Underneath this you had 285,000 people who came to work every day, 40, 50 million clients who depended on us, tens of thousands of businesses, trading partners, investment banking clients, and they all depended on this company being great because this was the Bank of America. It had a meaningful amount of America involved in it. And so you had to keep focused on that while you're focused on cleaning up and dealing with the issues of moments.
Welcome to Gray Matter. I'm Dean Kelly, founder, chairman, and CEO of Concello. I've spent the last 30 plus years advising the CEOs who are leading the world's top companies. If there's one thing I've learned in that time, the best leaders think differently. That wiring, that gray matter, separates the truly exceptional leaders from everyone else. Understanding it is what allows us at Canelo to help the best in the world be even better. This podcast exists because the most accomplished leaders agreed to sit down and talk about something they rarely discuss publicly, how their minds actually work.
When Brian Moynihan became CEO of Bank of America, the country was still reeling from the 2008 financial crisis. Bank of America, with hundreds of thousands of employees and millions of clients, stood at the center of it all. Chosen to lead was Moynihan, a lawyer from Ohio who had worked his way through nearly every division of the firm. His first act was to refocus the business on what it did best. Over the 15 years that followed, he led a digital reinvention that fundamentally changed how the bank served its clients, drove customer satisfaction to record levels, and built an institution that today looks fundamentally different from the one he inherited. Through it all, his steadiness and clear sense of purpose turned one of the most pressured moments in American banking into one of its most consequential periods of transformation. This is gray matter. Brian Moynihan, welcome to Gray Matter.
It's great to be here, Declan. Good to see you.
Thanks for taking the time. I was just in your office a little while ago. Thank you for showing me around. And I noticed in the office there is a picture of Churchill. And I couldn't help but think without comparing you to Churchill that both of you are models in overcoming adversity and doing things that people thought were not possible to do. What's the relationship with Churchill? What are your thoughts about him? And I know you're a student of history.
I'm a student of American history. I spent a lot of time studying early America. But that picture was actually given to me by a teammate who said, you know, as we were thinking of like 2013, 2014, we sort of had moved through a lot of work after the financial crisis to clean up the company. He said, you know, you're again not comparing you to a person who was defending Britain to the nth degree in World War II or anything like that, but basically saying, you know, you remind me because you stay calm in times of stress. You focus on the objectives, etc. And so he gave it to me. He said, you know, put this in your office. And a lot of people think that I put that in my office. Actually, I put it up on the wall because the fellow gave it to me. As I think about and learn more about Churchill, the admiration is he wasn't always perfect. He made some mistakes. His ability to engage with people, his ability to think bottom up. But there are great lines. One of the things that we do is we do a lot with the arts. And one of the great lines attributed to Churchill in the height of the bombing when the red box came in from the checker and people said, 'Why are we funding the arts?' He said, 'Well, if we're not going to fund the arts, what are we fighting for?' And so I've used that to say how important the arts are in times of stress, whether it was in the post financial crisis or during COVID and other things. You got to keep funding the arts. But that showed the well-roundedness of his thought process, which is it's about society, not about winning a battle. It's about a greater good and a common will and a way to have allies come together and defeat evil. Not about a single battle, single airplane, a single bomb and stuff. So he was remarkable that way.
When people ask me about you I always say two or three things. One, honesty. Two, low ego. And three, an ability to make things that are very complicated very simple. I think it exemplified itself through the way that you were appointed on the 1st of January on 2010 and walked in to handle what was a very, very, very difficult situation. Most people 15 years ago don't remember that. What was it like for you?
Well, the key was underneath this you had 285,000 people who came to work every day. You have 40, 50 million clients who depended on us. Tens of thousands of businesses, trading partners, investment banking clients, corporately, and they all depended on this company being great because this was the Bank of America. It was represented. It had a meaningful amount of America involved in it. And so you had to keep focused on that while you're focused on cleaning up and dealing with the issues of the moment. So I think when that mantle of leadership drops on your shoulder saying you have this 200 plus year old institution, you have this institution that carries in its hands the lives of so many people, you know, it's really a weighty matter. On the other hand, you have a talented team and you say, 'Let's get to work and let's be pragmatic. We got to solve A before we solve B before we solve C. We can't be figuring out the theoretical. We have to be focused on the pragmatic.' And so it was an honor to take over the leadership. It was an honor to have a team that I knew we could depend on. But the big honor was to say, you know, 285,000 people, you know, we can do great things. Let's just go do them and then clean away the crap and go on.
Grew up in Ohio, sixth of eight kids. Your dad was a scientist at DuPont. Your mom was a homemaker who went back to work at 55. And you know, having grown up in an Irish family, you know, being six of eight can't have been easy, but also you learned a lot that made you who you are as a person. What was it like? What was your childhood like growing up? And I know your brothers are doctors and you're committed to Haiti and Africa and all the things you've done as a family.
They're a group of talented people, my parents and my brothers and sisters. It was a big family, but it was close. We didn't have a lot of extra stuff. We all took vacations together, got 10 people in the station wagon, drove up to the lake, so to speak, and things like that. But it was intellectually challenging. I mean, believe me, if you weren't exactly right, you got called out and other people are very confident they were right. So, even if you knew they were wrong, you had to artfully figure out how to convince them of that fact. About facts, not about opinions, but about facts. So, it was good. It was a lot of fun. You could always get a game going of something because whether it was a board game or a car game or a sports game and when they brought relatives or friends or whatever, you always had a crowd. So, I was used to being around a lot of people. I never slept in my own room till I was like 22 probably. And you know, I always had even when everybody moved out except for one brother of mine, he moved in with me because he was afraid to be alone type of thing. So, it was a great upbringing, but it was very, you know, intellectually rigorous and we did everything. And we paid the house ourselves and stuff like that, but it was intellectually rigorous because they were also analytically and science-oriented. When I grew up, my grandfather was a lawyer and he was a small town lawyer in upstate New York, a town called Batavia. He became a judge and he was that kind of lawyer. So he did everything and then saw everything as a judge. My dad's dad was a banker and my dad's mom was a banker and they both worked in the same bank which we now own. It's kind of an interesting story. So he was the cashier treasurer and she was a teller. And so I worked in small towns but I always grew up thinking I was a lawyer but I thought I was going to be a lawyer like F. Lee Bailey was at the time defending this or in the great sort of criminal law out in the 70s and Perry Mason was on TV and that's what a lawyer was. And then I went to practice law and I became a corporate lawyer because there wasn't a lot of opportunity to defend criminals in big law firms and I needed to get a job at a big law firm east to make some money, pay off my debts. And so I changed to corporate law more out of pragmatism and the people who I worked with I liked in the corporate side. But it was the intellectual training, the rigor of being a lawyer, the discipline, the appreciation of precision of word, precision of writing, to have an intellectual argument to get to an answer, being able to challenge that you're wrong or right. Law puts that in your brain no matter what. And you know, many people in business were lawyers. I haven't practiced in nine years, was a little different. A lot of people just went into business, but they all look back and say that training I got for the intellectual curiosity, thinking, and by the way when a teacher says you got it wrong, it just hammers you. That sort of okay, I got to be able to defend my turf is a very good training.
I remember reading somewhere about Terry Murray at Fleet when you decided to go there and you said that meeting sort of changed your life. You're one of very few people who have pivoted from the law to becoming a CEO of a big bank, if not the only one. How difficult was it?
I'd gone to Providence to practice law and got married with my wife who was also a lawyer. I become a partner. You know, I'm making some decent money. We have our first child. We're living, you bought a house. The things that you do at 30ish years old. And then I'm working a lot with this client called Fleet that Terry runs and a fellow named Jay Sarles and Bill Mutro is the general counsel. And you know, Terry comes told Bill Mutro to come talk to me and he said to Bill, 'He's too smart to be a lawyer. Why don't you get him in here and we'll have him do something else.' It was luck and you got to have a return on luck. You got to make a decision. So there I am making good money, have a kid, have a house. I didn't know whether I'd be worth the darn on this side. I knew what I was going to do because I worked with that client. But you had no idea whether you could make that transition from practicing law with a small group of people to where you'd start managing people. You just had to take the risk. Everybody gets the chances and I was honored that Terry asked me to do it and I started that transition to managing people. Started with people who were like me, 25, you know, MBAs, business school, business-oriented people doing models and M&A and acquisitions and merger integration. But then it moved when I to groups of people that that transaction is actually bigger. It's easy to manage very intellectually driven people because they all sort of feel the same. When you start to manage people with different motivations, different ages, you know, people twice your age, that's where you have to start to really think about the science of management.
When you were offered the opportunity to go and run Bank of America, I read somewhere that you went and met the board and brought one page with you at the end of the day that you handed them and said, 'This is my strategy for the bank.' What was on that page and how much of it actually came true? And who on earth goes into a job that big and hands them one page and pulls it off?
Yeah. Well, I think there are two parts to the one page. They knew you knew the company because, you know, frankly I'd run different divisions, had been around for a while. But the real question the board had to assess is could you, did you know what to do and could you get after it fast enough. And the discussion with them was we have this list of stuff we have to get out of so the good stuff can shine through and we have to do both at once. And the page you're talking about is all the things I said that weren't core to what we did that had just accumulated. Remember from 2003 fall when Bank of America announced the deal for FleetBoston to January 1, 2009, the day we closed Merrill, we did US Trust, LaSalle Bank, Merrill Lynch, FleetBoston, MBNA, Countrywide. Just think of how much stuff came in. And so channeling that, that one piece of paper was we got to get out of all this because it's hurting, holding us back and we got to focus on this. And you know, the board saw it and they chose me literally 16 years ago, but we came out guns blaring. We knew exactly. So we chopped and channeled this and then took off on that. And it took a little while because quite frankly, you know, the rules got changed around us by a new administration, started saying, 'Well, let's reinvent what really happened and hold you accountable for stuff we shouldn't have been held accountable.' But that's water in the dam. And we had to get through that. But as we came out of that, but it was with the board, it was really we have these great assets. We have to simplify it and run those and those have to start being successful day one even though all this other stuff will be the discussion for a while.
People forget because it was so long ago, 15 years, a lifetime in our world now, but you know, dealing with Countrywide, dealing with the whole Merrill Lynch acquisition, dealing with all the things you had to do. I remember one of the people on the House Investigations Committee said, 'I'm not sure you're the right guy to be leading this bank.' Well, he was proven right, wasn't he?
He said one more word sent a little more directly and actually subsequent to that he became a fan because of the work we did in the mortgages in Prince George's County or whatever it was in Maryland. But he lit me up and in towns and in fields they lit me up. And they lit me up in a way because they wanted to focus our anger on a company. I happened to be the only person. We had two directors and a former employee. I was the person there. That's a lesson. So a lot of people said you testified in front of Congress. I said I did it before I was CEO and so I got a chance to do it one extra time than my peers because I did it once before I became CEO and now I've done it as CEO. You just had to keep your eye on 285,000 people, millions of clients, top talent, top businesses across all the different dimensions. It's all there. We just have to get all that behind us. And you know, it was an interesting trail because people remember Countrywide, but that wasn't the issue in 2008. It was Merrill had a hole in his balance sheet and we had to tell them we weren't going to do the deal. And you know, the Fed got mad at us. The Fed said they're going to fire everybody unless you do the deal and we're going to remove the board and management. All these things that people think only have happened recently. That all happened. They told us they had this, they basically said you got to change the whole board out and it's on the board member's state and they changed out, you know, that happened in '09 and under my predecessor and ultimately left at the end of that year. But you know, there was just massive change. I mean, we were fighting the Countrywide and mortgage and other issues really didn't become more present till you got into 2010, 2011 when delinquencies and things and the foreclosures and modifications and all the programs people tried to put in to mitigate the hurt to individual consumers, that was really later. People forget there's a lot more stuff with Lehman and Merrill and all the different stuff going on in '08 and '09 that we also had to deal with.
Our mutual friend Tom Brady often talks about, you know, in moments of epic importance, how he's able to still his mind in silence and focus and go into a bubble. Take us into your mind at the time to be you when you're alone in that moment when you go home at night when you have to think about the extremity of what you're dealing with. What was it like to be you just at that moment?
Two things. One, watching Tom for years and as a Patriots fan I watched a lot of Tom's success and you see that in him and other people, the ability that in times when you should be speeding up to slow down, right? And you know what he talks about and what other people talked about him and what you even observe is it seems like the whole game's going slow motion to him and everybody else is running frenetically around him. And I think that aspect, that's keep calm and carry on from Churchill. It's the same. The point I've always said is you can waste a lot of energy running around in circles or you can sit there and pull down. And at times of stress whether it's that kind of stress or whether it's the stress of other types of activity, management's job is to be a sponge to absorb the energy, absorb the emotion and just hold it. Not to explain to people you ought to feel better, not to explain you ought to feel different because they're not, that's not right, that's what they feel. You have to absorb that. And then the second thing is you have to be like a duck on a pond going across smoothly across the top, underneath you're frenetic and doing stuff. You can never show that because everybody's looking to you to say, well if he's worried, if the management team's worried, shouldn't we be worried? So, you have to calm the place down and then you have to be true to the purpose of the group. And so, in the middle of the mess, I get lots of books sent to me. Book came in and it was, you know, leading for purpose in times of things. And so, you open up and like all good business books, you can kind of read the first chapter or two and get it. And, you know, you said, you know, that's a simple statement. We have to tell people why we're here. Why do we? So, we had to make sure that people focused on why we're here, not what to do. Because why we're here, we keep them going. Even though the what could be changing and have a frenetic pace. So that ability to calm, to try to be calm and people often say that about our management team and me that you know this stuff and it's not because you sat there and studied it. It has to be natural and it has to be the way you think about problems is how do you bring the energy down and then get stuff done and then you can bring the energy up for success as opposed to having the energy be about the problem.
But you really do focus on as a person and also in terms of how you run the bank today, this low to zero ego approach. I know hundreds of people who work here and work for you. Every single one of them says the same thing. When you introduce the philosophy and the doctrine of responsible growth to fix the company that was at the center of it, right? Your sort of no-nonsense philosophy.
It's not about the ego. It's about the only way to be successful is to take advantage of the power we have for the 200,000 plus people. Not any one of them. There's nothing I can do to lift this company or do something. There's something I can do to help 285,000 people do it and they can help each other and they can help. So, it's an operational necessity when you're in large scale organizations, but it's also that you have the beauty of a scrum. It's that eight people coming together that you literally lift their weight off the ground and it's because of that they're as a team. If any one person gives a little bit, the whole thing goes apart and people get hurt, frankly. And so it's just a miracle thing. So it's not about subordinating your ego or something like that. We all have egos. We all want to be successful and stuff. It's more about the only way to get things done is to activate the collective energy at a level that you can't imagine.
Speaking of that, I think people remember endorsements back in the day. And then we'll talk about the present and the future. Back in the day, Buffett showed up and said, 'I want to invest in this company.' He's not an altruist. He's a hard-nosed investor. At the end of the day, that was a massive vote of confidence in you. May not have felt like it at the time, but at the end of the day, the sustained investment that he's had in the company and all the various different things that he said about you and the leadership, smartest investor in the history of the world, that must have been gratifying as a vote of confidence by everybody in you and the leadership team.
Yeah. No, at that time the US was getting downgraded for the first time. The government was shutting down, a debt ceiling, all these things were going on. The US was out of money literally. The stock markets were getting banged around, we were getting banged around specifically because of the litigation risk which was not near what people said and etc. And he called me up and said, 'I want to provide a billion dollars.' He said, 'Well, we don't need the money.' He goes, 'I know that, I wouldn't be calling. What you need is a vote of confidence.' And we knew that. We agreed with that. And that's why we did the deal with him was as much about the confidence than the capital. The capital was, you know, something. But the confidence, the fact that that investor said, 'I will put this money in.' And literally in 24 hours later, we had the deal was done. 285,000 people came back to work the next day and said, 'The smartest investor in the world believes this company has a lot of upside. Let's go to work.' And at $5 and whatever we were at that time to now, you could have bought the common that day and you would have made as much money as he did. Every time we got a purged stock, it got dividends. Matter of fact, he bought the common stock at a 20% premium. So if you bought the common that day, you did fabulously well. And it was just an injection of confidence. And from then on, we've gone from I think we were $5.70 at the time, $5.70 a share, and today we're $55ish. So it's been okay for him and okay for the shareholder. But it was about confidence. And he's a great investor and you know, at 95, you know, haven't seen him recently, he's as curious, as intellectual, driven, still wants another big deal and he always says bring me an elephant, bring me something big, that's what he challenges for. But he's been a great support for our company but it came from that observation this is the best country, the best bank, the best position, it's going to work, it may be bumpy and they need confidence and here it is. That's what he told me he did. And then on the other hand we looked at it and we actually had, he came to us, we didn't outreach to him but believe me when he came we had thought about the question. And so the board we went like that and next morning we signed a deal with him. He called at 11:00 and 8:00 the next morning the deal was done.
When you think about the transformation of the bank, I think one of the things that again you haven't talked a lot about but you've talked about in your investor day and all the other things that you've done recently, the digital transformation of this institution has been quite extraordinary. Yet you're a person who is as predictable as a Swiss clock in the fundamentals of the business and somewhat of a traditionalist I would say because you never veer from those principles as we just talked about. The world is changing so quickly with AI and everything else. You know, the digital, AI assistant, everything else that you've done, where do you see all this going in the future of banking and future of Bank of America as it relates to transformation digitally?
Notions in 2011 or 2012 that we would end up with a lot less branches, a lot less people, and a lot more customers, and it would all be driven by digital. But that notion comes from 10 or 15 years of practice built up at that time, and even back to computer banking and dial-up internet and everything 30 years ago. So you saw it coming, but what you really saw is the customers were adopting at a rate. And so from 2010 on, we have half as many people working in the consumer business, and the business is probably twice or three times bigger. The numbers of transactions are through the roof, and the customer scores are up by 20 points on a top-two-point scale, and the employee scores. So the churn in the business is way down, and the net growth is a lot higher. So it all worked. If I said to people this is all what's going to happen, first of all, other people would catch on earlier and be able to imitate it. And secondly, it sounds kind of fanciful. And so that's the principles you have to run it, which is every day you're driving against a very strategic, out-there view driven by a lot of talented teammates who come up with it, not me, it's their job. But what you're doing is driving relentlessly. So if you think about what AI does, it allows a company to change another step that wasn't possible. So if you look at that work and you said 285,000 people to 203,000 people at the low point, and then you back up to about 213,000 when that first chunk you went down all those people, then you invested a lot more in relationship managers and people on the front line, and computer programmers are developing more technology faster. So the actual headcount related to operations and consumer and stuff kept coming down during that time. It's just you're investing faster. What you won't see is did you use some tool to change the legal department dramatically? Did you use some tool to change the finance team dramatically? Did you use some tool to change the audit team dramatically? And the answer is no. Because the tools, yes, you're always applying models and machine learning and operational process simplification, all this stuff. But what you didn't have is something that can help people think faster. And that's what AI does. And so what we've seen is our audit team has already applied it, and they've been able to build a prompt library. And that prompt can help them start audits faster, and they know they can reduce their headcount. So now we have a tool that will approach other parts of the company differently, which is fabulous, but it still has to have people. It still has to be right. The data has to be right. The process has to be right. The controls have to be. It's a lot harder than people think. Everybody said, 'Well, I just go on ChatGPT or I just go on all the other models and I do some search and it comes up with an answer.' I said, 'Yeah, but you're not making a determination whether a person's going to financially be able to fulfill their dreams and own a house or not. You're not actually making the decision about whether this trading position's going to work out or not.' So if you're taking that kind of risk, you have to be a lot more perfectly right. That means the data has to be perfect. That's $3 billion we spend. That means your operational processes have to be understood. That's the process and work we have with 30,000 controls, and then you figure out how to engineer the process. And so that's why it's going to be slower. Is it unbelievably different? Yes, because it applies to different places. Is it going to take longer? Yes. Then there's a whole other question about how consumers are going to use it for their day-to-day lives, which we'll be adapting to over time. That's a second order because frankly consumers are much slower changing than people think. But this gives the consumer a tool to interface with people through an agent that they didn't have before. So now everybody has—we have Erica, which is a virtual assistant for people. Now every person has their own virtual assistant. How that interfaces to a company, that's going to be an interesting question. So there's a lot of work to do. It's got a potential that no other technology so far has had. But I'm sure we've said that about every technology that has come up. Honestly, the predictions that this work or that work, there won't be any work, we'll all be sitting around like in the movie 'WALL-E' and stuff like that. I'm not sure any of that's true, but the reality is that it will have a profound impact. But the question has got to be done right. And the minute you make a mistake, you got to go back to square one. That's what people—we have to think about what we challenge ourselves. So, we have to get it done right. And it has to be perfect on the other side because people won't tolerate imperfections when it comes to what we're doing with them. They will tolerate it if the term paper reference is not quite right. That may not be the best thing for your son or something like that. It's not a life or death thing. You know, get the term paper wrong in the old days. But the question is if I turn down the home loan or make a mistake and we lose a billion dollars on something, those are real issues that we got to make sure we don't do.
