Bank of America CEO Brian Moynihan Talks Credit Card Cap | Bloomberg Talks

Not exactly.

Good to see you. Howard and I were on a panel yesterday and then, yeah, made the day before yesterday, then lunch today, and actually we're going to do another public venue where we're talking about how you raised the money to do all this investment he was talking about. So he's bullish on America and I watched part of the interview. It sounds like he said that you guys are too.

Look, our research team, one of the best in the world, led by a woman named Candace Browning-Plath, they all come out and they raised their GDP for the US to 2.8% growth for the year. Right before we came to Davos, the world was about 3.5%, they raised it a point. And the important things I think to think about the US is, you think about the travel from last time we were here. Last time we were here we probably had 2.5%, then Liberation Day it drops all the way to 1.5%, and then as the settling in of there's the four primary policies of the Trump administration—trade and tariff, tax, immigration, and deregulation—started settling in. We've raised it back to 2.6% and now 2.8%, and that's bullish. And then underneath it we see what the consumer really does. The consumer spending was strong in the fourth quarter. When I'm talking about that, it's $4.5 trillion our 70 million consumers, which we're blessed to have, put into the economy a year. And for the fourth quarter, that grew about 5% over the 24's fourth quarter, and so far in January it's growing a little faster than that. Now, you got to be careful about two weeks don't make a quarter, but it's staying up there strong.

Well, because of who you are and you know, we've been part owners in this company a long, long time ago and Mike has built a good thing around the markets business. That's what you're always interested even though there's all this other stuff that makes a lot of money. But look, if we look at Jim DeMare who's now co-president of the company, but his team in markets this year had their last quarter had their 15th consecutive quarter of year-over-year growth. They just keep walking up, 10% up for the fourth quarter. If you look at investment banking, which was kind of interesting. So, Matthew Koder and team, you know, early in December, we thought we were about a billion and a half and I went out at a conference and told people that and lo and behold, we ended up a billion 65. And that made 2025 the second best year of investment banking fees in our company's history. And in the end when there was a pandemic when everybody did a lot of financing and next year we think we're bullish because the pipelines are full and the broadening out of the revenue stream into the IPO markets and other things which got started a little bit this year but have been pretty depressed for a while. So that's coming and then deals, you know, just the deal flow people can get deals done. When I was here a couple Davos ago, you know, the regulatory burdens were getting so high that you couldn't honestly tell a client who's trying to do a $5 billion deal to do it because you said if you're going to stabilize your company for 6 months a year trying to get this through and you don't get it through, is that worth it? And now that's sort of off the table and even our industry even though we can't do anything, 6 month approval timelines are back to where they should be.

Yeah. So if you look through the—if you think about last year and think about how bullish people were last year because about the United States and the change in regulatory regime and things like that, that you know, in April things changed and then by the end of the year they changed back. And so I think that had a lot to do with if you look at the consumer and what we see, that spending level is not consistent with people who feel they're threatened in the future and they're spending on all kinds of things. Now, if you look at the research team, the Bank of America Institute, if you look at the work they've done of if you put, you know, three groups of customers, lower income third, middle income third, upper income third, they're all growing, but the middle and upper growing a faster rate. And frankly, that drives a lot of the growth. But if you look at what everybody's spending on, they're spending on going out to eat, they're spending on booking vacations, they're spending on essentials. So, what's the affordability? It's the inflation that people remember. And that is going to take a while for people to kind of put in the rearview mirror because people can remember. It's not too hard to remember five years ago where X cost you, you know, a gallon cost you this, a gallon of gas cost you that, your rent was this, and with that explosion in prices, wages also went up, but the consumer thinks more about the price side. And then the question of will it turn over and get back in sync. And that's what's in those surveys. But if you watch your activity, and I'm a big believer, they'll tell you one thing, watch what they do, and that's what they're doing as of last Friday in the consumer base across 70 million people, which is a pretty good sample size. They're spending a lot and maybe they would spend even more if there was a 10% cap on credit card rates.

So, if you step back, you know, we're all for affordability in financial products. So you guys have followed over the years what we did on overdraft fees taking down by 90% over the course of 15 years. What we did on having a $500 loan account for $5 no interest rate you could borrow emergency loan of $500. 8 million customers have used that over the last several years to give you a sense. So and then we have a no frills credit card no rewards and other stuff that people might attribute that is lower rate. It's not all the way down at that rate. So I think the question is can we figure out a solution where you can avoid the equal and opposite reaction as our friend Lafayette said in the Hamilton song, you know, every action has equal opposite reaction. So the equal and opposite reaction we all talked about last week if you actually make this a policy it can reallocate credit that will slow down spending it will slow down credit availability and that might not be what you're trying to achieve. So can you do something on a go-forward basis on a limited things and even one year if you had to go reshuffle the whole deck that would be pretty interesting and to cause a lot of change in people's views of what they have available for credit. You want people to have available for credit because that gives them the courage to spend. And so we're trying to figure out, we're all working trying to figure out okay given the affordability given the thought processes a way that we can do something that might help without having that equal and opposite reaction because that would not be good. Our point is to get the credit losses down to the point you could afford that rate you actually can never have a charge off and you start to think about who can get credit that's the thing. So we're working hard we're trying to come up with solutions like we are on some of the foreign the proposal around mortgage and 401k usage and trying to think of how you maybe can move the transfer wealth faster by giving people in my age bracket the ability to move a 401k balance to help their kid buy a house or something like that. We threw that out to Howard yesterday. There's these ideas of letting people use their own 401k with less—they can borrow from today, but there's a way you can actually just take a withdraw so they don't have the added debt burden. And then you got to work on the supply side of housing. And you know, the president was interesting. Yes, he's sensitive to the issue if you bring down house prices to make it affordable. Is that the right answer for everybody? But on the other hand, when you have the kind of over demand in some of the cities we work in, 30,000 units in Charlotte, 20,000 Boston, 30, 40,000, 100,000, whatever in New York, you could build a lot before I think it'd have a major impact on the downward trend of prices.