This is Wall Street Week. I'm David Westen, bringing you stories of capitalism. This week, David Gura takes us through the state of the world as investors look forward to the new year, and we learn how generative AI could be used to give us healthy snacks that are just as tasty as the unhealthy kind. But we begin with a story about tenure, not the kind that guarantees you a job, but the kind that you have to earn day after day and year after year. The kind that, looking back after 15 years, may look obvious, but that at the beginning was anything but.
You know, I never really thought about it. I knew I had to be here a substantial time to work with the team and drive the company to what it could be, and that's great. But it never was like, 'I'm going to do this job five years.' I think you have to be where you have the place from where we were, and the place is in great condition.
When Brian Moynihan took over as CEO of Bank of America on January 1st, 2010, the place was definitely not in great condition. It had just gone through a series of mergers, including the one that brought Moynihan to the bank through its acquisition of FleetBoston just six years before.
Before the FleetBoston deal, legacy Bank of America at that point probably had 100,000 employees. FleetBoston had 50, 60,000. Then Merrill had 60,000, we'll say 15,000, 20,000. Countrywide had 40. More people came from the outside. And so one of the things that the team and I had to settle down is what is the culture we want, what are the values.
Forming a single culture from such disparate parts would have been a challenge all by itself, but this all happened as the great financial crisis was in full bloom, putting enormous pressure on all the big banks. A year into his tenure, Moynihan faced a mountain of losses from the subprime mortgage business he had inherited when his predecessor Ken Lewis purchased Countrywide, leading to losses of over $30 billion. Its stock price had fallen nearly 10%. Its price-to-book value was down to 0.45, and the government was putting into place fundamental changes in the banking system overall, including upping the capital requirements for the banks, requirements some doubted Bank of America could meet.
You have a lot ahead of you, and you also have a lot behind you. When we think about what the banking world was, what Bank of America was in 2008, 2009, 2010 when you took the job, it was a different world.
A lot of people don't remember that in 2007 and 2006, actually, when the financial crisis started to come through, the property values started going down, the over-lending on the consumer side became exposed, the ripple effect through some of the CDOs and things like that, the impact on Bear Stearns and Lehman and Merrill and other companies, and the acquisitions that took place in '08. What you had was non-banks that weren't governed by the rules. They were all brought into the banking system, and the net was thrown over, the tent was thrown over a lot bigger group. That's what made it different coming out the other side, because suddenly, you know, the group of my peers were Goldman Sachs, Morgan Stanley, J.P. Morgan, Citi, ourselves, etc. It wasn't just the banks and then, you know, the securities firms over here or the insurance firms over here. And that then required all the rules to change fast and all the reach to change fast and stuff people hadn't thought about. You know, the Volcker Amendment and, you know, this stuff, you know, stuff that people hadn't thought about. And that was because suddenly you took all these people who were governed by different regimes, different rules, threw them in a pot and said, 'We're going to put a tent over it.'
Moynihan's management team at the time knew that the challenges could make or break his new leadership. Anne Finucane served as Chief Marketing and Strategy Officer at Bank of America in 2011 before becoming the vice chair of the bank and chair of its European operations.
This was a moment, if you will, in financial services. We were in a near recession that was the likes of which we had never seen before. And BofA had a million problems. We had issues with regulators, we had issues with analysts, we had issues with clients and customers. Elected officials were questioning our viability, and, you know, the stock price was very low and there were questions about the company in general. And this is what Brian Moynihan stepped into. And he stepped into it, I have to say, eyes wide open because he had done almost every executive job in the company. So he was prepared. I think he was prepared in a way almost no one else could have been. And he was also willing and he was certainly able. So this was a moment for this company, and he assembled a crew around him, an executive management team, and we were going to work 24/7 for what turned out to be at least a few years.
And we recovered. To bring his bank back from the brink, Moynihan focused on what was working, where it could win, and what it could do without, cutting billions in expenses and tens of thousands of jobs.
We got rid of $300 billion in assets, 50 operating businesses. We're down to operating efficiently, made sense, and we said, 'Now we got to grow.' And so the first part of the response was, 'Grow, no excuses.' But what you had in the base was these eight lines of business. We talk about, you have Jack Welch or somebody say you got to be top one, two, three in the business. If we were top one, two, three in all the businesses across the eight lines of business, but what we had is a lot of other stuff that was not interesting. And then we had the regulatory issues and then we had the mortgage issues. So we had to just push all that away. But all those acquisitions left us with a franchise that is a top consumer banking franchise, the top wealth manager franchise, the top commercial banker in the United States, a global large corporate banker, and a global markets business that we were able then to start to invest in growing them organically. We had to decide what we were going to do in terms of everything from customer care, if you will, employee morale, dealing with elected officials, dealing with regulators, and then what businesses we were going to lean in on and those that we were going to perhaps exit.
So Brian has got a bit of the engineer in him in that he is an exacting person. We laid out every line of business, we laid out every geography we were in. When you look back on it, you can be a bit nostalgic, but at the moment it was very difficult. And he was so determined. He's a very good leader because he's calm and he's thorough and he's also human. And what I mean by that is he got when everybody was kind of frazzled and we just kept at it. But there was a camaraderie around it that I think would be maybe unexpected.
Even as Moynihan and his team were rebuilding Bank of America from the ground up, concerns about the bank led others to make sure its problems didn't further risk the entire financial system, leading the government to insist Bank of America and the other money center banks take large infusions of cash investments, and even for mega investor Warren Buffett to pitch in with a $5 billion investment.
So in 2011, August, when the United States had been downgraded, was close to defaulting at that point, the U.S. was short and didn't have enough money and was starting to run out of money, we were also getting knocked around at the same time. And he came in in August and said, 'Here's $5 billion. I know you don't need it, but it'll stabilize.' And the 250,000-plus people we had at that time came to work the next day and said, 'The smartest investor put $5 billion on a company in 24 hours.' That was an interesting moment. At that point, we had actually recovered enough that we had sufficient capital. And by the way, he knew that. And in fact, that's what he said to Brian, 'I know it, that's why I'm investing.' It helped us enormously with the analyst community and elected officials and even our own employees. If Warren Buffett was investing in us, it was such a boost of confidence that we didn't maybe otherwise have at the point. So it was reputationally really beneficial.
Under Moynihan, Bank of America has not only survived, it has thrived, earning over $15 billion a year over each of the last 10 years, increasing its assets from 2.3 to 3.3 trillion, and its share price from $13 to $44. And that price-to-book ratio, it's gone from 0.45 to over 1.25. But even as it has come back strong, it has not grown as fast as its biggest rival, J.P. Morgan, whose share price has led the pack of the big banks, while Bank of America remains somewhere in the middle. Some have suggested that Moynihan's steadfast commitment to responsible growth may have held it back. Did you leave any money on the table because of the responsible part? And does responsible growth look the same today in 2025 as it did in 2010?
So one of the things we always talk to our teammates about is responsible growth was a call to growth, not a call to be responsible. We were already pretty responsible, I think, from '10 to '15. And the idea was we'd done all the work, we reshaped the company, we said, 'Now we got to grow.' And so that you never disrupt the company's ability to keep going. And we have businesses which offset each other. So the markets business has done well in the interest rate environment change, now the consumer and global banking business will kick in. But the idea of responsible growth is that you got to grow, no excuses. You got to win in a marketplace. Responsible growth is like a dual thought, if you will. Demonstrating responsibility, which is sort of an extension of good governance, and also the contract you make with your clients and your employees that you're going to be responsible to them first and foremost all along the way. And remember now where we came from. And then the second thing was that we would grow. So responsible growth, I mean, responsible growth can be a modifier to growth, but it's actually two thoughts. We will be responsible in all the ways that clients and regulators and the community would want you to be, and we will grow, maybe more conservatively than others. But I just repeat again, BofA has had 10 years of $15 billion-plus net income consistently.
Where is Bank of America today? Give us a sense of how you grade yourself.
Well, we have great potential. But there's a phrase that Jim Collins, a great business writer, uses, and what I say, so I got a lot of people asking me, I just had our market presence on, you know, what about 15 years? What are you proud of? What do you do? I said, 'It's a nice start.' What this company has ahead of us is a lot because of what we've done for the last 200 years, but what we've done in the last 15 years as a team.
As you look forward to the next 15 years, what do you think that may hold for Bank of America, and what kind of person would need to lead it going forward as opposed to what's led in the past?
I think if you look ahead, the change will come from the data, the technology, the ability to transmit that data, the compute power, the ability to imitate a human's thinking. Those are ahead of us. That implication of voice recognition, computational power, algorithmic analysis, mathematical analysis combined with an understanding how the humans can drive it makes the next 15 years a whole another sea change in how we operate. And the person that will be operating that has to be that wise and that current, that balanced and that aggressive. And that's the key, which is how do you push.
As Moynihan positions Bank of America for the next 15 years, one of his priorities is to ensure that it is both a global bank and a local one, that it is thoroughly integrated into the communities it serves.
The whole idea was that we would set up a situation where you'd have top-line executives, but you'd also have market presidents. And the idea behind that was that market president would have a beat on that community, that economy, how we were going to contribute to it, and by the way, how we were going to get our fair share of business from that community. So he's been very focused, and he takes it all the way down to the community level to make sure that not only is the reputation good, but the numbers are good.
Coming up, having your cake and eating it too, literally. The promise of AI for healthy snack foods that taste just as good as the other kind. That's next on Wall Street Week.
This is a story about having it all: our favorite snack food, our trim figure, our healthy body, and the health of the planet as well, all thanks to the wonders of generative AI, or at least that's the plan. Why does the world need another snack food? There are a lot of them out there.
The world needs another snack food because the world needs a healthy snack food. They need a lot of healthy snack foods.
Harold Schmidtz spent decades at Mars, the company responsible for some of the most popular snacks in the world. He is now a founding partner of the venture capital firm The March Group, targeting the $700 billion global snack market, putting artificial intelligence at the center of snack food companies like Rivals. What does artificial intelligence add to the recipe?
What AI does is it actually makes this incredibly complex mixture of chemistry, biochemistry that then goes through food processing, it actually makes it understandable. So product development can happen exponentially faster in order to create exponentially better products that are more cost-effective for consumers in the marketplace.
If Schmidtz succeeds in making healthier snacks, it couldn't come at a better time. Studies show people continue to eat more snack food even as they struggle with weight gains that affect their health.
Consumers, for whatever reason, have less time for traditional meals as we think about them, and so snack foods play a really important role in filling these, you know, dietary occasions. At the same time, obesity is increasing at alarming rates.
Are those two things connected?
So it is quite possible they are connected. What we certainly know is that obesity is high and it has been increasing, and diabetes, Type 2 diabetes specifically, it's been called a global epidemic, is high and it has been increasing. It is really, really interesting that for the first time in history, thanks to the pharmaceutical industry, we actually see hints that this curve is bending downwards.
J.P. Morgan predicts that by 2030, 9% of the U.S. population, 30 million Americans, will be on GLP-1 drugs like Ozempic and Wegovy. When you talk about the GLP-1s, Wegovy or something, those sort of things, we know about, they do affect demand, do they not? And that sounds like it wouldn't be good for somebody in the snack food business if people are eating less snacks. That's not good.
Now, for the first time in human history, we actually have a class of pharmaceuticals that's relatively safe and it causes a decrease in food consumption. So in terms of demand, consumer demand will go down for certain types of foods that are less healthy, but consumer demand is going to go up for foods that are more healthy. And frankly, it's pretty clear from a business context that there's a gap in the marketplace for these healthy foods.
Seeking healthy foods to fill this gap in the marketplace became a quest for UC Davis Computer Science Professor Ilias Tagkopoulos, not because it was his job, but because of his experience with his son, who had to drop out of school due to a debilitating condition. Doctors had no answers, so he looked at the food his son was eating.
We consulted with different nutritionists, we designed the diet, and within nine days my son was cured. And he's now 15, he never had this issue again. And I said, 'Okay, I'm sold. That's it. Everything we do in PIPA is all about food.'
Tagkopoulos's company, PIPA, targets uses of AI for food, working with a range of companies from the largest consumer packaged goods companies to startups like Rivals, where the focus is on fiber and protein over the savory snacks full of sugar, fat, and starch.
Food is something that's underserved in terms of AI. We are at the precipice of something really big. We have a need to change the paradigm and we have to be more sustainable. Going to our health and for a healthy society, we need to generate food that can keep us healthy in the long term.
Does the food industry, particularly some of the large food companies, they're very, very big, do they know they're on the brink of something really big? Do they realize that, hey, you know what, like maybe like there's a revolution that's coming? If I am a food company and I want to develop a new food, what does AI allow me to do that otherwise I could not do?
Yeah, excellent question. So what AI does is figuring out where you should focus. So imagine having all these variables, all these parameters, I mean, where do you start and what do you explore based on the velocity you have for your experiments, your formulations, or doing and tasting, right? So what the AI can do is quickly and directly, of course, make you focus on what matters.
