country. the industry fully recognizes the seriousness of this and is moving in all sorts of fronts to try to address it. let me tell you about one. basically, we set up what amounted to -- we have done it twice now, a test case of a variety of attacks on the investment community and on the exchanges. it was called quantum gone 1. it was a very intensive exercise. it involved a tremendous number of business entities and banks and investment houses. it involved the entire relevant part of the federal government including the treasury and homeland security, the fed and other agencies. the attacks were structured by

independent groups which we hired to figure out what would be the most vulnerable places and where the attacks would come from without us knowing about them. there was a basically, a process of replicating what might happen in an attack. we learned a great deal from this. the quantum dawn exercise occurred last july. we expect to do it again. the systems held up fairly well. we were reasonably accountable with the fact that the industry is doing a good job at trying to get ready for this type of a threat which we consider to be extraordinary. >> is there anything you think regulators should do on the cybersecurity front? >> i think congress should do something. congress has a responsibility to come up with decent cyber language which creates a proper sharing of information across agencies.

this was a problem when i was there. we spent a fair amount of time on this. those were the good old days. that is the way it should be today. just kidding. [laughter] i didn't say that, barbara. breaking down the stovepipes, it is hard. we all know it needs to occur and we need proper sharing and congress has had a couple of good bills that made it all the way through. we need to get something done. >> that is a good segue into the political questions. you have called senator ted cruz incredibly self-destructive. what can and should the gop leadership due to limit his influence given that he has a powerful base of supporters outside the senate? >> i am not speaking here as a ceo but as a republican.

a former republican office holder from new hampshire. you can't do anything about a member of the senate's right to say things and you shouldn't be able to. someone used to describe the senate as a task force moving around the halls of congress. everybody is their own power center. senator cruz has decided to pursue these issues but unfortunately, the manner in which he pursues them, especially the attempt to shut down -- make the condition of opening the government and passing the debt ceiling conditional on full repeal of obamacare and the affordable care act, it had no chance. it had no chance from the beginning. there was never an opportunity that was going to lead to governance. what the american people want and what the republican party has to do is govern. it has to participate in the

governance of this country. it has to work across the aisles to solve our deficit problem and move forward as a nation that is actually addressing the issues that are critical to the everyday lives of americans. you can't stand in the corner and shout out phrases. you have to be willing to come up with ideas that can go across the aisle and work. it doesn't mean you have to give up your philosophy in any way or your commitment to your basic goals. there are a lot of places where you can cross the aisle and still maintain your basic philosophies. there are a lot of good folks on the other side of the aisle. they are willing to try to govern. that is where i think the republican party needs to do something that reestablishes its credibility with the american people. start governing, as should the

president. >> will you support moderate republican candidates in 2014 primaries if they find themselves running against tea party backed candidates? >> i don't think we are going to get involved in that issue. >> why not? [laughter] >> i just don't think that is a role for us. we are going to support people who support the free market, who understand the importance of the financial markets to improving the lifestyle of americans in their everyday life. we will be there to help americans have a more prosperous lifestyle. >> does the u.s. deserve to have a lower debt rating now that many members of congress have shown themselves willing to default? >> of course not. we are not a government that moves linearly. we move all over the place. we are not a parliamentary system.

the government can't do whatever it wants. -- system, where the government can do whatever it wants. we are a madisonian government built off of checks and balances. both parties have to be consulted to move forward and there has to be some consensus in almost all major issues addressed in a bipartisan way. it takes a much longer time to accomplish that than if you're running a parliamentary system. what i think the more sophisticated rating agencies see is that we are making progress on this road. there has been progress made on the issue of getting the deficit and debt under control. the 2011 budget agreement was a $900 billion down payment on the discretionary side. the fiscal cliff was a $600 billion down payment on the tax side. now we have the sequester in place which is technically a $1.2 trillion payment on the discretionary side.

not the right way to approach it but that is a mechanism to return to the table and reach an agreement on the entitlement accounts is where the real problems are. the process is going on now with the budget committee negotiations chaired by senator murray and congressman ryan. it is an opportunity to move the ball further down the field. i think most rating agencies are sophisticated enough to understand that this isn't going to happen overnight but that there is progress and we are hopefully moving in the right direction. >> you talk about the importance of both sides of the aisle working together. you are here speaking to us today as a ceo and not as a commerce secretary. why did you turn down that invitation from president obama? >> i have explained this before. kathy and i thought about it a lot.

i like president obama. he was a friend in the senate, not a close friend but somebody i dealt with. when he was elected president, like all americans, i thought it was a great statement. i wanted to try to be helpful. when he asked me if i would be willing to serve in his cabinet, i was caught up in the moment and was very appreciative. kathy and i talked about it and i should have realized this immediately but i didn't. my philosophy on fiscal policy was a long way from the president's philosophy. the number one job of a member of the cabinet is to be 100% with the president. it would have been very difficult for me to do that and maintain my values on fiscal policy.

i should have recognized it earlier and i didn't. i have always regretted that. i will say this, he was extraordinarily gracious in the way he handled it. i have always appreciated that fact. rahm emanuel was also gracious. he was the chief of staff at the time. i was very appreciative of that. >> how do you see the differences in the republican party playing out? will things get worse before they get better? >> i am not speaking here as ceo, ok? the way i see it playing out is this, i think that this country is built on the two-party system. the two-party system is critical to our success as a nation. we are 330 million people. you can't govern a nation of this size and complexity unless

you have a process -- what we in new hampshire call sugaring off. getting to a conclusion. the first step in that exercise in politics is gathering people under the big tents of the parties. a multiparty system would be destructive to our nation because everybody would go to our own corner. the two-party system forces people of very large philosophical beliefs under one tent. we have different philosophies but the folks under those tents also have lots of similarities. it is a process of building into an agreement. i think the republican party is the right force for good governance in this country on the issue of fiscal responsibility and i think we have to get back to those themes that have always been at the center of our policies which is that we believe this country must live within its means and that we have to have a nation

which cares for those who are less fortunate, but in the process we also have to recognize that we can't have a nation that lives beyond its means for an extended period of time. i do think our party will be a very strong voice as we go forward. >> treasury secretary lew previously said we would solve too big to fail by this year. is it solved? if not, how can it be solved? >> great progress has been made on that. our capital, which is the core of safety and soundness is up by almost 100%. we have the living wills. we have the restitution authority. we have the stress test. all of this works together in tandem to basically lead towards making sure that we never have a situation like 2008.

there are other things that may still be thought of that can be done. tweaks possibly to the capital structure. as a practical matter, i think we are well on the road to putting an end to, as i think we should, the concept of too big to fail. >> we are almost out of time. before the last question, a couple of housekeeping matters to take care of. i would like to remind you about our upcoming speakers. on monday, we have the president and ceo of the charles schwab corporation. he will discuss 401(k) plans. on november 18, we have gloria, a feminist activist and founder of a magazine. next, i would like to present our guest with the traditional national press club coffee mug. >> thank you. [applause] >> one last question. here at the national press club we have the tradition of the

last question being lighthearted. we don't usually have the speaker asked it of themselves. senator gregg has asked himself the question. he wants to know who won the world series? >> nobody knows? [laughter] the red sox won the world series. go sox. [laughter] [applause] >> thank you for coming today. i would also like to thank the national press club staff including our journalism institute and broadcast center for helping organized today's event. you can find more information about the national press club on our website and if you would like a copy of today's program, you can find it there at well at www.press.org. thank you. we are adjourned. [captioning performed by the national captioning institute] [captions copyright national cable satellite corp. 2013]

will talkbettinger about issues facing future retirees. we will bring you his remarks live starting at 1:00 p.m. eastern. the place is now called the mercedes-benz superdome in new orleans. built entirely at public expense. after hurricane katrina, badly damaged. the public paid for all the repairs. the public is invested about a billion dollars in the construction of the mercedes-

benz superdome, and the man who owns the new orleans saints keeps almost all of the revenue generated there. why don't people rebel against this? many people in the public don't understand this is taking place. the second reason is they feel like there's nothing they can do about it, it's all based on insider deals, and it largely is based on insider deals. the most recent time there was a vote, in miami there is a vote as to whether to use public money to renovate the place where the miami dolphins play. the citizens of miami voted against that, because they got the vote on it. >> more with greg easterbrook tonight at 8:00 on c-span's "q&a." >> as a pakistani, i'm concerned about pakistan. i want pakistan to overcome its dysfunction for pakistan's sake. this is not just out of love or caring for the united states, out of love and caring for

pakistan. pakistan has to understand and realize that a nation -- as a nation that no other nation can stretch you in size like your neighbor. india is an advantage to pakistan. pakistan has to happy with security with india. pakistan and india have nuclear weapons. now pakistan needs to trade with everybody in the neighborhood, address its economic dysfunction, put 48% of its school-age children who don't go to school in school, and make sure that pakistan's population does not continue to rise at a pace that is much faster than the pace of economic growth. none of those things can be addressed just by building relations between an american military personality and a pakistani military personality. >> former pakistani ambassador to the u.s. on the painful

history of pakistani-american relations. tonight at 9:00 on "after words." next, bank of america ceo brian moynihan. he discusses the state of the u.s. housing market and homeownership. as head of the second largest bank in the country, he talked about how much the bank has spent since the 2008 financial crisis, to settle a lawsuit. he was interviewed by gerard baker for about an hour. this is an interesting time to be in new york, change the political direction here. it has been a very interesting time to be in banking in the last five years.

five years ago, the worst financial crisis the country has had in three quarters of a century. five years on, much progress has been made. the financial system has been largely repaired, the economy is at least not in the shape it was five years ago. yet we do not seem to be able to shake off the consequences of those -- of that financial crisis. what is going on in the government seems to be very aggressive still about going after what it perceives to be abuses that took place. we have seen what is going on with jpmorgan over the last couple of months. there was talk of perhaps other banks. you yourself have been involved in a number of civil and criminal cases. where are we in this process? are we still going to be working off these, going through these regulatory and legal issues for years to come? >> i think there are a couple of things to keep in mind. we put it all out there so everybody sees everything going on and we do it every quarter.

the thing that gets lost a lot is the perspective of history, which is if you start back four years ago, i think the number that we paid out, not the number that we accrued but the number that week paid out, is in the -- that we paid out, is in the $40 billion range, through settlements and all different types. the first quarter we took a charge of $19 billion, the second quarter, $11 billion. our strategy has been to work through one piece at a time based on the merits of that piece, and then the next piece and the next. we have settled many things that came out of the crisis. there is an element now, we are finished with the mortgage backed securities part. our company is winding its way through the courts with the larger cases. i think that is the perspective, our company has paid a lot.

you have to take that legacy and encapsulate it. you have to make sure the rest of the company gets invested going forward. they are gaining market share at the same time they are put it behind us. i could take the next hour and a half and explain every case and what went on, but i am not sure that would be tremendously good for the setting we are in. it costs a lot of money. a lot of it is behind us. there is still work left to do. the real question is did you learn from it and how do you make sure it did not happen again. >> do you think this is -- is the government piling on now? is it a fair reckoning for the errors and the abuses that nobody denies before 2008, or is this now -- this has been described as a shakedown.

jpmorgan, in civil and other suits, $40 billion and rising. this does look like -- the attorney general has made it clear there are many other cases to pursue. is this fair? >> the biggest debate is around we bought a company called countrywide, an extreme situation. from my standpoint, what is fair and unfair as an restricting -- an interesting debate to have. >> would you like to share some of that? >> how do you move the company forward, put stuff behind us, settled the company down? how do we build the capital so that people do not think the company is at risk? i would rather not engage in that dialog because i do not know what it does to help me do what our team has to do for customers.

>> let's look at bank of america. as you say, over $40 billion so far. there are other issues going on. you have the criminal case. the -- the bank was found guilty of fraud. >> that was a civil case. >> civil case. i know you do not publish your expectations of liability, but what can we expect in the next year or so? >> if you look in the queue, liabilities have accrued and we have a range of possible losses based on probable cases going on that we have published. on the litigation side, we publish those numbers. our run rates changed dramatically. if you think of 2011 when the company lost, basically broke even. we probably had $25 billion or $30 billion of charges.

this year we had a couple billion for one case, a half a billion, a billion. the numbers are smaller. >> what is your ballpark estimate of what this entire thing is going to cost? >> we will see. >> jpm, the estimates that i have seen that bank of america will be around $6 billion on fha. >> the issue is all these cases are much different, so extrapolating from one to the other -- by the way, because we have settled on a lot of them and we know what we did versus what we think other people did. it is hard to speculate. >> so it is reasonable to assume the total cost will be up to $50 billion overall. >> the majority in the mid-40 billions.

>> most of that was related to countrywide? >> yeah, but everybody, all the pieces -- even like last year third quarter we settle the case around the merrill lynch transaction -- we settled a case around the merrill lynch transaction. this year there are other things in there. the biggest part of it is mortgage related, mortgage related activities that took place in the mid-2000's. we settled some discrimination suits hanging around for years and things like that, so there have been other things. >> you paid what for countrywide, $2.5 billion? >> that was -- >> is that one of the most memorable acquisitions of all time, could we put it that way? >> i am not sure that anybody could have known that mortgages would have done the same thing. the reality is nobody knew. >> so you do not fundamentally dispute the government's case,

what seems to be the public's view, that wall street behaved pretty outrageously touring that -- during that period between 2002 and 2007. and some of those practices, whether direct lending practices of companies like countrywide, or the bundling of securities and investment banks, you do not dispute that a lot of things went bad? >> i am not sure that i agree with the premise of the question. but as a good reporter that is how you ask it. >> what should the premise of the question be? >> the lesson we have to take away from mortgages is that consumers over borrowed, the companies overlent. when you get to the modification project, it is an outcome of having a serious number of

delinquent loans we never intended to have. when you talk about litigation costs, we had to build up from 10,000 people to 58,000 people to modify 2 million loans. each one of those takes hours and hours to work through the customer. 58,000 people, all the way back down to 30,000 people. we end up with situations where borrowers and lenders put people in a bad place, and we have to think through the process. what is the role of homeownership? is it as good as we think it is? we have to think about down payment requirements, the structure of the mortgage financing. those are keys and that is one of the lessons learned on the mortgage side. on the other side, the trading

side, so to speak, we have to remember we are in this business to help our clients and we have to do everything to help our clients. at the end of the day, proprietary trading is something our clients demand of us. we should be moving risk at every moment. that is how we are running these things for a long time now, and that is why rwa and risk measures down. our value of risk is 25% of what it was four years ago but we are making as much money. the two big lessons are how do we end up with a reasonably structured consumer mortgage finance that is fair to everybody and works. the taxpayer, the borrower, the lender, and everybody between. and then we have to make sure that trading stays within where it is supposed to. that we make it all happen and

stay out of investment and proprietary trading. >> you made a lot of changes. if you look at the lessons and the things that have been done , as you say, capital ratios are stronger, liquidity ratios are stronger, management is better in shape, management of risk is better -- there are still some people who say that is not enough to really avoid the next crisis and that we still have this problem of banks that are just too big to fail. that the banks are so important to the financial system of the economy, that should they get into serious trouble, they are just too big and they will have to be bailed out. you know better than i, the likes of susan warren -- >> it is elizabeth warren. >> sorry, elizabeth warren, the senator of massachusetts, is pushing hard to break up the banks. are you worried that with this

continuing regulatory pressure that argument is going to gain ground? >> let me come back to why i believe the model, the universal banking model works because i think that is the fundamental policy decision. if you think about it from a customer, a client's perspective, the ability for a major company to bring both corporate banking and investment banking -- especially in light of the new capital rules, the fact that you have to make sure you are getting paid for using your capital -- is the superior is this model. -- business model. it is the model the clients want. it is the model that wins. when you go to the trading side, you cannot do the first model without having the ability to distribute the bonds or equity out to the market, and that market -- universal model works. it is the model outside the united states and it has been.

the question is, what is the scope of activities, how much capital, how much liquidity? think about last year's stress test that the fed went through. when we did the work across 19 firms in the united states. that test said take the scenario, we are as close to the great depression as you can get. run it through your models is if you ran through 100 miles per hour with no preparation. you're not allowed to say i had six months to think about it and don't change it. you're not allowed to say i had six months to think about it and don't change it. the standard which is pretty high, that is in the model, and the results of that stress test last fall -- or last spring -- that all the banks could continue to lend. it is not that they would survive, they could continue to engage. getting the banks to capitalize to that framework creates stability around the question

that is much different. so you put the stress test and those things into answer the question so that the probability of anything happening is systemic is low enough that the question, what is the additional cost to society if it goes further, the model is superior. the discussion at a policy level does not hold merit. i understand that people are upset because it is complex to merit -- it is complex to manage. that is what they are worried about, could there be a mistake made. the reality is we are in a business taking risk, so our business judgment is on mistakes that are supposed to be made. is there capital, liquidity, and the resiliency to absorb it? >> with the universal banking model, when it works it seems to work very well, but the risk is when it goes wrong it goes badly wrong. the fact that as a result there is no question that because of the risk, there is perceived risk, that people take risks

with that money, that they are able to do and that ultimately imposes a burden on the government, on the taxpayer. >> that in the u.s. is a little different. the stress was severe, so i think now, if you visualize a tent, what went on in 2008, people facing a crisis had to figure out creative solutions, if they were close enough to help solve, now they are all in the tent. the key is to never let that thought's a sleeve, whether it is on the consumer side with the consumer bureau, whether it is on the banking side, everybody has to be in the tent. so the rules and regulations -- all of us report every day all the risks of what is going on, counterparty risk, continuously.

you can see most of the risk is in the system, not sitting out here. i think those are good things to sort of protect it from happening again. it is not universal bank model. especially in the u.s., the deposit insurance model, that is what guarantees that. each time a bank fails, a percentage of that cost comes to bank of america and then we have to police each other. there is an intermingling on the balance sheet of banks. our security activities that you think about our -- our outside that. >> let's look at the macro picture, the macro picture, the macroeconomic and markets picture. you are a huge bank, privy to organizing information where we are. let's start with the housing sector. obviously when interest rates

start shooting up over the summer, there was concern about what happens to mortgage demand and we see that with some of the banks results. then there was the question mark about whether the fed was going to taper. what is your concern about the housing market and more broadly, the economy? >> the issue with mortgage production, mortgages where people buy homes and refinance when higher interest rates go to lower interest rates. when rates rise, purchase continues to be stable, so the number of applications we get through the system every day on purchases is stable, slightly up from earlier in the year two now. that market is robust and that is the market you see with housing sales and things like that. then they move around a little bit. it is fairly stable in lots of markets, and in the 212 area code you cannot buy a house -- the markets in boston, dallas,

san francisco, there is a shortage. the refinance went down, and that is more of an issue for us in terms of how to get the cost down. it is less of an issue for -- if you refinance a mortgage and save $100 a month, it is $100 a month. the real economic spinoff of houses, nobody buys a house and let it sit their bank. they paint, put new appliances in. -- and let it sit there. they paint, and put new appliances in. they should get up above $1 million based on population. that creates economic activity. the purchase money market, is it solid? does it continue to grow?

if that goes on, the refi creates activity, but it will not change people's course of history. 100 basis points for a 20,000 dollar average mortgage is 2000 basis points per year. you will have a little more cash flow but the rates for refinancing now are fairly small. >> mortgage origination did drop. let me take it forward. we saw what happened when the fed even talked about tapering in may. we saw bond yields shot up. we still do not know exactly when they will taper, when they will start withdrawing the stimulus, but presumably they

will at some point. is what we saw over the last six month something that we should be concerned about? the idea that tapering will happen, interest rates will go up and it will chill the housing market and the economy, is that something we are going to see? >> why is the rate structure being held so low, and why is qe going on? it is to preserve the rate structure until the economy gets going. with chairman bernanke and all the different people who talk, who set the minutes themselves, they are on the side of making sure the economy does not go backwards because it is a big economy. 2.5 or whatever times the size of china. if this does in the wrong direction, the world is not really there to help it. i think rate structure stays low. so when they set taper, interestingly enough, they did not save a lot. the markets have taken a 10-year instrument, a 10-year treasury drawer a 30 -- treasury, or a 30-year mortgage. they got ahead of them and people got convinced it was going to happen and then it did not. you saw the 10-year went all the way up to almost three percent.

it will be an adjustment, and there is no question everybody worries about that. we worry about all the time, what will happen, what will be the effect? the reason why the rate structure goes up is that the economy is growing faster than people think it is. underneath it, the economy is growing. other reasons our mistake inflation. that is a problem. >> but from what you are saying, you don't think the rate structure is going to go up very much. you continue to expect this fed support for some time? >> our view is a little over 2.5% growth in the u.s., a little over 3.5% in the world. re-think i see in our data and that i hear from our clients, that is fairly fundamentally

sound setup. people write it forward. -- people grind it forward. you are still much higher than the target, whether it is a target that is assumed or announced. the markets believe the same thing. the rate structure stays here. if you go back and do the research about how many days the 10-year traded under 3% in its history -- to have been another couple of periods, but it is all right now. i think we are approaching five years. think about that. people say this could go on a long time. it already has. now the question is how much longer, and the market has 10 to 15, and i don't see anything that would cause you to feel differently.

i guess that is a fundamental economy moving forward, there is just the additional 3.5% growth. >> but can it go on? the fed balance sheet is now close to $4 trillion. can they just go on like that without creating imbalances? can the economy go on being dependent on the fed stimulus forever? >> it is already in there. they make their own estimates of how they are moving around. driving rates down. remember, that is $4 trillion, more than $16 trillion. the treasury did outstanding with $1 trillion of securities debt outstanding. it is big but not as big as people think. if you take some of the big asset management firms, our balance sheet, we buy per quarter.

their are a lot of buyers out there, so i think it is a precedent to unwind and that is when everyone talked about. some of the other countries around the world, a lot of economists say you have a $4 billion balance sheet against the $15 trillion -- they are outsized relative to other markets. >> where it all seems to have gone over the fed stimulus, maybe it supported the simple, real economy a bit, but a tremendous amount is reflected in asset prices. tremendous run-up in stock prices, housing prices. by historic standards, very well supported. is this creating imbalances, that these asset balances are very important? >> the impact on emerging markets and all this, there are probably better people to talk

about it. if you look at fundamentally sound of valuations of abilities, take us. you can get our strategists and stuff talking about the s&p overpriced, but it is not out of range. others can talk to it better particularly. but you do not see -- it is not like it was around 2000 when companies did not have earnings. corporate earnings are in good shape. is it a little bit overpriced, but it is sitting on top of a ton of earnings as opposed to sitting on top of hope or something like that. i think people overstate that affect because if you draw lines of continuous movement you are getting back to levels that were there in 2007 and 2008. spending is higher in things like that. it just took 5, 6, 7 years to

work through. the crisis started in 2006 and 2007. people think it started in 2008, especially around here. the reality was the housing crisis started in the third quarter of 2006. you are now seven full years after that and we are still not back to those levels. there is still work to do. housing prices being out of control -- if you go back, you are basically back on the curve. we had a crazy up and down and then back to normal. >> you have millions of customers, millions of credit cards. you see pretty much in real time how the american consumer is behaving. what is your current read on that? >> october 13, total spending by bank of america customers on credit and debit cards was about 5% over october 12. that is a pretty consistent

number we have seen, so that is good. i do not know what october data showed. but consumer spending and spending is a little bit more on credit than debit. some can be rewards-driven. spending on the internet growing 14% to 15%. people are using cards on the internet. internet retailers of headstrong growth results. the consumer spending -- we see that is good. the only time that that really fell off in the last four to five years was early this spring, february of this year, when he had a triple whammy of the year-end on people's mind and the unemployment taxes.

it was the flattest year. it stayed at about a 5% level since july. 6% is what we have seen in the better months. consumers are spending. >> consumer confidence dropped around the time of the government shutdown. did you see much evidence of that? >> i watch what they do, not what they say. i did not feel very good at that point either. but if you watch what they actually do, you did not see a break in spending. consumer spending drives a lot of activity for the world. we have to be careful as we go along. consumer confidence, stock market levels, trading levels,

spending levels, all that is very critical. people will stay employed, make more money, and be able to spend more money, and that is critical to the world economy. >> it was not a pretty spectacle to watch, what went on in washington with the shutdown. they are back at it again now, trying to get a fiscal deal. are you optimistic that we will get any kind of sustainable, long-term fiscal arrangement? >> long-term, i think it will be a political discussion. i am more confident than i was a couple months ago. they realize how much inability to make this not be an issue -- that is too many double negatives. but the rate is 2.5%, and maybe it will be moved north. default is not a question.

if you take those two things off, now you are on the political side. it is a question of spending. that is a debate the congress, president, and both parties should have. the consequences of having extraordinary measures or whatever, i think there is much more seriousness, much more sobriety about that question. i think it is getting more divorced. let's not create a problem for the economy, but let's begin the debate on spending. >> you are very much on the sharp end of the regulatory sphere, if you like to go over the last few years. you have come through it stronger, and the bank is in much stronger shape. can i ask about the broader regulatory environment? you think we have a balance right now? clearly, there was a political

consensus in this country in the late 1990's to early 2000's that maybe it was to lose. since 2008, there has been a very aggressive mood, whether it is dodd frank or the various enforcement actions that have been taken. it is a much tougher regulatory environment. have we gone too far or are we roughly where we should be? >> it is hard to assess that because there are still things going on. i would say that overall if you think about the pieces that were put in place, the question on consumers was -- did we end up with the financial services industry doing things for consumers that turned out not to work the way the consumer thoughts and they cannot understand, so the consumer bureau came out of that and tried to simplify? we have to get a balance. an organization was started in

the middle of this thing, which is pretty tricky to do. but the principles are the right ones. we have to be more streamlined. we quit doing overdrafts on debit cards. people were trying to figure out the mechanisms on the payments and how they work. we got ahead of this. the consumer side of the bureau, there is still work to do there. but you can see the set of rules and how it will work which leads to a simplified consumer model

for a company like ours. we do not sell insurance. we have a bank account, lending for cars and houses, and credit cards. you get out insurance and all this stuff that people build over the years, and that is very straightforward. we do not do subprime and stuff like that your it on the institutional side of the house, i think the impact of the capital, leverage tests and things like that, which are good to make sure it never happens again, there is still an adjustment that will go on. so people -- major investors around the world, they are big institutions and we are big institutions. if we have to hold more capital and liquidity, that will have an impact. that is a trade-off. is it too far and will swing

back? it will get level back. the key is to get it done so we can help society. this is a technical matter. we have to let the regulators work through it. and we have taken care of the problems you are concerned about, and focus on that. there are things that have unintended consequences that everybody knows about, but it is hard to fix them. any give back is a give back. as time goes by, my experience doing this over the years now is that heads will prevail. it will be much more tight than it was before. frankly, as you run a company and think about it, from my standpoint as ceo, it makes my life easier. >> are you concerned broadly about the political climate? >> there is a few out there. there is still a lot of resentment. this crisis was largely created by financial institutions and you can argue by borrowers as much as by banks themselves. but it was a big financial crisis. five years on, stock market is up. people with money are doing

better. unemployment is still very high. a lot of people around the world are still very resentful. there is a kind of populism rising, and understandable one. even in new york city, people are feeling it. we have had years where the rich have continued to do very well and the middle class got the shaft. how big a threat do you think that is? >> if you took the people that paid at certain levels, the growth rate at the lowest levels of the highest. in our own world, we are trying to do that. the issue is that the jobs are not there. you used the word financial crisis, which is fine, but it really was an economic crisis. the basic job creation mechanism had moved, and we were all covering it up by doing things we probably should not have. government-level borrowing. trying to make three out of two.

all of that came to roost the cuts the amount of leverage in the system came crashing down. the two places again crashing downward the two places that had the fundamental issues and the work their systems could do was going other places. we did not address it well. a lot of mayors around the world are focused on how to make sure they can employ and have employment-ready graduates from high school, technical school, junior colleges, and colleges. having a symbiotic relationship between the group i have coming out of high school or junior college and the employers. it is a jobs issue. that is what leads this thing. we have higher unemployment than

we should. to make it about -- the question is how to create the jobs. as an industry, we have to get people comfortable that we are fixed enough that we can focus on the other issue which is how to create jobs. >> let's open it up to questions. please, there are microphones rotating and people holding them, more importantly. if you could identify yourself your name and your organization. >> don murray, bessemer trust. what does bank of america stand for its employees and clients -- what do you stand for as an organization today? >> the purpose that we have is to help our customers and clients live their financial lives through the power of every

connection. first, it is their lives. our job is to serve and help people with their lives. whether that is the individual consumer trying to live their lives and we are providing transactional accounts or we're helping them do and acquisition for an investor client, it is to help our clients and customers live their financial lives. the second part is critical. we have been in business 230 years if you go back to the oldest part of our company. for the first time in history, you have the capability to cross the four or five core products customers need in the company. taking merrill lynch wealth management and combining it with u.s. trust, we had the trust capabilities in every market that we can help serve affluent, wealthy clients at a level that never existed.

take the investment bank and corporate banking, it is the best it has ever been. it is for the customer and client and that relationship. it is not like we're trying to take a product that is not one of the best standalone products in the world -- it is not an inferior product. we have the best standalone products in the world. the purpose is to help people with their financial lives, their lives, serve them. we facilitate. the second question is that we cannot do it one product at a time. we have to connect it. give them more value. it is true for the retail consumer and more. >> thank you. >> two questions. softball and one a little faster. big bad. big banks bad. second question -- [laughter] do we need champions?

>> chairman of the bank, next recession comes, things are bad. the object is to sell the pieces off. a company comes to you and asks if you want to buy it. the attorney general says i promise we will not go after you. are you going to do it? >> i think if a large institution failed, i would find it hard to believe that they would want to make one of our very large institutions larger. i think they would go to someone else. that is my guess just by the nature of it. is big bad? we can do great things for clients and customers based on our skills. take the consumer, it is about what is valuable. we look at the costs to provide to consumers and increase the functionality which allows us to

not charge the overdraft fee. you cannot do it if you do not have efficiency in the system. we are down 700 branches from our peak. 40% more deposits. the customers are up. we went from 2007 to 2013 from zero mobile customers to 14,000 signing up per day. mobile deposits. the investment cost, probably half $1 billion we put into mobile and online in the past few years. that is our biggest good. it allows a tremendous feature functionality to the customer at a lower cost for them. we cannot do -- we're limited by law to do acquisitions. so your concept is -- >> not the whole thing. [inaudible]

>> we trade portfolios all day long, but i am not sure we need to acquire anything. we need four or five cities to get the top 30 in every market. we're just not doing acquisitions. >> big is good but you are not planning on getting any bigger? >> what has been interesting, when we are in davos and european banks are talking about a shakedown -- 2008, combine institutions probably close to $3 trillion. think about that. that is a pretty good size institution. the capital has doubled. the core business -- even today, we still have tens of billions, maybe $100 billion. there is a lot of growth. there might be a day five years out where the growth comes

through. we can get rid of the $40 billion of home equity loan still left over from the crisis, those type of things. we only have $90 billion in home equity loans. half will run off and half will be replaced. so we can grow without growing. >> thank you. another question? >> my name is ivan from tigress financial. it seems to me that thinks seem to be most aggressive when they should the most conservative and most conservative when they should be most aggressive. they were not aggressively loaning against real estate. they were running away from real estate when prices were addressed. and then prices were inflated.

the cycle has continue throughout banking history. >> a specific thought and the general thought. looking at commercial real estate or commercial lending in general, just not the issue in this cycle. it is pretty remarkable. it was the issue in the fallen angels cycle in 1999 through 2001. most the commercial real estate issues that we acquired we ran through pretty quickly. i do not think commercial lending was a problem. that does not mean it will not be a problem next time. that is what we have to be careful of. the general principle i focus on is balance. all things in moderation and most people think their grandmother made that up but it was actually roman philosophers. you have to keep it in balance. then me give you a real example

from our company. at the peak of the we probably had about $250 billion, largely credit card portfolios. we now at about $100 billion. if we keep that at $100 billion to 110 billion dollars and the economy breaks in way we do not think about, that is not a life- threatening event at all. charge offs were at $1 billion a day and could go up. in one quarter which urged about $14 billion in credit cards. that threatened the capital. the key is not to be good at underwriting credit cards. it is also to keep the balance of the portfolio in light of the $2 trillion balance sheet. even if you are wrong, you are not real wrong. you're right, the hardest time to have that discipline is in good times. your back is against the wall and you have a portfolio you have to get rid of. if you think about it, how you

balance the company, we have great consumer lending, commercial lending, markets, and try to keep them in relative size so they are not dependent on the volatility. so they can withstand the recession and have enough capital to get through it. so the test will be, over the next few years, can we maintain the discipline? when i was talking about the nco, and we talk about if we need to grow faster, and i said you would have a new one because i will not go through this again. i am 54 years old. i went through the crisis in the late 1980's. we try to keep that on our manager's minds every day. the term we use is responsible growth. growth in the market but not exceeding it because then you get risk. sustaining the not the fastest growth rate.

>> thank you. >> martin candell, formerly of cnn. i have a political question. there seems to be a growing sense of resentment among the traditional republican establishment, and i assume most bankers are part of that establishment, towards the growing influence of the tea party on the republican party. what is your view of that? >> i am trying to think of what upside there is. [laughter] my view is that our company's job is to help people understand the facts of what we see. we try to stay out of one side or the other in politics here at with this question of the government shutting down, here

is what really will happen -- if you do not give us the money, we cannot put the money in social security recipient's accounts. it is a real pain. i try to stay at that level. my personal political beliefs should not shape this company. that is just not right. we have a deep engagement with everybody. we mostly try to say -- what is the right thing for america? at the end of the day if you think about who we are and what we reflect, if america is going fine, we are going fine. so i try to stay out of it. >> [inaudible] >> going back to the other question -- what worries you? the question earlier was, you know, we tend to have this kind of contrarian or pro-cyclical approach. when things are going well, we add fuel to the fire.

when things are going badly, we make things colder than they are. what worries you? what can go wrong? >> well, that whole thought process and how to keep people's expectations and the investment base, employee base, and customer base, we are trying to stick to what we do. that might make some people unhappy. you have to be customer focused but not to the point that you kill yourself. it worries me about getting managers to stay focused on responsible growth. remember, we can mean and move a lot. put another $100 million in credit cards. if i drop mortgage prices, i can get a lot of mortgages. how to stay in the middle, that is what worries me. you have to be careful. even the rules, out of the

crisis for a guy that ran strategy for eight or nine years, one of the best things that came out of it is the director level, supervisor level, manager level, focusing on how to stay ahead. you look at capital in the future. that gives you more of a guidepost. second thing is with companies like ourselves that cannot make acquisitions, you have to retrain yourself as an industry to be like companies with organic growth. that is a sobering issue because

you cannot do an acquisition or something like that, so you only have one choice. what worries me? i mean, i still worry that we have to get through -- we cannot let the debt issue in the united states be a problem. we have to get europe moving along because it is also a big economy. teenage drivers, those types of things. >> [indiscernible] think about it again. >> another question. >> i am with the "wall street journal" on the business side. about talent, what is your philosophy on recruiting and developing talent within bank of america? >> as a company, we think about the history of the company for the last 20 years or so and there was always an acquisition. we always had two people to do a job, if not more. that has changed now. we have development of processes. we have talent processes.

we look for the best we can find. but it has changed dramatically in how we think about people going forward, we get picked off more than we pick off people nowadays. we have a segment that is $3 billion after-tax, and that wealth management business is the fifth largest bank in america on its own. our talent is very experienced and capable. we have to then save, how do you groom people into the business? we are very robust at hiring. not only talent acquisition but also diversity. we have stayed on college campuses. huge acceptance rates for juniors to seniors. the biggest change is what we do in our leadership development programs have switched a lot. there is the question of organic

management across decades. you want to see what will go on down the road and plan five to six years out today which has not been a requirement. basically, we did an acquisition every so often that changed that. as a leader, the biggest job of my team is to develop the talent. that is hard because a lot of them are raised as operators and want to run the business. it is tricky that way. the third element is training people to deal with complexity, the complexity of the outside world. i grew up in a business that was very well-contained. and then we hire from outside. we hire experienced people left and right. the big challenge is the

tradition of the training programs which are now the core dependency to get that right. >> any more questions? >> hello. i am with the "wall street journal" news guide. you mentioned you have worked for the last few years to put a lot of your legal troubles behind you. i am curious if, at the time you started the process, did you ever think about the possibility of a global settlement, of trying to settle everything at once? also, if you think that is potentially a better way to deal with these legal headaches, because potentially you can sort of avoid the reputational damage that years and years of legal battles will have? >> i do not know if you can

accomplish that. these are very different cases. the merrill lynch securities legation is completely different from the other case. they have nothing to do with each other. no common claims. you really have to take them as they come. the servicing settlement was a global settlement. there were pieces. there were the settlements of fannie mae and freddie mac across the put-back risks. a truncated the risks and put it behind them. mbia settled mbia, but that does not mean you settle with fannie mae on some thing. there is a relationship but they are not at all common. people cannot combine private litigants. it takes chopping and chopping

and chopping at it, and we have been doing it. >> i am from the financial times. eric schneiderman has said that the tentative eagles should be a template. if you disagree with that statement. i would like to hear a little bit more about that. >> we don't know what to the deal is. you have to remember that even with the stuff that was done a few weeks ago, we did that two years ago. unto you look at the facts and circumstances, they are very different cases. i would trust that there is nobody more educated than bank of america at this point, unfortunately.

>> we have not talked about the latest round of fact to the t, and thel case in europe latest investigations on exchange trading. any of that in your ballpark et al. why are you happy to be out of that business? >> we disclosed all that stuff so there is nothing else to say. this goes back to the broader point people can get themselves and operational right. they will go on, but i would not have anything to add in the public domain. time for a couple more questions if we have any more. yes, over there. popper, cnbc. you are talking a lot about profits growing in that

trajectory, but it seems like in the last few quarters, the issue has really been rather norms -- revenues and how you grow that ,nd what, following on that roe fora sustainable bank of america and where do you think your peers will come out going forward? >> in terms of revenue, we $20 audit billion -- audit -- odd billion. you have seen that stabilized. without getting all the details, basically you have portfolios that were running off because the interest rate environment changed. you have seen our income, our revenue from spread stabilized.

you have seen that number stabilize and then the seaside has trading that is very strong but that is traditional. or quarter came in ok and we will see what the fourth quarter is. the revenue has stabilize. there is nothing we can do for our shareholders except get the cost structure back in line. in the difference of earnings levels is explainable and is largely attributed to the mortgage stuff. was $3 billion is down a little over $2 billion and coming down hundreds of millions of dollars per quarter. it will then put roe's in low teens. is still taking place in our company and we still have a lot of work to do, which is really getting legacy

services or servicing the bad mortgage loan stop down. that is going out and is chipping away every quarter. and thenues are stable core revenues are actually growing, but the reality is that stability is key. the real driver is the cost structure. >> one more question. yes, over here, actually. >> thank you. you comment on your strategy overseas? there has been a lot more talk, specifically in europe and in china. >> sure. outside of the u.s., we do basically to businesses. we have the business of corporate investment banking and global markets.

serving the largest markets in the world and global markets servicing the investors across the world in other countries and other countries investing around the world. that platform is built out. it is very strong. agocombination four years of both investment banking and corporate banking to drive it so it is really to businesses. it is a fine company that is a good market share but the to focus businesses going or is that. that's about 18% of our revenues. .oes not a large company the fastest-growing revenue source for middle-market companies is international stuff we are doing for them. it is absolutely critical that that international peace is competitive and growing. it does not make a difference if i'm growing -- sitting in zürich or a large company taking about

what they're going to do in brazil. same.estion is the the same went you are talking to an investor whether they are in new york city or somewhere else. what are the companies in brazil i should be thinking about for the private equity side or to the bond side? and likewise, how do i invest around the world? there is no distinction between united states international board of those two businesses. we got out of everything else. we focus on those two businesses. an interesting fact is we have more loans funded outside united .tates men inside united states

>> let me ask the final question. famously was supposed to have said a lot of people said to him, it you need more excitement. .hanks should be more exciting sometime after that he is supposed to have said, i have had enough excitement to last me a lifetime. >> he said it before. have you had enough excitement? >> no. we have a lot ahead of us. i don't want to that kind of to goment, but you've got back to what the fellow asked about talent. have a team who gets the charge out of doing what we can for customers every day. our team gets that.

i spent most of my security consolidating this industry. this can never happen again. i grow as a lawyer for a few years doing deals. one of the reasons i was asked to not be a lawyer anymore is because one of the bank failures in history. said, will it and you come in and do it as principle and not as a lawyer. that was exciting. we did 13 deals in a year one time. you have to have people who get their excitement out of hitting the mobile capabilities exactly right that allows people to literally take a picture of a check instead of walking down the street to an atm, going in a branch to the process. that takes two different types of excitement. job is completely different than their job. they gave us this franchise.

our job is what is will become next and that is a completely different task. other companies will still have our job isate but completely different. if the excitement you have to get is serving customers with a balance. all of that stuff we talked about. if you are not excited about that, you have to get out. frankly, we have had a lot of people leave whose jollies were about acquisitions. they left. change, go through the whatever the word might be, i think anybody can because my teeth were cut completely on deals. >> ladies and gentlemen, this is been a great event. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> monday is veterans day. later in the morning, they will attend a read laying ceremony

and the president is expected to give remarks. watch for live coverage beginning at 11:00 a.m. eastern time on c-span. monday at the national press cub, we will hear from walter bissinger from one of the largest investment companies. he would talk about issues facing future retirees. we will bring that at 1:00 p.m. eastern. will not be in on monday in recognition of the veterans day holiday. they will return to work on tuesday. we spoke to a capitol hill reporter on what is ahead on their agenda. >> humberto sanchez is a staff writer with "roll call." budget and senate conferees hold that house and senate conferees

hold budget talks. what is the status of their talks? >> they continued to try to find common ground on the goal of the talks. expect a lot of positioning on open positions on where the negotiations will begin. senator patter murray actually gave a speech about what her goals are on the floor last tuesday, saying that she is looking for a budget deal for the short term, basically, and to rollback the sequester, to replace the sequester, and she is hoping that republicans go along with closing tax loopholes to do so, but republicans seem somewhat skeptical of the idea because they think it's just another way of raising taxes. >> next week, senate committees are holding confirmation hearings for two of the administration's nominees. jeh johnson to be homeland security secretary, and federal reserve chairman nominee janet yellen. what's the status of those nominees in the confirmation

process? >> senate democratic leader harry reid definitely wants to try to get this done as soon as possible. they are both coming up next week, and we could see some action on them before -- soon after they come out of committee. if they do come out of committee, senator rand paul has threatened to put a hold on janet yellen's nomination in order to get a vote on the federal reserve amendment he has been pushing for a wild. would jeh johnson, some republicans have raised concern about his qualifications and they have also said that his background as a one raiser for president obama is an issue as well. >> tell us some of the details of the legislation to be taken up on the federal health care law. >> the law basically authorizes insurance companies to continue to offer plans that would have been canceled due to the new standards under obamacare. the bill basically -- president obama during the debate said people could keep their plans if

they like them, and now that seems to be not the case. millions of people have gotten notices that their plans have been canceled. the idea behind this is to maybe try to score some political points on that, but also there is a big debate going on in congress about whether there should be a delay in the affordable care act and many of its provisions. >> health-care care legislation also scheduled in the senate involving pharmacy compounding. they are also planning apparently to consider a few more judicial nominations. what else is going on in the senate? >> that will be the balance of the week. we will have a vote on adc circuit court judge -- a d c circuit court judge. she likely is not going to be able to get the votes needed. republicans argue that this three vacant seats on the court, and the caseload for the court does not represent or them to fill those three seats -- is not requisite for them to fill those three seats. they probably will not give her

cloture, and she probably will not get the votes needed. then the senate will move on to overcome pharmacy legislation, which is basically designed to expand oversight after a fungal meningitis outbreak last year killed 65 people due to medication that was contaminated. senator venter wants to offer an amendment that he has been pushing for a while to prohibit staff from getting health care contributions, and also to ensure that all staff and lawmakers and certain executive branch officials go into the exchanges. senator harry reid is offering the opportunity to have the amendment on the condition that he does not offer it again in this congress. they continue to talk, according to democratic aides. >> we thank you for your time

today. >> thank you so much. collects both chambers of congress return on tuesday. the house will consider bills under suspension of the rules with the votes after 6:30. they will debate the nomination of nina. a procedural vote is set for i: 30. watch live coverage on the house on c-span and the senate on c- span 2. >> the place is now called the mercedes-benz super zone -- superdome in new orleans. is built entirely at public expense. after hurricane katrina badly damaged, when it hosted football games again it was a national feel-good story and rightly i

would say so. the public pay for the repairs. the public is invested in today for about $1 billion for the construction of the mercedes- .enz super zone -- superdome the man who owns the new orleans saints keeps almost all of the revenue. why don't people rebel against this? i think many do not understand what is taking place. i think the second reason is they feel there is nothing they can do about it and it is all based on insider deals and it is recently -- mostly based on insider deals. there is a vote on whether they should use public money to renovate the place. the citizens voted strongly against doing that because they got to vote on it. >> more with "the king of sports" tonight at 8:00 on c- on c-span, next newsmakers with iowa senator, chuck grassley followed by

victory speeches of the governor speeches. and lateris christie a look ahead at the 2014 midterm elections. >> joining us this week on "newsmakers," senator chuck grassley from iowa, member of the budget finance committee and ranking member on the senate judiciary committee. >> thank you for being with me. >> thank you for inviting me. >> joining us with questioning is the chief washington correspondent for the examiner. we are about one month away from the self-imposed deadline for congress to come forth with the budget plan spending bill. what will it look like and will you reach the deadline? >> i don't believe it will be very easy for us to make an agreement between the republicans and the democrats because the democrats want to increase taxes, they want to forgo sequestration.