Transcripts For FBC Mornings 20240703 : comparemela.com

Great accomplishment especially this day and age. Thank you so much. When when you this i about quarter, you are welcome when you think about quarter, does the job did a great job,producing profits of, 10 approved, 15 return on common equity Revenue Growth great expense management bringing down each quarter, as we said, are importantly we can see a path forward seeing one of our major drivers revenue flatten out grow from there based on what we see forward curve of Interest Rates, so we feel good about it it was good trading it was good lending o deposits everything continues to work 7. 8 billion dollars in net income. I think the bears out there on banks in general are worried about a large bond i want your take on that, obviously, youve got incredible deposits, that is that is a major positive there. But the presentation that youve been making on the bond book tell me about that tell me about unrealized losses some investors are worried about. Well two years ago we had to make a decision to start to value out of depositors great customers leave 1. 9 trillion dollars deposits back, 2. 1 trillion out of trillion dollars loans still have a trillion dollars in loans, so, when it kas clear deposits were staying with us we had to put it to work we did we did that in summer 21 we have a trillion dollars to invest every day, 9 hundred billion, trillion dollars to invest half short half long, that that stability earnings extreme provide great earnings, stability Going Forward as we do as that bond the portfolio matures put in short term that is how we got to 14 1 2 billion dollars, nni, this quarter more than the street predicted 14. 2, that is why we feel good about the 14 billion dollars we will have in Fourth Quarter now seeing trough proud by great deposit base. Great analysis 10year treasury yield jumped over 4. 8 yesterday as you know the the wall street journal is writing the consumers are quote on spending binge despite high Interest Rates elevated inflation you talked about it very strong consumer in the matter of youve seen modest slowing of that spending tell me about the consumer today, what the impact has been of the higher Interest Rates. Well clearly the hi Interest Rates affect most ratesensitive activity, homes, saw Mortgage Application low today, because higher Interest Rate makes everybody step back adjust car purchases same thing impacts go through relatively quickly, people forgetting commercial said a huge impact of higher rates in terms of peoples willingness to borrow so Lending Conditions tight what fed wanted to achieve when you look at consumer side from spending, 2022, 2021 across bank of america Consumer Base you would see 9 1 2 to 10 growth in net spending yearoveryear first part of this year, first part 23, first part 22, 9 now 4 to 4 1 2 September Quarter so far october with a does that mean that rate of spending across four trillion dollars plus our consumers spend every year through accounts credit cards, cash, checks written that four trillion dollars is ro growing 4 now if you look back say what does that mean in Historical Context in other consistent with low inflation low growth economy the point is that all impacts of everything going on have led the consumer to slow down activity. Will bounce around retail sales of across all things they do with money we feel weve been washing data over 30 years generally leads the other peoples data that it is real time it is across a huge base of consumers not based on surveys it is actual movement, 4 says fed has gotten u. S. Consumer slowed down major challenge it had to get economy back in line with inflation, and growth. What about Small Business brian . Youre obviously, a great destination for so many small midcap business taking about impact of rates on their interest payments, of course, has gone up in some cases. O o how would you characterize that you will business in terms of tight credit environment. If you think different types of businesses we have Small Businesses, say under three or four Million Dollars in revenue medium sized go up to 50 million, 50 million to two billion dollars in revenues we, draft in three to four businesses you had Sharon Miller on last week Small Business borrowing robust we had 2. 8 billion dollars origination in quarter 40 plusbilliondollar loans under a Million Dollars to small, mediumsized businesses largest in that space feel brgd that, temperature for lack of better term admit gaited by wiser about inflation worries teammates to work for them frankly the impact of higher rates, interestingly go in Larger Companies you have seen not use larger credit dropped line back down crater cost of credit has gone up much more careful how they use it conditions lending tightening, as you said, that is clearly happened again, that will lead to slow down the economy our teammates have predicted slowdown trough out in middle next year barely growing half a percent second, Third Quarter working up from there. Maria i want to talk about Regulatory Environment your take on deposit posts you have been derisking Balance Sheet 15 years proven effective for you, in managing, times that that are volatile boring offset higher deposit costs in quarter people worry about pressure on deposit costs maybe Federal Reserve is not done maybe rates go higher than that what can you tell us . Well, our deposit costs 1 1 2 against fed funds rate 5 plus think about that spread what were saying to people, franchise 1. 9 trillion comes from core tractional accounts for customers be they are businesses wealthy americans general americans if you look at it you are seeing growth in the Wealth Management space stability slight growth you are seeing growth now six quarters ago hit low point in the business side, in it is banking side growing consumer side drifting down a little bit, but thing that drives the consumer deposit franchise is 500 billion dollars of low interest no interest checking 37 million check accounts prepandemic now grown three or four million checking accounts great core customers Wonderful Team goes gret great job serving them risk for profitability 150 basis points from 1. 9 trillion dollars up a lot from a couple years ago but on the other hand, the rate side balance loans up much more. What about ramifications what is going on in terms of the regulatory proposals i know you believe going to hurt your ability to lend, make the industry less competitive. Given what is coming out of washington. Youve also got new rules on fees, how much you can charge, in terms of credit cards, you do have analysts lowering estimates in terms of the fee revenue this morning, talk about the Regulatory Environment right now, and what is new there in terms of challenges for the entire industry. Well, the big discussion now is new capital rules proposed, sort of what they call three endgame, there is request for flows, comments due end of number of will see a lot of comments by our Industry Company by many others, basically saying lets think through whether that is wise set of decisions or not you are seeing the, a lot of discussion, among governors Federal Reserve discussion in congress around saying should we do this is it right thing to does it anticompetitive for american businesses Small Businesses . , higher cost of borrowing versus busies copycat in Global Supply chain what it means to us basically, will say you need 195 billion capital to support the inflation in our at risk rated assets 1. 6 trillion dollars risk rated assets under new ruled as proposed 1. 95 trillion required 195 billion dollars capital we have 194 billion dollars capital regulatory capital now this is not a big issue but on the other hand, question is that takes 300 billion dollars lending capacity we could have to support american businesses help them grow takes it out of system, the same risk we had yesterday we have to have 30 billion more capital, we are saying that may not be a great thing to do any time clearly today to slow down amount of Banking System to support small medium sized bifrs in United States. Maria of you got major banks competing with everyday, that are foreign banks there are not faced with the same capital rules and the same you know constraints that u. S. Banking system is so a fair point, before you go, brick on macrostory here what you are seeing, at bofa in terms of this slowdown, because of higher Interest Rates, there is a lot of people expecting that Federal Reserve may be is done at this point because market has done the work for it, were going into howled period with some expectations that things are going to slow down, as you just said. How slow will that be in the year ahead . We have a Great Research team by kandiss brown they basically last year pushing out view of trough in the economy a year and a ago it was going to be middle 23 then end of 23 now settled in have basically economy slows down middle of 24, to about a half percent analyzed growth second and Third Quarter fed will start cutting rate they believe middle next year latter half next year the basic thing, what would be called soft landing risk is geopolitical risk the risk if tightening goes too far conditions around go too far that is recurrent view supported by what they see in underlying consumer activity. I have watched your leadership over 30 years integrate you for turning the company around since financial creates good to talk with you thank you. Congratulations on 30 years Brian Moynihan chairman ceo of bank of america. Well be right back. Maria welcome back, President Biden meeting with Prime Minister Benjamin Netanyahu expand bilateral meeting Edward Lawrence now at the white house. President joe biden right off air force one into meeting with israeli Prime Minister in that meeting said what do you see from hamas makes isis looks like it is rational President Biden supposed to meet with Palestinian Leader Mahmoud Abbas canceled also a summit in jordan included president of egypt white house said postponed because of mourning other leaders said they canceled it the president plans to call leaders on the way back to white house meeting with israeli war cabinet to discuss how to avoid a greater conflict in the middle east. We will continue to have israels back as you work to defend your people. Of we will continue to work with you, and partners across the region to approach the more tragedy, to innocent civilians. President biden says explosion at gaza hospital not israels fault even though, each side blames each other. I am deeply saddened outraged by explosion at hospital in gaza yesterday, based on what ive seen appears as though it was done by the other team not you. But there is a lot of people out there not sure. So we got to overcome a lot of things. World waiting for Ground Invasion into gaza by israel, for, sources saying u. S. Looking to postpone that we might me movement that direction when president leaves israel later on today back to you. Maria thank you very much Edward Lawrence white house. Well be right back. There are some things that go better. Together. Burger and fries. Soup and salad. Thank you like your Workplace Benefits and retirement savings. With voya, considering all your financial choices together. Can help you make smarter decisions. For a more confident financial future. Hey, a tandem bicycle. You cant do that by yourself. Voya. Well planned. Well invested. Well protected. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Goli, taste your goals. Mr. President road to victory will be long and hard united in purpose with deep sense of justice the unbreakable spirit of our soldiers and our people. Israel will prevail. I want you to know you are not alone. You are not alone. , we will continue to have israels back, as you work to defend your people. Maria . Israeli Prime Minister Benjamin Netanyahu President Biden speaking in tel aviv this morning, President Biden is planning on asking congress for 100 billion dollars supplemental funding for israel, as well as ukraine, also tying this money to the border funding disaster aid as well, i want to talk more about that exactly what is border funding mean joining me right now mo congressman jason smith chairman house ways and Means Committee thanks for being here. Great to be with you. Maria so much to talk to you about this morning, from the war, and the financial needs there to, of course, the speaker race first lets talk about this israeli aid i know there is a lot of Common Ground in terms of supporting israel, is there Common Ground, in tying this money o to ukraine funding i know 117 republicans voted against sending more to ukraine, but know president wants to tie this together is that where this is going. It is hard to tell exactly where it is going maria, i can tell you, that it is very bipartisan, in the house and in the senate amongst republicans and democrats in supporting israel. The funding for ukraine is a different story you see a lot of disagreements, divisions but id is greatest ally friends they are in need we will find a way to provide the resources to israel. Where is this coming from congressman . Lets face it. Youve been having a fight with white house and democrats now for over a year, year and a half actually the whole time biden is in office Kevin Mccarthy tried umpteen times to get meetings with this president to try to come up with boundaries on spending it hasnt happened where is this coming from. What it is going to be, more debt that is in fact because right now were spending more than two trillion dollars, in a deficit, just for this year, that means were borrowing from chinese were borrowering from other entities over 3 trillion dollars, on the average day, we spend roughly two billion dollars in just interest on our debt. That is where were at that is in fact if we spend a hundred billion dollars going to lead to more borrowing. Thanks for being so frank practical because we figured the fact is we dont understand if in fact this money is being spent wisely the Watchdog Group opened books defense minister found reported biden administration, sent more than a billion dollars of u. S. Taxpayer money to the palestinians Trump Administration as you know completely froze that aid to palestine in 2018 sailing money was used to support groups like hamas, the state department this morning responding to 2 report it claims this money is not benefiting terrorists, congressman where did that come from then the administration proposing another 260 million for palestinians in 2024 budget request isnt that right. Exactly why i am adamantly opposed to large spending bills pass 2000 page bill money goes to different pet projects American People do not want us sending money to countries to love to burn our flag. We need to make sure we prioritize that, and we cut out entities and kwhounz wanted to destroy us. Maria thousands of people are dead, because of iranian backed terrorist groups like hamas, hezbollah as well here is your colleague, chairman of the Foreign Affairs Committee Michael Mccaul with me this sunday watch so that 30 billion dollars unenforceed sanctions on, guess what else it helps give 150 Million Dollars to hamas, that a bunch of weapons they use to invade israel last saturday conduct massacre on the ground in in addition the hostage situation getting five innocent americans out in exchange for six very culpable iranian prirs culpable of espionage for lack of better word unfair trade in and of its, you though six billion dollars on top of that. Congressman look where we are. Okay in look at the the world of hurt, we are in. As a result of bad policy, but ive got to ask you has it not reckless to have Kevin Mccarthy step down and now you have no speaker . Why couldnt he stay in the job until another speaker was named or stay in the job until we have clarity . God for buddy something happens to this president weve got kamala harris, god forbid doesnt work out it is supposed to be inspector of the house take presidency we dont have one. A mari