>> rose: welcome to the program. tonight a conversation about america and banking with brian moynihan, the ceo of bank of america. >> we have been in business earliest predecessor to 1784 so we have accumulated all of this

to make lives better for people, whether a person starting their first job to you, as affluent cause kawrnl to a small business own tore big business owner to hedge fund manager or trader, our job so help them live their lives an to do it by connecting together all the pieces and that is what makes us unique. it is not we have all of these pieces. the eces are the best in e world, brokerage capabilities to banking capability or investment banking or commercial banking that is what make us unique. >> rose: brian moynihan for the our, that is next, funding for charlie rose was provided by the following.

>> rose: additional funding provided by these funders. and by bloomberg, a provider of multimedia news and information services captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> brian moynihan is here, the ceo of bank of america, one to the world east larger financial institutions with over $2 trillion in assets. he has led a transformation of ththe bank taken over three yea, noncore assets and businesses have been reduced significantly and shareholders have been rewarded, stock more than doubled in 2012 making it the best performer of the dow jones industrial average, fortune magazine says moynihan is

qualified to lead into the post financial crisis environment, quote, she perhaps uniquely suit ford job of chief executive in today's banking world, the business is now so complicated and so fraught with hidden dangers, lodged in such esoteric products the best leaders those totally immersed in the data and details, the ones who serve in their own risk managers, that is moynihan. i am pleased to have him here at this table for the first time, welcome. >> thank you, charlie, as the pleasure to be here. >> i am also pleased to learn that you have picked duke to win in the final four. >> well, it is a poll between my son and his room mitts and their father, so it is not a b pl, but a bibract but i hope we do it and coach k runs a marvelous program and can do it again. >> how is bank of america since you took over ceo? tell me in your own words how it is different. >> well, i think you have to remember that leading up to when i became ceo the company made five or six big acquisitions and a simple way to think about that is that almost 225, thousand,

into a company that had 65,000 people before, so we had a lot onfiratis. so how are we different? i think my predecessors built a company built on acquisitions and things like that, we can't make any acquisitions anymore so an organic growth company, the big change is bring the culture from an acquisition, from where they came from, whether legacy, west coast bank of america or merrill lynch or whatever to a company sat only about organic growth, a simple, more narrow company where every day we get up and say we have customers and clients and how do we do a better i don't know in is. >> is that wholly different? >> no. >> but it takes away a lot of stuff that was going on an replaced with itith stufhat reall good. >> and the core value you have is what? >> the core value we provide our clients is to help them live their financial lives better is our purpose, by connecting together all of these things, it has taken 2:30 years to put together and we have been in business our earliest predecessor to 1784 so we have accumulated all of this to make

lives better for em, whether a person starting their first job to you, as after friewnt customer to a small business own tore a big business owner to a hedge fund manager or trader, our job so to help them live their lives and by connecting together all the pces thatis what makesus unique not that we have all of these pieces, all of the pieces are best in the world, whether brokerage capabilities to our people to our banking capability or investment banking and our commercial banking, that is what makes us unique. >> someone said to me, people have said to me when i began to think about you and bank of america, i thought bank of america from a long time because i am from north carolina. >> i didn't know that. >> and i remember -- >> yes indeed and bank & trust company was bought by -- bought so all the way up. it is that what bank of america has that is unrival, perhaps by wells fargo, but it is an asset based depositors. >> right. >> rose: and lobes to people. >> it is a customer base, i mean people think deposits are which

are liabilities or loans or assets but as the great customer base an that franchise is bigger than anybody else in the business of consumer banking in the united states. so what does that provide? it provides a great customer base and the work we can do with them and great stability and, you know, in an vessel stores mind a very stable stable, very low cost funds business but really provides a great customer base and that is what the core of bank of america is. so we have a lot of businesses but largely the dominant part of our business is really around people and small, medium sized businesses and th we serve big businesses in sales trades but in the dominant part of our revenue comes from the solid core commercial bank. >> rose: in 2008, but 2012 transformative? >> every year has been a bit transformative because we put more of the legacy behind us, we had a strategy -- >> rose: put more of the legacy behind you. >> that means the mortgage issues or the acquisitions. >> rose: right. >> ros so let's go bk wh i started as ceo in 2000, i starred to talk to the board in

the fall of 2009 when making the selection, what i said to them is we need to do the following things which will simplify the company. increase the capital, decrease the size, get rid of the businesses that weren't core and started working that, each career we have made major strides, some years it was getting out of some businesses another year it was settling some of the mortgage litigation, and another year was driving the customer business. but each year we made that to the point where if you look at our performance on things ke the stress test nowe can return capal,hat's a major milestone so each year had a milestone toward it zero so each year was a movement along that strategy we started the first day i became ceo to simplify the company and get the legacy assets risk behind us, build the fortune's balance sheet. >> rose: it is easy to say get the legacy risk behind us but when looking at countrywide and what you had to do, tell me how you approached this decision. >> well, when we -- when i took over in 2010 the first thing i said is i need to split the mortgage business in two-piece there is is a very good mortgage

business that we will do that serves a lot of erica that we are very good at and we want to keep going on, so we split that away and hired fellow to come in and run legacy asset service i which was the products that we wouldn't do ben, in other words, sub prime and things like that. >> rose: countrywide. >> countrywide and split it two and countrywide had a good side two and split it in two and there was a task, get is loans to zero and two and a half million now and we -- by the end of this year we ought to be down to seven 50,000 and trying to work that dow down and do it ine right way with the customers, modified million plus loans and we have helped people through it. it is a very difficult process to deal with people, at a difficult time in their live life and we needed to split it to make sure this approach was not confused with in approach. >> rose: where are you in the process of doing that, obviously that journey as you suggested is not over. >> well, to make it objective we had 6 million loans that we had to work through, we are now down

to two and a half and by the end of the year we sold some of the good side of that service, down to about three quarters of a million, if you think about it we are 60, 70 percent of the way roug theoodews is at along the way we have modified and helped americans stay in their homes, that has been a difficult process because the economic environment we have had up to 58,000 people at the peak working on this issue, the good news is for america it is now starting to get behind us, in other words, the delinquencies are down, the numbers of loans are down that are in foreclosure, and house prices are up which is good for america. >> rose: is that something you managed -- >> it is, in time, remember that -- >> rose: you think those assets -- that overtock out? >> for usechanics, in the whole system, so if you think about today, you have the announcement that the house prices increase idea they were in '08 or something like that so they are not back to the peak of the peak but moving back up, an it is incremental one percent of growth this month or eight percent, year over years

those type of numbers but the reality is of what you are saying is a tremendous demand to buy these homes in foreclosure which then shores up the market for the rest of the homes and the confidence that will bring to the consumers is good into so the $8.5 billion settlement how did you approach that? >> well, that was prt of cleaning up all legacy issues but that specific issue was a countrywide litigation, and the real test was, there wasn't really a road map to do this, so we hired some very good lawyers and they sat with good lawyers on their side, who represent 20 to 30 of the largest investors in america and had to come up with a way to do this, there actually isn't a very easy the way to do this so it was a very big event in the second quart i arter of 2011 that allowed us to get an agreed to settlement between us and the major parties to the litigation and move th bin us, there was always going be her things but that was a major milestone, that is still pending in the courts and it should come through the summer, but the goal of that was to allow us to kind of move past a

critical point on a very hard, difficult, hard, if, it is not a simple process. >> rose: but the lesson here is put those things that are a big problem behind you, bet them out of the way is you can tend to your own business. >> that is the lesson, and, you know, when i talked to ceos, that have been retired now and they always, you always ask them what is the lessons you should learn as c and they y you mo quily o people, put the issues of the past bin you. >> rose: either doing well to prpro promote them -- >> get your team together an follow the lessons, the key lesson i would say over the last three years if i could be where we are with the mortgage thing two years ago we would be two years faster in the future. and so, you know, that is the 11 but it is tricky when you have structures and things that have whenever been done before, that you are working through and that is what the team did a good job of figuring out. >> rose: that was the biggest cloud. >> that was the biggest single part of the cloud. >> now do you worry, somee suggested iso me the may be litigation out there, i mean

is that a concern for investors and for people when you have these quarter in i reports. >> you know, the last couple of quarters we settled a couple of major pieces of litigation so our need to get these issues behind us is still high, but we have been, if you look at our track record over the last couple of careers we have been chopping up the pieces so if you think about the pie or the piece being this big we have been cochopping it down to less and less, that doesn't mean there is some left open and so there are a couple of pieces of mortgage litition left and a couple of pieces of mortgage litigation that are different flares of it but we are working it through, but the lion's share went through the p & l, it is not a small number, $30 billion plus so when people say $30 billion, it already cost us 30 plus billion dollars. >> and what is the best for what assets you decide you do not, cannot afford or do not need or will not contribute to your future? >> well, the mortgage, you know, the mortgage was easy because it was products you wouldn't do. we didn't do them at bank of america, we bought companies

that did them, but when you look at buness, the other thing that when you talk to ceos as i came in, you have to figure out what business you are going to do and what not and figure out pretty quickly so in early 2010, i literally had a list of things i was not -- i thought we need to get rid of. >> early 2010 when you took over and that strategy we have been following ever since. now the reason why -- that is based on a principle and we serve three groups of customers, people, companies, special investors and only need to do what we can only do for them and what i mean by that, for consumers we don't need to sell them insurance, there are a lot of great people th can do that, for -- we don't mead to provide mortgages to other mortgage companies, with he need to provide them directly to our consumers and we don't need to have a private equity business because, you know, all those great private equity players you had here at the table over the years they are very good at it, so we are able to take all of those businesses out. so there are products and services in mortgage but the real restructure and balance is to get all of those businesses

down and there have been 60 or 70 of them we have liquidated but that leaves us with a simpler company, easier company to manage and doubled the coany an shrunk t company by a third and that is have important to get where we are today and start returning capital and deliver deliver -- >> you didn't want to be the biggest but wanted to be the be best. >> i want to be the biggest to the customer in as small as i can be outside of that, that allows me to optimize the capital mr. it is like carrying a backpack, you had to carry a backpack, and your competitors were going full speed ahead. >> right. >> rose: when you got half the backpack off your back you thought you could lead the pack. >> right. and so i he, you know, thnalogy us is, you know, we are in a competitive race, it is not like we are losing brown to the competition so our mobile banking or investment banking is as good as anyone else and winning market share every day but doing it with this heavy burden upon us, as that burden lifts think how

we outdid the competition, so we are all climbing the hill together and just staying with us and we are burred with a backpack with 150 pounds and they have a couple of bottles of water so when i removed the 250 pounds we can take you have off d that's whe were. rose: a comte with tt level. >> if we compete sod far, that was the hard part, the easy part will be when we don't have these other issues. >> rhett at the same tile, j.p. morgan and wells far know/foe have a better return on equity. >> exactly. >> and when do you square that? >> we have got to get back to the normalized earning, we earn about the amount of money those companies earned but they just don't have a legacy that is, so it is just covering up so you have to think about, if we are earning this much money but the legacy issues that brought the last couple of quarters to zero, settling a couple of lawits, aftethatou a lef wi the earnings and i am confident we see them there and that's what the market is starting to see, as the issues fade you can start to see the core earnings come

through. a key link between those two is the cost structure of the company an we are working hard on that. >> rose: what is your definition of a fortress balance sheet? i mean the idea obviously is what kind of balance sheet do you need the withstand the biggest kind of onslaught that could come in. >> well, we have capital equivalent to what the companies are required and then we put thatapital through a stress and we come out with 6.8 percent. >> rose: is your stress different than the stress that is recommended by and exercised by others? >> i am talking about the pedestrian stress. >> we came out with an amount of capital that was par above the standard. and that allows us to start reducing capital. so the important thing about that stress test is to realize the scenario in it is pretty deep, you know, it is deeper than 2008, not quite as deep as the great depression. >> ros ght. >>o if we can come out of that

with to to three times as much capital in our company as we would went into 2008 that is a fortress balance sheet. >> rose: a good place to be, yes. when you look at the global economy and the global market, there was some net of something you were doing in honk con, having understood already in this conversation that it is not acquisitions but, in fact, organic growth you are looking to, how do you see the expansion internationally of bank of america. >> so when you think of what we do outside the the united states we really have two businesses at we are drivg our posion, theusiss we call global corporate investment banking, a group of large companies, inside and outside of the united states and what we call global markets which is work with largest stress stores around the world an those two business is a comploabl business, why do i need to be in hong kong, because the u.s. and hong kong business communities are probably players and they need to work with us around the world. >> rose: so you need to be where they are. >> you need to be where they are and be able to work them across. so what has been amazing to me, even in my business career,

charlie, is a middle market company which would have been served by, my predecessor, 1988, is now a global company. >> in other words, they are selling into the demand in china, the demand in ini can't and manufacturing in vietnam and have a factory and so they need people who can actually finance them in knows settings and i can remember back in 20 years ago when somebody had a factory in italy, it was like impossible to figure out how to finance it from a bank, and we got to be all over the world with companies, because even mid sized companies, not the largestable everybodyan vialize donald's, t even d sidompanies that supply those companies are taking advantage of growth in the world, and so we need -- >> rose: go where the growth is, because that's where they are going to be. >> exactly. the it is to focus on those two businesses and we are ready second in the world in investment banking to jp. >> rose: right. >> we will catch them at some point, but in -- we are about third or fourth in the probably market business, so it is not

like we have to aspire to be something but the real combination of corporate beijing, cash management which is helping people collect and pay the bills and everything and investment banking is the killer app in the world of the upon things that works for people around the world. >> rose: sandy wiles said we should probably do is split up investment banking from banking, have banks be deposit takers and banks make commercial loans in real estate, loans have banks do manager that is not going to risk the taxpayer's dollars that is not too big to fail, if they want to hedge let them do it in a way that will be market to market so they will never be hit, i am suggesting they may be broken up so that the taxpayer will never be at risk, the depositors won't be at risk, the leveragef the nks will b somethg reasonable, investment banks can do trading, that they are not subject to a voelkel rule that can make mistakes but they have something that clears every single night so they can be market to market, should investment banking and commercial banking as we know it

be split? >> no and i think it is that simple, now the question is why. why not and it really comes down to the customer's demand it,. >> is a guy that created the idea but the customers demand it, outside of the united states the only model is what they call the universal banking model, the investmentanki, commercial banking together. so i think a lot of what sandy talked about are embedded what activities can you do in a deposit bank, there are a tons of rules around it and the rules require -- >> rose:. >> that has been the rules forever, but the idea of owning both of them is the client's speaking, what do i mean by that, so when, you know, you go to davos or occasion, and say the last couple of years i would meet with clients and as we brought together the investment banking, the comrcial bankin franche, w could -- the clients saw us in a different way, and so, in fact, we did a deal for one of our client, right around davos two years ago where we did a $4 billion

transaction for them, it is a very high grade client, they bought a company in the united states because they wanted, we gave them the expertise of which companies to look a at the beste could tell and they made the decision, then we financed the $4 billion transaction for them and then we syndicated that out but we really committed the opinionsing so they could do the deal immediately and saw the power coming together to serve in the united states. you know, this is what thelients need, ey need the integrated model, very few companies as they grow don't need to access capital markets, don't need to help them understand those issues, so the safe and soundness there are a lot of ways to get by splitting up activities which will better served together, is, i don't think is the right answer i think the whole answer is a whole bunch of other things. >> rose: what does that mean in too big to fail and size? >> well, you know, if you think about like what i said rehearsal, we have been running our opinion to be the biggest we can and the smallest we can to make sure everything is optimized for the customer but when you think of too big to failheres an aspect, should

the taxpayers ever have to go on the hook that is no and we have an obligation through the resolution and planning process and the requirements to, and we filed a resolution plan and spent tens of millions of dollars for it and very serious about it so if there is a bankruptcy in the bank of america we would have to be liquidated there is a path, there is a road map to do that, so that is -- the taxpayer is secure. so the second thing is too big to fail get into sort of the competitive question, and so yesterday afternoon i spent three hours talking to our loc market presidents and those are the people who run the local businesses, augusta georgia so i ddo it in flee areas and it is competitive, it is not wells or jp or ourselves, it is bb&t and -- whoever it is. and so it is a competitive market so i am not shower is i free when you get down to it, banking is local and global, the

consumer, middle market, those are -- wrong it is a competitive issue. and then i think the real question is, it is too hard to manage them. >> rose: that's the interesting question, did bakes, banks, did citicorp get too large t to manage? >> and j.p. morgan? >> we were too leveraged in the industry. we didn't have the liquidity we needed when we hit a crisis and with all of the acquisitions of our company we had to simplify. so if you think from that point to now you dowbd the capital, you have increased liquidity four times and you shrunk the company by a third, now, not to play numbers but jst to double the capital, that is $70 billion more capital than we had four years ago,. >> rose: 70? >> 70 billion. >> when you go back to su thousand 7, 2008, i mean did the government go the right thing when it bailed out the banks, even though some did not need it but the argument was made by paulson and bernanke you need to do it because we need to have

everybody in? >> well, i think is is kind of the interesting hinge is the decision was made if banks were going to get to the capital levels and restoreheir fortress balance sheets rinkg and shriing e economy the decision was made by secretary paulson and others we don't want them to do that, we want them to keep their size up and keep participating in helping the economy along and not take liquidity from markets and keep the meltdown going, and i think that was a wise decision and then what, 15 months later the money went back with a profit once the markets stabilized once you stopped the liquidity run. >> rose: you said you didn't want government bailing out banks but in this case -- >> they did. >> rose: they did and believe it was the right thing to do, and you beeve it was the rht thing to do. w doou dide at. >> the capital and confidence in the system, the capital is not at the levels, the liquidity is motte levels and since then the path is different now. >> rose: you mean dodd prank. >> and the second question -- >> rose: and the resolution. >> not only the resolution but the strength of the capital, all

of the schemes out there. >> the capital requirements. >> three thing, capital, liquidity and then scope of activity. you take those together and the stress testing around that forces you to think forward about what would happen. i he if you look at it, if you look at the stress test today it is interesting because in the press release in the federal rerve out ,hey say it is clear to us these companies went through the stress, that they would have the capital to continue to participate in the economy, exactly the opposite, i am paraphrasing exactly the opposite statement that was evident evident in 2008 the only way is to shrink quickly, so i think i think they had to do it and i am only reporting what they said and i wasn't looking at all of the fact. i was will in the middle of it with our opinion. they had to do it. part of it was the liquidity and catal and structure weren't there and there we a bun o pieces that are not the way they are now that help you but i am tellintelling you they shouldn'e to do it again and it is our job in the industry, our job as a

company to have resolution capabilities and run the businesses so it never happens again. >> rose: most of, has most of the money been paid back? >> >> in fact i think there are small pieces left but the pieces are very mal. >> so when you look back at 2008, the lesson for you was. >> all things in moderation,. >> rose: all things in moderation, which is a roman learning, it is not what your grandmothetold you.yo know, the idea is you can't lean a company. what would be odd for people is people point to the countrywide issues, merrill lynch and deep troubles in the fall of 2008, but what they don't realize is, we also had legacy bank of america credit card business exroag way too fast and gotten too big relative to our size and then if you think about the mistakes made where we are say in dividends buying back shares and making acquisition, maybe one or two of the three but not all three, so i think the question is how you run this thing and run our compani and n our industry, you know, with

a view we are going probably to not make as much money in robust times but won't give it all back in tough times and that to mesa lesson we have to learn. >> rose: but do you think you needed more -- are you convinced you have in place the kind of risk management that might not have been in place at the time? >> yes. i think -- >> rose: or was it in place and just something else happened? >> you know,, i think there is -- there was risk management in place, et but i think the reality is without the capital and liquid at this protection how much risk management you d th impact was tremendous with what was going on and it takes risk management and the capital, but don't discount how much the scope of activities have come down, so in our company an easy way to think about that is, if you put bank of america and merrill lynch in the fall of 2009 on a pro forma basis you are about $2.8 trillion in asset and 2.2 so a lot less can go wrong if you had 600 billion less in assets it is how you run them and all of the different

guardrails have had in, an amount of leverage taken out and an average of leverage we can deliver tohe hedge fun industry is way down and i think those are all good things. >> rose: what is your impression of shadow bank something. >> we have to watch it, and, you have to watch it carefully because in the end of the day if you think about a tent that had the fully regulated institutions in it, those institutions had a lot more inspection, now lot more institutions are in that tent and we have to make sure people don't grow up outside of that tent and i think of that on multiple difficult men's you are thinking, some banking versus commercial baking and also thinking consumer, the nregatedonsumers a all gone, we have to make sure that doesn't come back, you know, and in wasn't the first time we have had this problem in sub prime lending, it happened in the nineties and so we have got to make sure. that's where the cpsb we thought was a good idea buzz it would bring all activities in, not regulated banks. and so you have the analog on the institutional side of the house is, goldman sachs and

morgan stanley, bank holding companies regulated by the same way i am so money is outside of the tent and lehman and stearns would have been in the same, so getting everybody in the same tentllowthem to see the risk and it is complex but a much simpler environment when serve in the tent. >> when you look add dodd frank are you approving, mostly with a few exceptions or do you he it will seriously inhibit your growth? >> well, i think that the principles in dodd prank, capital, liquidity, resolution planning, scope of activity. >> rose: so far, good. >> they are all good. the devil is in the details, so at this point we need to get the rules set and so we connect we can work our wayround them in areas where the rules were more difficult were areas you have seen some movement made which our ability to, with a client, tto bilaterally enter into a client that buys oil and we need to help them buy oil or hedge

their oil input prices but not an oil company. you know, boy lateral driven, they have made a lot of headway in that and we need the work on that, the bottom line is the principles there, we are to protect these things, by the way it is not dodd range alone it is the dozen sell 3rules a a bozel things and risk management practice. >> when you look at lofty expectations, and i think correct me if i am wrong you said in march of 2011 that you could earn 30 if billion dollars. >> yes. >> in 2012 and you are earning $3.1 billion. >> yes. >> what do you attribute that moment of your own express to? >> well, we were talking, that is pretax must be in an environment where, where interest rates are normalized and the world is norma lized and we have an earnings power, if you look at the street estimates you see the start end, as we bring the cost structure town you see the estimate

throughout so we have an inherent power to american this company the problem in 2011, early of 2011 people thought the economy would be healed by late 2011, 2012 and we got to the summer of 2011 and that moves out the lesson you learn is make sure people understand the predicate to any statement you may make is that the economy is going to et back to three percent growth and we said that, it just wasn't probably as loud as we should have. >> rose: you once said at th table tell me what t by is going to look like in 2000 whatever and i will tell you how our company will perform. >> and i think if you look at what happened right after the crisis, there was a constant sort of over prediction of the near term recovery, the recovery happened faster and where that changed dramatically with news the summer of 2011 when people said you know what? this is going to be a tough shred, europe was still going around in circles, the u.s. was having -- and beanke went to jacon hole and said we will keep the

rate here a long time and the curve went flat, we don't make a lot -- this rate is think it is great for the banks, it is not, a high rate environment helps us and that really -- >> rose: we will see a, when will we see a higher rate environment? >> we think, you know, late 14, early 15. >> rose: because, chierm bernanke believes h he has to do what he is doing to get at the idea of reducing unemployment. >> i think it has been clear. i think he was clear with it befo. >>ose: do too. >> >> rose: he made that very clear flnch the summer of 11 -- i think he is right, i mean, remember, you know, he studied japan heavily and studied depression and i think he his that -- what he says he thinks and i would agree with him, is think about the size of this economy, which is unprecedented in the world, because we are we are the largest economy for a long time if you can't keep this thing inching forward can you get it back going again? so i

personally believe we should continue to err on the down side ofaking sure thi econom keeps moving forward all know griping and moving out. >> by doing what. >> keeping the rates low and accommodating i am not a fed expert or economist but when you really intuitively look at that, the idea of having this thing go backwards on us right now i think is very difficult and yet, but underneath fundamentally what we see in the data shows et it moving forward every single week. >> rose: so when you look at the overall environment or economic outlook for the united states you are reasonably positive in the context of two percent growth, which is better -- >> rose: which rais an interesting question, grantham was here and said wrong we will see four percent gdp growth again. >> those guys, they are much better at that. and horizon in the next few years i think will be grind grg two to two and a quarter to knee. >> rose: over the next ten years. >> it is just we are a big economy and people for get when

they have these long-term growth rates you remember we had a population growth that was much faster. we had housing, not housing like the bad stuff in 2000 that was over built, housing just ndamentalldriving iand nothing better for a local economy than structured housing. >> rose: and it spreads out in so many areas and affecting many people. >> it is all local contact. you can't build them by computer, you have to have somebody do it. >> rose: nail a nail and dig a hole. >> that's one of the things that is helping right now you are starting to see the housing starts come back up and construction jobs are coming back, that was the big hole, construction things that weren't coming back an by the way, the virtuous circle off that is years get back to work, they do sewers, development and stuff like that, todesign the house architects, you know a lot of service economy, they have done characteristics things of how the service economy is and housing had a lot to do with that, over building is dangerous, we shouldn't over lend again. >> how do you know we won't?

>> boy i hope it goes back to all things in moderation and i hope we keep ourselves bliewd to the -- >> rose: that has not been our experience in life, has it? >> i think often we don't expect that they will deliver some kind of bubble, whether it is the tech bubble or a housing bubble or -- >> there will always be excess but we have to keep it more moderated so i they may over shoot and build too many houses but if you are in some of the communities that get over built there are a lot of times before you say let's put new sticks in the ground and stuff so i think the population, household demand, household million and change a year, you know, type of numbers you get various estimates, you know, i don't have you to have houses to absorb that. >> do you get a feeling washington is listening more now to the private sector an to people like you? >> i think -- i think she c they havelway listened. >> havehey hrd now is the question. >> i think that is what -- i think time heals all wounds so

as you get further past the debate about what caused 2008, who was directly responsible you start to get, this is about making america great, this is about having the pest economy in the world and actually supporting it, and so i think there are a lot more of that view starting to hit. >> rose: i do too. you hear much more than for a while there, it was 100 books or decline of america. >> right. >> rose: you know, and china was down to seven and making changes and you can't count them out in terms of being able to look at their issues and try to correct them. but it seems to me, you know, i see enough evidence of people talking about in the sense of america not in decline, but what america's potential is. >> right. >> rose: to play in the world economy. >> and so you see in the mere term data and you see the long-term, you know, think about investments by venture firms and different types of technologies so if you go to places like texas it is hard to get them to ta about what happened, because the l industry and

things like that. >> rose: sure. >> if you go to san francisco, the housing shortage, i mean and starting to build a lot, it is not quite true in some other areas. >> rose: it is a regional thing. >> be 2 places that are fundamentally competitive on a worldwide basis come back, and the state of massachusetts, unemployment level i think is since and change now, and so you see this in our various markets so i think the ink knew at this, the innovation, the thing in america is, you know, you are seeing that come through, and i think that is helping funnel the discussion as we go forward, we still have work to do to get it right. >> rose: you are an inteational banker, americans get up and read about cyprus. tell us why we should be interested in cyprus. >> well, i think you have seen the markets react. >> rose: yes, that's true. >> the household net worth is back to a strong level and why should we be interested? i think it points out the difficulty of solving some of these countries who ended up with an economy and a financial system that got out of skew, so ire lan was a -- cyprus is a

case set. greece andyprus have different elements but clearly -- >> rose: iceland -- >> i mean, just to give you the way i was trying to figure out how to -- i was getting asked a question by teammates the other day and i said to them, i said, so cyprus, gdp is 20 odd billion, right, something like that, the bank deposits are 68 billion. >> rose: right. >> so if you took that to the u.s. the bank deposits in the u.s. are 45 trill, theirs are eight or 9 billion, so their system got way out of control and skew and way out of balance i think theyre dealing with th. i think at mes it unue but the principle of unassured depositor bondholders taking a hit in europe sent dialogue around the system and there are different interpretations of what exactly happened in cyprus, in the u.s. that is taking place for a long time so the bondholders, and the holding companies -- fdic and suffered

lossness uninsured losses suffered in liquidations and it happened before, so, you know, and i think the bank system in the united states is well capitalized but it shook a little bit in europe because of the debate could this be applied in my countr a what i hope it doesn't start is capital flight issues going on, where money was moving around country to country, because mario drop gas stopped that in the summer and that settled everybody down so hopefully people will keep distinguishing this as a unique event as opposed to -- >> rose: speaking of this too, i read this about you and not so much banking .. it is the idea, i think this happened in davos, you announced you would bring together a group of sort of brain trust of sorts, but not so much in terms o of finance but n termof what? wha wasth idea behind the idea? >> i mean we have an advisory council and that's who w we met with in hon hong kong, as i mentioned earlier, one of the perspectives i and the management team needs what goes on in the world because at the

end of the day i live in the united states and travel the world but you don't have the same perspective as advisor board members from australia and hong kong and the middle east and turkey an england and, you know, a couple in the united states, so what they do is bring a perspective and as ceo you are always looking for perspective and you have allf thes ople ll you everything but you are looking for somebody to say you know what? here is how to think about what is going on in turkey and may be something that sparks either an opportunity or go bag to the risk management question, we ought to go take a look at how this works. so we had our first day and a half with them, it was tremendous, and we just went around the table, people from africa, south africa and, you know, we had a to go through and talk about country after country, the gdp growth and what the issues are and, you know, we have to clients in those and it helpyou understando it i alenter perspective. >> and she i am, it seems to me, i am intrigued bringing people

together from different disciplined, cross fertilization of people from science and law maybe from act deed i can't and a whole range of experiences, and both those people who are sort of the business of labor and management working together. >> right. >> rose: the idea of how much iq you can put and how much experience you can put on a problem to solve it. >> right. and that's the case, so we had people, i try to think, there are probably one person that has actual bee a banker. >> rose: yes. >> in the whole group and investors, you know, from korea and kuwait, there are former head of mackenzie germany operation, there is only one person i am trying to visualize the room, one true banker, an by the way, he has done other things since then, he is chair of bhp, so obviously is his background, but so we know banking or at least we think we know banking and pretty good at it but what we really need to know is what is going on in the world, that is important, we are a glal company, we ge abt

-- loo what is your role to care about things that don't affect the bank but could affect the bank? i am talking about a whole range of things. i am talking about global health, a whole range of things that affect people on the planet and you want the plan let to be as healthy as possible. >> right. >> because the more middle class in china, you know, the more opportunities for businesses of all kind. >> right. >> well i think two things, one it is who you are as a person and i believe we have an obligation to help everybody, you know, them people that need help and comes fm the traing, judeohrisan training and all of that kind of stu but the reality is this in the business context you have to make money for the shareholders if you he in the context of america, what we do with low-income americans in being fair to them and providing great service, in the and the trade-offs about how we charge and stuff i think are critical, we have done a great job of continuing to improve those, and we have got to keep doing that. when you look around like healthcare, we have 260,000

teammates, what we have tried to do is for the teammates is provide the best healthcare plan we can at the cheapes b also get them down the wellness curve and get them to move along in a wellness curve so we have biometric screening, 89, 90 percent of our employees went through, one went straight to the hospital and figured out they had a heart thing. and so it is a tremendous help, we think about that and joined with some groups to figure out as a large employer you can start to change the way healthcare service is delivered, not to really save money but provide a better outcome for the same money. when we go to the environment, a $50 billn commitment and we go, winan the largest project in the united states, solar project we do a lot of things in how we consume so we try to do this, it all makes good business sense and also members of the community, how we help community. >> what criticism of the financial community do you think is the most piercing and accurate and what is the biggest

misconception do you think about wall street? >> i think the fairest criticism is that is what we talk about in 2008, when we made choices had to be made that, for the financial system that we shoun't have to ma, and how do you avoid it, and can you keep the discipline and run your companies that way and keep your nose clean or whatever the right words would be and i get up everybody and challenge ourselves, is everything we do consistent with that view we have to narrow the company and only do what our customers need and if we are doing something that just makes money, it is not that we can't do it but shouldn't do it, that's the criticism i think -- i think the misperception is somehow this is the chicken and egg argument on the economy, we reflect the economy, so why are u.s. bks bing? because our economy is the biggest and most successful in the world. >> rose: so you grew up in mariette, ohio, in a town of 14,000, your parent both worked? >> yes, yes. >> rose: yes? >> my mother started working raffles the kids -- it was work

with eight kids and work after. >> rose: eight kids is working. >> keep me from getting me in trouble, i will see her this week. >> rose: you mailed your way to brown, ivy league school. >> yes. >> rose: why brown? >> number one my older brother got in there and it is the best school i could get into, and different from my kids when i took them to see 15 different schools and stuff, i never saw brown before i arrived there. >> rose: never been there. >> i applied -- >> rose: you knew your brother went there and -- >> >> rose: and a basketball team -- >> i was going to be a history major and it was the best school to get into and i went there, and -- so then you decided you wanted to go to law school and you went to -- my grandfather is a lawyer and, you know, notre dame was a very good law school. and it was the best one i got into and it turned out to be a wonderful experience, because it is hard to explain, b most people think olaw school as a really crazy environment but we had 150 kids per class and a lot of fun and the professors were terrific, so it was really, but

it was interesting for me in that brown versus notre dame are so different, they can't match two schools more different but my uncle and grandfather both went to notre dame i got part of that tradition growing up and i was this high i would go to notre dame for undergrad. >> rose: okay, so then you graduated from notre dame and you want to go to work in boston? >> right. >> rose: what happened? >> well my wife was from massachusetts, any current wife, she was my girlfriend and said i am going boston and i couldn't t a job. >> rose: bause nody uld ke y? because it was still, i it is not that long ago but law was still regional so the best boston firms went to the best boston schools and maybe some of the best new york schools and that was it, so even when i went to work in province as a first notre dame person there. >> rose: so then you went to fleet bank an that became big as i remember and i don't know much about fleet bank because of acquisitions. >> right. >> rose: so therefore you were a lawyer and making acquisitions. >> right. >> exactly. an you built fleet bank, you helped build threat bank into, you know, a ba o se

resource an size. >> right so all of a sudden it was bought by bank of america. >> right. yes. so in 2003, the fall, bank of america bought a company called fleet boston which is an amalgamation of a bunch of banks. >> rose: thinking what? i mean, you were doing what went when you went to work will? >> well, i was running a group of businesses called global investment oil -- private banking business -- it was one of the six of seven major subsidiaries. >> did you any you could be ceo at that time? >> you know, i alwayshoug my job was todo a great job and if you did that, and you learned about everything that could go on, where i was lucky when i first came to work i work as part of corporate strategies, where they did a lot of mergers i had seen a lot of mergers, i thought if i are an't the business well -- i never planned the way i it happened, ken leavg was kind of a surprise from an age difference and everything i thought i would be in the running some day, it just

happened fast. >> rose: you were there when the acquisition of countrywide was there and there when the acquisition of merrill lynch took place. >>hos were interesting times. >> rose: but, in fact, you are, what you are now having to do is recover from those. >> yes, the countrywide was more of the recovery, the merrill thing world out, it was just a balance sheet issue and we fixed that. >> rose: someone once said to me you could have bought -- you paid $29 and could have bought it on 29 cents on monday. >> i am not sure i would agree with that but everybody that their opinion. one thing about doing deals all your life even when you do a deal -- >> rose: what do you do -- >> the day after you do a deal you think you are over paid you ver trt yo instinct that much but what you did learn from it was to learn the culture an companies and how to bring them together, so when i work in the company, i worked in most of the major divisions, a lot of the people who worked for me what i was able to do is get off the ground running fast, what i told the board i would do in the fall we did the strategy of

simplifying the company and doing the legacy issues and the capital and position to return capital because i knew where all of the things were, if i a came in the outside and had to stud study it six month or a ye it would have explode the process down, s so the management team i pulled together from the company and they are from all different parts of the company that came together they knew the company and able to move pretty quickly, there has been some arduous tasks but we were able to move quickly. >> you are a young man in the early fifties if you had made a decision to leave or whatever reason decided you wanted to go coach basketball -- or golf -- do you know who your successor would be? you don't have to tell me, but do you know? in succession in place. >> we have a succession plan in place but i have got -- i a havi the t time of my life in the sense that if you see the impact we have every day in helping customers and client, even difficult situations work work out or for major client when they do a transaction or

raise equity or go public or whatever it is, this is the best job there is, and, you know, there have been times where you sit there and say, gee, this is a lot of pounding, you always keep you're eye on the purpose you are here is to help those people with their financial lives and if go uh really keep focused on that, i could do this the st of my life. >> rose: here is what is interesting to me, it is interesting how people deal with adversity and deal with everybody else doubts them but themselves. when you took over, understanding the humongous problems you had, i mean you had to deal with the hand you had to play and you had to come out of that, this was in 2010. >> right. >> rose: and decisions had been made you had to unwind. when you did that, in the early going, i mean, did you have my doubts, did you know that the course i set my sites on are going to dever for ? >> youdi but you learn all along the way, it is not like every single thing happened in the order we said because like

we said earlier the economy changed or different things but you never had doubts the advantage would work, you had to make sure and have great support from the board you could see it through, and that would work to where we are and we still have lot of work to do,. >> rose: everybody says that but when i talk to people about bank of america they say they have done a good job, i mean, a good job is not over by a wide margin. with the responsibility to continue to bring it down to wher-- >> and we still heega issues but if you think about it, the first flee years is a lot of add petition by subtraction i had to get rid of stuff, the last three years are addition by addition. >> getting rid of legacy and adding to the -- the next is addition, putting more personal bankers out there and more mortgage loan officers out there, more investment bankers, more corporate bankers so it is a different mode we are shifting to, so when people say, you know, they have done a good job, they are sort of sayg i can see the adtion by subtraction

when does the addition by addition come, when does the income come t to what we know is in there and that's why you see the stock move up, you see it move up because people are getting more and more confident and obviously investors see that coming through. >> rose: can you imaginethe stock being what it was at one time before 2000, $52 a share in. >> we have a lot more shares outstanding, so if you have $50,000 a share that is 500 philadelphia, $550 billion market cap, a tt that one ofthe major leons fmhis crisis you can't dilute your shareholders and your prices down, we have to have the fortress balance sheet. >> rose: you can't dill lut your shareholder's balance sheet so the cost of that dill loose and plugging the holes in the balance sheet us about power to 5 billion shares that we didn't think we would have outstanding. >> when do you buyback those shares. >> rose: you didn't get to prove it in the beginning, we have it in just a few weeks ago,

and so we were allowed to start doing it in the second quarter. >> rose:. >> you start buying back the shares and my job is t get those ares back and so that is the part of the value proposition for our company is to keep, if our shares are trading below ten to book they are clearly a great investment an that's what we are going to do. >> rose: but, you know, if you think about going back to your question as sort of the adversity. >> rose: and how you deal with adversity. and other people are not sure you are the right man for the job. >> i don't have you to focus on the purpose and the people and the clients, we have,, the reason we are here is be able to do what we can for people, the people love to do it, and my job is just to move the stuff out of the way with the management team, and so iould hav pple doing that and i had the people running the business and we have got plate people. i mean, if you and i went to visit, you know, a merrill lynch office or branch or even a a corporate business banking officer or corporate banking officer, to see what they think he can do and they can do for the clients is terrific.

a and all we have to do is keep the things out of the way for as long as possible. >> rose: arnold buffett told me this story i am name dropping and asked you about it and said i could tell this story, he said to me that -- what is his positionn thba now? >> h had a $5 billion preferred investment, which in about warren to acquire 700 million share,. >> as he tells the story, he was at home in the bathtub and thought about it and he thought he knew something about banks and balance sheets and always been pass nateed by bank of america, and was thinking about the bank and decided that what confidence would do for the bank at that time was confidence that the bank deserved. >> right. >> so he decides to place a call to you and didn't reach you right away. >> yes. >> .. and he told yo -- and so the then he didn't reach you right away and he reaches you and says brian i am prepared to do this, invest in your company, with the deal i want, i mean just lay it out exactly what he thought was good for him and assume good for

the bank. well what was good for the bank was his confidence in you and the bank. and you said but warren we don't need any money. >> right. >> rose: and he said, as he expressed it to me, if you needed the money i wouldn't be calling. >> that's exactly what he said and i am glad to hear that because we don't. >> rose: but what he thought you did immediate is in the sense that somebody who brought certain credibility would serve the bank well and he wouldn't do that casually. >> wha what that did for 270,000 people that worked the next day was said we do have a great franchise. brian has been telling me, the senior management has been telling me but now the one of the best investors in the world is telling me that gave us the confidence to push forward again an those were difficult times remember in the, section, we were going through the debt crisis issues and our company was being bandied around and credit spreads were bei bandied around, in the debate, in the hindsight you say was, you know,, correct or not

correct, but the reality was there are a lot of people running around and the warren says i see what this company has and that helped build the credibility that gave us the stability to move forward and for that, he has made a great return on his investment and so there are shareholders. >> rose: and worth it for the bank. >> yes. >> rose: brian, i want to thank you. go, duke. >> see what they can do. >> rose: brian moynihan, the ceo of bank of america for the hour. thanks f joining us, we will see you next time. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org