Keynote Address: Brian Moynihan | #MPC23

Please welcome chair of the board and chief executive officer of Bank of America, Brian Moynihan.

Good afternoon. It's an honor to be here, great to be here on the island at a historic location for this important conference. And listening to the panel before us, the important issues they raise will be among the many rays today. It's obviously the first time I've arrived at an event like this in a horse-drawn carriage, so that's a little different, after a ferry ride and after a plane ride. So I want to thank the Detroit Regional Chamber for hosting the event and for the invitation to join all of you. I want to thank the Detroit Regional Chamber CEO Sandy Burrow and the choice of the Issues Conference. And my teammate at Bank of America, Matthew Elliott — Matt is our president of Michigan and he leads the teammates across this great state, more than 1,500 of them, who look to help all of you be successful in your business. So I also want to thank the Business Leaders of Michigan who sponsored this segment and the broader conference. We appreciate business communities like that around the country and around the world who help keep states economically healthy and work on behalf of Michigan to maintain its economic health. Our job is to help people live their financial lives, whether it's here in Michigan or around the world. Preparing to join you today, I saw the theme of the conference — and you heard it in the last panel — on the power of 'and'. So Matt Elliott exercised his prerogative to help shape the conference, as the president gets to do. But he also did it for a good reason. The power of 'and' is a great way to think about how the private and public sector joined together, along with other elements of society, can help us work to ensure that capitalism continues to deliver the results that we all need and want. But Matt also knows this is how we run our company. For a public company like ours, many talk about a false choice — and some embrace it — about what we're here to do. People on one side will say we're only here to produce profits and nothing else. People on the other side will say we're only here to produce perfect purpose and nothing else. But we don't believe companies need to make that false choice. They have to produce for their shareholders and for society. These theories have been debated along many avenues, including from an intellectual basis, from a theoretical basis, with your stakeholder capitalism theories of Klaus Schwab versus the shareholder primacy theories of Milton Friedman. In fact, at Bank of America, we believe we have to do both: we have to deliver for our shareholders and for society. The great business writer Jim Collins, who wrote a series of books about companies and what made them great, wrote in 1996 the book 'Built to Last'. He wrote that companies need not make the false choice, need not fall prey to the tyranny of 'or', but they need to embrace the genius of the 'and'. That means a company, to be built to last, has to deliver both profits and purpose. So that's how we run our company. We use the words 'responsible growth' to identify it. It's enabled Bank of America to be one of the four companies in America to earn $15 billion or more for the last eight years. It shows up again in the first quarter: we had record operating income. At the same time, in the first quarter, we delivered record purpose. We direct our talent, our innovation, our resources of our company, of capitalism, to help our clients and partners in the public sector achieve their goals. And we invest in the partners and programs in our local markets to help create economic opportunity and prosperity in undeserved and underserved communities where the needs can be great. But at the core of this is the conviction that capitalism delivers opportunity for our clients, our teammates, our communities, and for our shareholders. So Bank of America's advertising line is 'What would you like the power to do?' That's how we position our company. We ask that question of clients, teammates, communities, shareholders, and others, and they give us an answer, and then we try to deliver one. We are here to serve, and if we do that well, we'll be successful because all of you are successful. So the question is: what if you ask the world, 'What would you like the power to do?' That isn't a theoretical question. In fact, in 2015, the United Nations did that. In that year, 190 countries signed the Sustainable Development Goals. Society wants sustainable progress, sustainable development that is fair for all. But like all good things, that aspiration costs a lot of money. The SDGs cost $6 trillion per year to implement. So how do you pay for that? A lot of people point to charity. Well, charity and foundations have a lot of money, but it's not enough. There's about $1.25 trillion of charity given away a year. That's only part of the goal. Governments run deficits at the national level and struggle to maintain balance at the state and local levels. Your state is trying to maintain that balance, so they don't have extra money to spend. And in fact, we are witness to debate at the federal level about the ability to raise a debt cap for another huge annual operating deficit. We need to get that through and approved so we can go forward in the United States. So who has the money to make the SDGs happen, to do what societies want to do? Companies do. The investors in those companies do. Capitalism does. So if we think about our company, we do $360 million a year in charitable giving. We did $22 million in Michigan alone in the last five years. That is wonderful; it does wonderful work with our partner NGOs and wonderful beneficiaries. But we have $60 billion-plus in total expenses. We have a $3.4 trillion balance sheet. We have $4 trillion in investment assets. We have $90 billion in revenue, and we had $8 billion in after-tax income last quarter. So how do we deploy all that to help deliver for society, deliver on the SDGs, deliver sustainable growth? We do that through our $1 trillion financing commitment for the just energy transition over 10 years, of which we're two years into and $400 billion into. We do it through the $2 billion a year we spend with minority and women-owned vendors. We do it through the $5 billion we invest in affordable housing every year. We do that through our pay and benefits, starting at $22 an hour for employees at a starting wage. We do that through hiring 10,000 teammates from low- and moderate-income neighborhoods over five years, and now redoubling that effort to do 10,000 more. We do it by hiring 10,000 veterans over five years to help those families have the opportunity to re-enter society and join Bank of America. It's the way we bring our entire resource — our balance sheet, our employment, our spending — all to the task. Now imagine the expense base of all the operating companies represented on this island today, of all the operating companies around the world, of all the balance sheets of all the banks, of all the investment houses and their assets under management, all deployed and aligned to deliver for society while delivering on the genius of the 'and' for the shareholders. So we just have to make sure those things get aligned. If you take the talent and innovation that the private sector can bring and back it with a profit-making, sustainable business model, that represents a lot of money which eclipses $6 trillion a year easily. So capitalism isn't the only system that can do it, but it's really the only hope to accomplish these things. So you see that in Michigan: the great U.S. auto manufacturers, who have a long history here, and their suppliers are leading not only what they did yesterday but what they have to do tomorrow with the clean energy transition. They're investing in battery technologies and other parts and supplies that will change the industry and transform it while it continues to do a great job. The power of the 'and' also helps explain how those companies are engaged with their own customers, employees, their communities, and elected officials to step up and use the perpetual motion machine of the profit model of capitalism to help create this great flywheel of progress. So how does that relate to this conference? Capitalism is enhanced by strong public sector help. The public sector helps incent, enable, and speed progress. This conference is a testimony to those goals. So how does that work on a global stage? Let me give you an example. I have the honor of chairing a group called the Sustainable Markets Initiative. It was founded by King Charles III when he was Prince of Wales about four years ago. It's 200-plus private sector CEOs joined together, all co-led across all industries across the world. We work together to increase the pace of the just energy transition, and we think about policy initiatives which could increase that pace. So it's private sector, co-focused and action-focused. However, the king enabled us to speak to the G7 leaders in 2021 and the G20 leaders later that year. On behalf of the CEOs, I had the honor of speaking to the G7 heads of state, and I opened that by saying something they didn't expect. I said in my opening line, 'We do not need your money. We have enough money.' They were surprised because they thought there needed to be more money spent by governments to help the just energy transition take place. But then I said, 'But here's what we need from you: permitting speed, project completion. Time is money. The faster something gets done, the more it can turn a profit in perpetuity. Use government purchasing power. Buy hydrogen trucks, buy electric school buses, deliver on mandates. They finally in the last G20 put a line about sustainable aviation fuel mandates. Before that, the industry put it on themselves. Reform the multilateral development banks. They have a new leader coming on for the World Bank. A price on carbon — any reasonable official price — so we could have a market developed to help the transition take place. And standard disclosure, so we don't spend all our time trying to count the things instead of doing the work to get the things done.' So there it was: an outline for the power of public and private partnership working together on energy transition, and it can apply in lots of areas. There it was: the genius of the 'and'. That is how we speed the flow of capital, how public and private sector work together. And seeing the initiatives in the state, I can see outlines of those ideas taking place. In the Inflation Reduction Act, you can see incentives being put on the table. Then there is a price for carbon capture that is increased to make it more economically viable. We see permitting in the debt agreement that's being debated right now. We see European governments doing the same things. And we see Ajay Banga, the new head of the World Bank. So this is how we can all work together, and working together we can solve the hard tasks that face the world, including the just transition of the energy sector. But it has to be led by the private sector. And I encourage all of you to do that, and we here at Bank of America are here to help you do so. I've been asked in many settings, and even in Congress, 'Am I a capitalist?' And of course the answer is yes. How can you not be a capitalist if you're the CEO of one of the largest banks in the world and your sole purpose is to transmit capitalism from your different sets of clients? But I understand why they ask the question. There are concerns around capitalism and the opportunity it creates. There are concerns around whether the profits and spoils are shared fairly. Just concerns about whether we're taking interest in things not core to the profit motive. But at Bank of America, we deal with that by focusing in a straightforward way on the genius of the 'and'. And what I say next is: capitalism provides the money, the creativity, and the expertise to solve the needs of society. We enable our customers to participate and drive in that capitalist system. Other systems haven't been successful, and you can look around the world and see that. And when I say that this is the right system, it's not some plan for tomorrow. This is what we do. The businesses in this room do it every day. It's how you run your companies, how you commit your balance sheets, how you deploy your expense base, how you engage your value chain, and how you drive your net-zero commitments. Capitalism in the private sector delivers for customers, it does for shareholders, it does for society, and it does for your teammates. And when capitalism is enhanced by the public sector, it can work even faster and better. That's what we call the genius of the 'and', and that's what you call in this conference in Michigan: the power of the private sector and the public sector working together. You can do both. It's not a false choice. It simply is capitalism done right. Thank you.

Well, I think you have to start with the banking industry. It's going to reflect the economy. You know, we along with many other economists in our research team, which is the best in the world, have a mild recession predicted beginning in the third quarter, fourth quarter, first quarter of next year, and then it ends and goes into recovery. And that's driven by the need to get inflation under control. The fiscal stimulus that stopped in '21 and now the monetary accommodation being pulled out of the economy. So we've had that prediction for a long time; people have been slow to believe it. But the interesting thing is we don't have high unemployment. We have unemployment getting into the high fours and maybe to five, and then coming back down. We have the Fed holding rates to offset that inflation through next year. And so that change in economic structure is affecting our industry because banks reflect the economy. It affected us on interest rates as interest rates rose quickly, and that affected some companies. It's affecting the debate about commercial real estate over time and whether it's going to have issues and other credit issues if you have a recession. But these are all things that we've all managed through. The banking industry really, since the late '80s and early '90s, has changed. It has had strong regulation. The core banking industry — and the 2007 financial crisis was really about companies that weren't banks, which is an interesting thing that gets lost — but even since then, even more so, they're well regulated, well capitalized, they run well, and I think they'll be fine. Yet you had some failures because of the very unusual circumstances of how those companies operated and how the economy affected them. But I think overall you should all feel very good about the rest of the industry and what my colleagues have done and what we've done in the company. That's great. And I think that's the same conversation we have with people. But it's interesting how something can take root and you feel like you have to come back at it again and again and again, and time will demonstrate that.

Well, if you think about getting the organization focused on what we needed to do coming out of the period from 2003 to 2009, the company made six or seven major acquisitions that had about 300,000 people in the employee base coming in, and then we ended up with about 300-some thousand people in the end if you mathematically did all the math. So that's quite a bit of change from fall 2003 to January 1, 2009. Think about that many different companies: Maryland, U.S. Trust, Countrywide, MBNA, FleetBoston, I'm missing something, LaSalle. And so they all came in. So that was kind of interesting. And as we thought about how we had to shed what we didn't want in the company, we did that. But importantly, how do we have an operating basis going forward? Responsible growth was a way to express the basic concept: you have to grow, no excuses; you have to do it the right way, risk-wise; you have to do it on a customer-focused basis; it has to be sustainable — not sustainable in the energy sense, but sustainable in that it's got to go on, which means you have to be the best place for teammates to work, you have to share your success with communities. And the last part's the most important: you have to drive operational excellence to give us the money to do the first three things. And that's what we've done. So I repeat that. One of the things I read early on in my CEO career, starting 14 years ago now, was how much you have to repeat yourself. And you should rest assured that I've probably said what I just said thousands and thousands of times. But you have to make sure your teammates see it, because that's how you create a culture. So we went from 300,000 people down to 205,000 people at the low point across about eight or nine years, and then you had turnover and new hires and all that stuff, and businesses shed and businesses growing. You had to give people a common purpose, and that's why you have to have a sort of north star. And that's what responsible growth has played out for our company. Now it means something different tomorrow than it did yesterday because it's not that binding of a set of statements, so you have to make it a little flexible. So we had to lean heavier on growth beginning in the mid-2015-2016 because the responsibility was taken care of and things like that.

Yeah, I think it's a fairly straightforward thing. We have to have a teammate base which is creative, strives for the success of the company and what they can do for customers and shareholders. And you think about it, a bank is really people, buildings, and computers. That's what we are. We don't have stores of steel we make into cars. We basically are ones and zeros and the minds and the talent to operate. So you want to have the best teammates. You want to free them to think wildly and widely about anything and challenge each other, feel free to speak their mind without fear of negative consequences. One thing we measure deep in our company: you want them to feel they can be themselves. We defined inclusion, I don't know, 15 years ago, 20 years ago — probably now 15 years ago, 17 years ago — by saying that people wanted to hire a consultant to define diversity before I could. But I just had a diversity group, and people wanted to hire a consultant. They said, 'Let's just ask people what they mean by it.' And an individual in the company said, 'I want to be able to come to work and not have to leave who I am at the door.' I said, 'That's good enough definition. Let's just work on that.' So that's how we describe it. And so we saved the money on a consultant. So all the consultants out there won't be happy, but it was really a straightforward statement of what you want. But somebody has to change from representation to 'I can be who I am in the company.' And you think about the LGBTQ+ community, you think about all the different ethnicities, you think about the intersectionality of different ethnicities. They have to be themselves to be able to do what they want to do. So we built the company based on being inclusive and diverse in terms of representation top to bottom. We measure it every day. Cynthia Bowman's out there, and literally we measure it at every level in the company. Every quarterly business review of my teammates who work for me, they come in and they've got level one management, level two management, level three, all the way down. We have eight levels in the company; we used to have 13, we only have eight now. And they have to make progress across all the things because we have to represent society. We have to have a diverse group of people. That inclusion we test every year. We ask a bunch of questions around how you feel. It's an on-the-couch question, it's an individual question. And then we have to figure out how to make that happen. And then we have affinity groups. 180,000 teammates, I think, are in affinity groups. You have huge affinity groups; they operate across the world. It's fabulous to go to London or to Paris and see our disability affinity group operating or something like that. Just fabulous. The military group is a strong group. And so you have affinity groups, you have the GDIC, you have the line of business responsibility, you have it. You measure it. You don't trust that people are doing it from a representation standpoint, and then you test every year. We ask the questions about inclusiveness, so we have a DNI score and we have an employee satisfaction score. And when people come to me for talent planning, I see those scores across the last three years and how they fared. So if you have a group of 12 direct reports or somebody, I can see among the direct reports who's lagging, and we put them in a red box if they're lagging on those scores because we want to know why they're faring different from the group. So it takes all that, but it comes down to a simple thing: our customers look like the world. We have to look like the world. They want us to look like the world. We want to look like the world. We want to have access to every talent base we can because talent is scarce. How can you do anything else?