Interview Summary: Sustainable
capitalism requires a greater purpose than profit. Profit for profits sake is simply
unsustainable. Profit for the purpose of
sustainability of any business will require meeting the 17 Sustainable
Development Goals. Achieving these will
require approximately $6 trillion annually. Governments are simply too burdened by
existing debt to achieve them. Charity
alone is insufficient. Business leaders
need to step up and prioritize a balancing of short-term gains with long term
interests globally. Politics must be
good for business and society. Partisanship
isn’t.
C-span program interview: Bank of America Chair & CEO Brian Moynihan discusses the state of the economy and the U.S. financial system during a conversation hosted by the City Club of Cleveland.
City Club Cleveland Bank America CEO Program ID: 529044-1 https://www.c-span.org/video/?529044-1/bank-america-ceo-remarks-city-club-cleveland
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Abridged text of the interview: [all caps is CSPAN generated text]
BRIAN MOYNIHAN,
C.E.O. OF BANK OF AMERICA since 2010.
THE SECOND LARGEST BANK IN THE U.S. and leads a team of 215,000 employees....DEDICATED
TO MAKING FINANCIAL LIVES BETTER FOR PEOPLE, FOR COMPANIES OF ALL SIZES, FOR
INSTITUTIONAL INVESTORS ACROSS THE U.S. AND AROUND THE WORLD.
AS THE COUNTRY AND WORLD GRAPPLE WITH THE AFTERMATH OF THE
PANDEMIC, INFLATION, THE BANKING INDUSTRY FELT ITS SHARE OF VOLATILITY. iN
MARCH 2023, when THREE SMALL TO MIDSIZED U.S. BANKS FAILED, LEADING TO A
CHAIN OF EVENTS -- NOW REFER TO AS THE 2023 BANKING CRISIS.
ADD TO
THIS WIDESPREAD CALLS FOR: INCREASED EQUITY, ACCESS TO ECONOMIC
OPPORTUNITY,AND THE INCREASING RELIANCE ON EMERGING TECHNOLOGIES,
THE WORLD OF Banking AND Finances IS CHANGING QUITE A BIT.
WE'RE GRATEFUL TO HAVE HIM HERE
TO GET HIS PERSPECTIVE ON THE ECONOMY, THE INDUSTRY AND GLOBAL TRENDS SHAPING
BOTH.
There are a lot of factors determining the growth and
changes in the economy.... as well as indicators our bank uses to evaluate its
mission.
The US has AN EXTREMELY RESILIENT ECONOMY. ENTREPRENEURSHIP, CAPITALISM, PROFIT MAKING.
AND ALL THAT THEN CREATES A LOT OF ACTIVITY. SIZABLE. UNEMPLOYMENT IS now at an ALL-TIME LOW and
VERY RARELY HAS BEEN BELOW THIS LEVEL. It
is NOT ONLY RESILIENT, it ATTRACTS CAPITAL AND ACTIVITY LIKE NO OTHER.
10:15
WE JUST GOT THE STRESS TEST RESULTS FOR OUR INDUSTRY :
19:29
OUR SOLE PURPOSE IN LIFE IS TO HELP EVERYBODY PARTICIPATE IN CAPITALISM, INDIVIDUALS, COMPANIES, HOURLY WORKERS, THE RICHEST people IN THE WORLD, The small companies, the big companies....CAPITAL MARKET...
00:20:10 THE DEBATE IS ABOUT HOW YOU DO
CAPITALISM. ... THE REALITY IS
CAPITALISM IS THE ONLY SYSTEM THAT IS GOING TO SOLVE THE PROBLEMS the world
wants TO SOLVE.
20:30 And that’s the thing THAT Everybody is
trying to WILL WORK ON. So if you
are going to HAVE AN ENERGY TRANSITION -- IT is going to BE THE PRIVATE SECTOR THAT
DRIVES IT.
GOVERNMENTS
DON'T HAVE THE MONEY. YOU CAN’t REGULATE IT because it’s very hard
because it is across every place in the world. So WHERE you ARE GOING TO GET THE
MONEY TO DO IT? YOU’re going to get the
oil companies to do it. You’re going to have new energy companies to it.
You are going to show it BY
HAVING THE capital EQUITY COME IN, the talent come in, THE LENDING COME IN.
PEOPLE SAY “YOU ARE talking about renewable energy so you
are NOT A CAPITALIST! YOU ARE DOING THAT TO BE GREEN.” NO! I’m doing it because WE HAD $150 BILLION OF
IT LAST YEAR. THAT IS A BIG BUSINESS. IF WE DISCLOSE THAT THE TAX BENEFITS FROM THE
RENEWABLE DEAL ARE THREE QUARTERS OF A BILLION DOLLARS -- THAT'S PRETTY
INTERESTING.
21:23: MAYBE I'M
GETTING OLD -- BUT WE AS PEOPLE WHO HAVE BEEN AROUND A WHILE HAVE TO SHOW THOSE
COMING BEHIND US THAT MAJOR COMPANIES WHO are strong companies CAN DO GREAT
THINGS. CAN DO IT IN A WAY that SOCIETY benefits AND
SHAREHOLDERS BENEFIT. It is Progress with a purpose!
JIM
COLLINS, a great business writer over the past-- the great books he did IN 1996
TALKED ABOUT THE GENIUS OF THE ANT. Progress with a purpose!
IF YOU go back and TALK ABOUT STAKEHOLDER CAPITALISM, ... PEOPLE
SAY ‘WHAT DO YOU THINK ABOUT THAT?’ DO YOU THINK IT’s a pretty GOOD thing IF
YOU DO GREAT THINGS FOR OUR CLIENTS? OH
YEAH.! If you DO GOOD a good things for
our team mates? Oh Yeah!
IF YOU DO GREAT THINGS FOR our shareholders? Oh Yeah! If we do great things FOR OUR COMMUNITIES? Oh Yeah!
THAT IS STAKEHOLDER CAPITALISM. HOW CAN YOU SAY THAT IS BAD?
Milton Friedman said it was bad! But if you read more of what he said, he actually
says more than that. Which is ‘You got to deliver profit and purpose. Not profit
for purpose.
22:47:
THE
MANIFESTO CREATED AT DAVOS, HE AND MILTON HAD AN INTELLECTUAL DEBATE ABOUT WHAT
THEY WERE GOING TO SAY.
But
COME FORWARD A BUNCH OF YEARS, MAJOR COMPANIES around the world are TRYING TO
RUN THEIR BUSINESS the way they’re doing what IS RIGHT. WHICH
IS SHOWING HOW CAPITALISM WILL SOLVE THESE PROBLEMS BY DRIVING THAT. IT WON'T HAPPEN OTHERWISE.
THINK
ABOUT 190 COUNTRIES SIGNED ON TO THE SUSTAINABLE DEVELOPMENT GOALS. THERE
AREN'T MANY COUNTRIES IN THE WORLD PAST 190 SOMETHING. THEY ALL SIGNED. THEY TOLD US WHAT THEY WANT FROM THE SYSTEM. The point is, IF YOU look at that, it takes $6
TRILLION A YEAR. WHERE IS THE MONEY GOING
TO COME FROM?
Charity is wonderful!
WE DO $500 MILLION OF CHARITY as a company A YEAR. There is great philanthropist in this city that
has been around for years!
ALL THE
CHARITABLE GIVING IN A YEAR IS $1.2 TRILLION. THE ART MUSEUMS and stuff DON'T
COUNT. He said, ‘What are the Governments going to do?’ OUR GOVERNMENTS RUN A TRILLION DOLLAR A YEAR
STRUCTURAL DEFICIT. They are the only ones with any money. THEY DON'T HAVE ANY EXTRA MONEY. So, WHERE IS
IT GOING TO COME FROM?
ALL THESE BUSINESSPEOPLE BY EMPLOYING good people AND HIRING
GOOD PEOPLE, invest it, drive it. BUT DO IT IN A WAY THAT DELIVERS THE PROFITS
THEY NEED TO DRIVE THE COMPANY, PLUS -- PAYS ATTENTION TO WHAT ELSE THEY DO. That’s the end of purpose. DOING
THE RIGHT THING FOR CLIENTS AND COMMUNITIES and things. So that IS HARD TO
ARGUE about.
That’s what we are trying. THAT IS HOW WE RUN OUR COMPANY. That’s what we
call responsible growth and we’ve been doing it for a lot of years. So WE ARE ONE OF FOUR COMPANIES IN THE U.S. that
has earned MORE THAN $15 BILLION in eight straight years. We’re beyond 8 billion this year. MY GUESS IS WE WILL GET NINE.
THERE ARE ONLY FOUR OUT OF ALL THE COMPANIES LISTED IN THE
U.S. TO GET TO THAT.
YOU CAN DO IT. There are other companies that have to do the
same thing. IT CAN BE BIG. You can do
it. But it’s THE IDEA OF DOING BOTH! THE ‘AND’! NOT ‘OR’. And WHEN YOU DO THAT, THAT $6
TRILLION CAN BE FOUND.
YOU CAN HAVE THE ENERGY TRANSITION BY HAVING THE OIL
COMPANIES USE THEIR EXPERTISE figure out how to do it. AND STEEL COMPANIES figure out the WAY THEY
CAN GET THE HYDROGEN IN PLACE in Africa, in place OF COAL, BY THINKING THROUGH
THE TRANSFORMATION.
That’s what’s important. But YOU HAVE TO
WORK WITH THESE COMPANIES.
THE DEBATE IS NOT TO DO BUSINESS WITH EXXON, We don’t do
that. HOW CAN WE HELP COMPANIES MAKE THE
TRANSITION with that particular element.
OR HOW DO WE help DO GREAT THINGS FOR the EMPLOYEES? WE START at $46,000 A YEAR for our COMPANY. Full
Benefits. Career Mindset. WE DO THAT BECAUSE IT IS IN THE economic
best INTEREST OF OUR SHAREHOLDERS TO HAVE A TEAMMATE WHO WORKS FOR 50 YEARS IN
OUR COMPANY. WE HAVE 200,000 PEOPLE! Each
1% TURNOVER I have to hire 2000+ people each year. A person is not really effective SIX MONTHS, THREE MONTHS, PICK A NUMBER.
THE DIFFERENCE BETWEEN 15% AND 7%, WHICH IS WHAT WE WENT
BACK TO AFTER THE GREAT RESIGNATION, 7% IS 15,000 PEOPLE WE WON'T HIRE THIS
YEAR. THAT IS BECAUSE OF THE CAREER MINDSET.
......
44.19: Purpose before
profits is not a new concept!! [He was
an American History major]
GO TO AN AVERAGE COLLEGE CAMPUS AND ASK IN THE ECONOMICS
CLASS WHAT ARE THEIR VIEWS OF CAPITALISM, IT WILL BE INTERESTING. WE HAVE TO
GIVE PEOPLE WHY A BUNCH OF ANY COMPANIES CAN DO THINGS THE RIGHT WAY, THAT SHOW
YOU THE VALUE OF CAPITALISM. BECAUSE YOU WOULD NOT HAVE THE GREAT THINGS YOU
HAVE IN ANY PLACE IN AMERICA WITHOUT THAT CAPITALIST SYSTEM. IT OVER POLLUTES,
IT DOES THIS, EMPLOYEE SAFETY, IT GETS REGULATED BACK. BUT YOU WANT TO FIX IT
BEFORE THAT. WHEN IT COMES TO REGULATION
IT GOES PAST THE POINT OF PAIN.
...IS KIND OF INTERESTING. THE IDEA OF A COMPANY LIKE OURS
IS TO DO THE RIGHT THING, BE CONSISTENT AND MINDFUL THAT THE ELECTED OFFICE
COMES AND GOES, B UT THE PEOPLE AT THE COMPANY WILL BE HERE THROUGH THE
ELECTION CYCLES. YOU HAVE TO BE CONSISTENT. DO YOU WANT PEOPLE THAT SEE THE
VALUEOF FREE ENTERPRISE CAPITALISM? YES. THAT DOES NOT MEAN IT IS RESTRICTED TO
ONE IDEA. I THINK THE IDEA AS THE BUSINESS COMMUNITY IS MAKE OUR ADVOCACY
KNOWN. WE HAVE TO BE PART OF THE PROCESS TO MAKE SURE THINGS DON'T GO IN A WAY
THAT DOES NOT MAKE SENSE FOR PROSPERITY. BE MINDFUL THAT WE ALSO HAVE TO
SUPPORT, WE HAVE TO HELP EDUCATE, HELP DELIVER. THIS IS A WONDERFUL COMPANY.
WHEREVER YOU GO IN THE WORLD, THE GENERAL ASK OF THE BUSINESS COMMUNITY BY THE
POLITICAL SIDE IS TO HELP THEM BE SUCCESSFUL. THAT IS NOT A HARD ASK TO
FULFILL. BUT YOU CANNOT DO IT BASED ON POLITICAL, IT HAS TO BE ON WHAT IS GOOD
FOR SOCIETY. I DON'T KNOW HOW MANY PRIME MINISTERS OF THE U.K. IN MY 14
YEARS. IT'S NOT LIKE THEY ARE NOT GOING TO CHANGE. OUR U.K. BUSINESS HAS 6000
PEOPLE AND I CAN'T CHANGE IT BASED ON WHO IS ELECTED. THE TEAM HAS TO RUN IT ON
A CONSISTENT BASIS. [INDISCERNIBLE] I CAN BASICALLY SAY LET'S GO RUN THE
COMPANY THE RIGHT WAY.
PERHAPS ONE FINAL QUESTION AROUND CAPITALISM. DO YOU HAVE ANY GUIDING PRINCIPLES AS YOU ARE CONSIDERING DIFFERENT STRATEGIES TO IMPLEMENT THE BALANCE, THE
SHORT-TERM PREDICTABLE GAINS THAT ANALYSTS ARE
LOOKING FOR VERSUS CREATING
LONG-TERM SUSTAINABLE SHAREHOLDER
VALUE?
53:00 ODDLY ENOUGH, THE METRICS I SPOKE ABOUT THAT
THE INTERNATIONAL BUSINESS COUNCIL PUT UP that match up to the THE SUSTAINABLE
GOALS. That we had the four big ACCOUNTING
FIRMS go out wo we knew companies COULD DO THIS BECAUSE we had the account firms
go find twenty odd METRICS THAT WOULD PROVE that WE ARE DOING WHAT THEY WANT on
the SDGs. So, IN THOSE METRICS, people,
planet, property, and responsible government... and so THAT IS WHAT WE LOOK AT.
WE ORIGINALLY BUILT THOSE AS a sort of DEBATE between SHORT TERMism.
Because that was kind of raging for a while. And,
so the BUSINESS COMMUNITY we’re, THE IDEAs like, ‘that’s good.’ Let’s force long term, quit doing quarterly
reports...that stuff is just not going to happen.
IF YOU SHOW PEOPLE THAT OVER TIME, YOU ARE ACCOMPLISHING BOTH A
SHORT AND LONG-TERM. THAT IS PROFITS IN PROFITS, NOT PROFITS IN PURPOSE. Because YOU got to be both profitable, but
then you HAVE TO SHOW PEOPLE YOU ARE MAKING PROGRESS. THAT WAS DISCLOSURE the disclosure theory.
Look! HERE IS OUR
DIVERSITY, HOW WE PAY OUR TAXES, here is OUR SCOPE ONE TWO EMISSIONS. Here’s
the third year in a row. YOU CAN SEE THE
PROGRESS -- OR LACK OF PROGRESS. So we
built that.
I THINK YOU CAN GET OUT OF THE SHORT-TERMism.
WHEN WE THINK ABOUT THE DECISION OF THE COMPANY, ESPECIALLY WHEN
YOU ARE ALWAYS THINKING MULTIPLE YEARS OUT, when you are worried about tomorrow
afternoon -- OUR BUSINESS DOES NOT MOVE FAST ENOUGH TO DO SHORT-TERM STUFF.
YOU TALK ABOUT WHAT WE HAVE DONE AROUND TEAMMATES OVER THE
YEARS, I STARTED WITH A MANAGEMENT TEAM. IN 2010 WE HAD 285,000 PEOPLE. WE HAD
213,000 PEOPLE AT THE END OF THIS QUARTER. THAT SOUNDS LIKE WE LET ATTRITION
WORK. IN THAT TIME, THE STARTING WAGE HAS GONE FROM $10 AN HOUR TO $22. THE
AVERAGE WAGE HAS GONE UP BY 25%. THE OWNERSHIP BY EMPLOYEES IS UP BY A LOT. We
are in the sixth straight year of.
WE DID $4 BILLION OR $5 BILLION OF STOCK GIVEAWAYS. WITH THE
CHANGE WE MADE IN THE BENEFIT PLANS IN 2011 -- [INDISCERNIBLE] WE HAVE NEVER
RAISED IT. IT'S DIRECTLY RESULTED IN THE TURNOVER RATE AND ENTRY-LEVEL JOBS
DROPPING. THAT SAVES ME A LOT OF MONEY. THE HEALTH AND WELLNESS STUFF WE DO
WON'T PAY ANY MONEY AMONGST THE MANAGEMENT TEAM BECAUSE IT WILL SAVE THINGS 20
YEARS OUT IN TERMS OF HEALTH CARE COSTS. IT IS THE RIGHT THING TO DO FOR EMPLOYEES
AND FAMILIES. YOU ARE ALWAYS THINKING ABOUT THE LONG-TERM, SHORT-TERM. IT IS
NOT AS BINARY. THERE ARE THINGS YOU DO INCREMENTALLY. A THING WE DID EIGHT
YEARS AGO BEFORE ANYBODY KNEW WHAT IT WAS, NOW IT'S 20 MILLION CUSTOMERS. IT IS
A VERY SIMPLE FORM OF IT. THAT. WAS BECAUSE WE MADE IT YEARS AGO IT WAS BASED.ON
A CUSTOMER DECISION WE DEPLOYED IT AFTER A COUPLE YEARS. IN OUR INDUSTRY YOU
ARE ALWAYS MAKING LONG-TERM DECISIONS BUT YOU WANT TO BE CONSISTENT. YOU HAVE
TO DO BOTH. THIS COMPANY HAS BEEN AROUND FOR 240 YEARS. I WILL BE HERE IN A
NANOSECOND IN THE LIFE OF IT. SAME WITH MY MANAGEMENT TEAM, 30 YEARS IN THE
COMPANY. 30 OUT OF 204 YEARS -- 240 YEARS IS NOT A LOT. YOU HAVE TO LEAVE THE
WOOD PILE BIGGER, THAT ANALOGY.
