. And I think that's one of the challenges the business community has is how do we get the regulation right, how do we get the growth the right way and how do we do things so that we can actually help the current Trump administration be successful in a way that is long term and helps the United States and that's why people are in there now. It looks different than the past because I'm not sure people are getting invited in there before now. It depends on everything. But we work with every administration. We don't work any differently with a Republican or Democrat because the end of day we have one interest. If America's strong, the bank of America is going to be strong.

[C]

You had your investor day relatively recently, the first one in a long time. And I've read all of the coverage since and my reading of the debate that's followed is you've had this very successful strategy of responsible growth. You touched on it from 2014 onwards after a tough time post financial crisis. And you're kind of moving on now to.

Not irresponsible growth, but trying to unleash a bit of the kind of capital and the know how that you've built up.

[B]

Is it the right time to be.

[C]

Doing that after such a long expansion, as it were? And how do you weigh up how much you kind of put your foot down on the pedal.

[A]

So there's every day out there, there's the right loan to make and there's a wrong loan to make. Even though our charge off rate's lower, we'll still charge off $800 million of consumer credit card debt this quarter. $800 million. So you can make good loans today, you can make bad loans today. And so the key is always be running, always be growing, no excuses, winning the market, you gotta grow. That's the first principle. The second is do it with the right risk. And those two things always have to be in balance. And so, and the goal of doing it with the right risk is you can const with through the time. So we have made commercial real estate loans the last few years when people say oh no we do. We also had to liquidate some. And so you're out there in the market being able to participate and grow. So if you look at our organic growth rate really from 15 on in deposits and loans, it's strong relative industry but it's huge. When we grow 2% on a base of $2 trillion in deposits at 5% actually I think we grew last quarter, third quarter, third quarter. It's not a small amount of money. And so it's growing like the 10th largest bank. So this is a lot of work and a lot of team and again a growth and like in the markets business before the pandemic we had like a $650 billion balance sheet on a daily basis. Now we've run over a trillion and so we've invested in these businesses. So the key is but to do it the right way for exactly that reason. The worst thing is if you get it too far extended and have to pull back, that's when you either take a lot more hits or your clients get really mad at you. And so the idea is to do the kinds of work that you can always do and take the right risk whenever you can and you'll get up wrong. Sometimes we get paid to take risk and sometimes you're wrong. But on the other hand you want to minimize that and then they want to have the risk distributed. We made.

30% more last year last third quarter this year than we made last year on an EPS basis. That's pretty good.

[C]

Not bad at all. I know we're nearly out of time. I've got two questions left on AI. Clearly it's led the markets to soar. Where do you stand on whether we're due a big correction or bubble bursting or what?

[A]

I let my experts in the COVID companies do that because I am. Look at the end of the day the big debate is the capacity build out too big and not it'll get used at some point. But the people who are building it have a lot of money and have a view of the war. They're fighting among themselves to have commerce and all that stuff. That's not what AI means to us. What AI means to us is the process improvements enabling humans augment intelligence. So that market will be a different market and that will come with a dessert will come with dinner for a lot of software providers are going to have to provide us the AI part of it. The separate buy will be one thing and so we'll spend a few hundred million dollars on it this upcoming year of new technology, around AI, 250 or so.

For new initiatives. So that's the debate. Is the revenue stream strong enough to support it? But the law that war is being fought by a group of companies that have a lot of money, who are in more of a binary fight about who's going to control your basic interface to the world.

[C]

But you basically say not all of them can be successful. So there's going to be some correction.

[A]

Yeah. And our team, so Chris Isa, who's our strategist, explained it the other day. He said, you know, there's clear winners and there's probably clear people we don't think are going to win as easily. And there's ones in the middle that you'll sort out. But this is going to take his views a few years to figure out.

[C]

As we wrap up, Brian, it's been such a fascinating conversation. I could go on for ages, but we don't really have time to. But I wanted to end with the question that we, you know, we've asked everyone that comes on, which is, you know, relating to the advice you can give them and in particular in business leadership and how you run the company. So what is the overriding piece of advice you do have? Leadership advice in particular for our listeners?

[A]

The two pieces that I always talk about. One is you have to keep learning. You have to be curious. You have to read a lot. So we just had a discussion. You asked a question about AI. How do you learn about that? Get smart people, get outside influences, read about it. And so you just got to be curious. You can never.

Never understand anything. But we can understand is how to learn enough about, to ask questions to understand it. And the second, I think, is a basic principle of any especially large organization like ours, 213,000 people, is you have to think of everything from the customer in and not from the center out. So you can put a lot of smart people in a room and have an idea. The basic leadership is how's a person who's actually been sitting in front of Will Frost as a customer do what they need to do from that idea? The idea is easy. Implementation is hard. And that's in the scale that you do it on a company like bank of America, as you get more and more senior in the company than the amount of people and the less direct contact you have and less direct influence, that's how you have to run it. So be curious and think outside in, not inside out from a customer standpoint.

[C]

Brian, it's been a pleasure to catch up. Great to see you as always. Thank you so much for joining us on the Master Investor Podcast.

[A]

Thank you again.

[C]

The Chairman and CEO of bank of America, Brian Moynihan, there. Next week on the Master Investor Podcast, we'll be joined by Nick Train, the founder of Linsall Train, and of course the manager of the Finsbury Growth and Income Trust. Please do join us for that.

[B]

In the meantime, once again, our thanks to Brian Moynihan.

[A]

Thank you.

[B]

The Master Investor Podcast is sponsored by Interactive Brokers. Please do remember the views expressed in this podcast are for general informational purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes. This podcast is produced by Paradigm Productions and Master Investor limited In association with Birdline Media. If you've enjoyed the show, please do subscribe on YouTube or click follow on your podcast platform and you'll be automatically notified each time a new episode drops.