The next is a transcript of an interview with Financial institution of America CEO Brian Moynihan that aired on “Face the Nation with Margaret Brennan” on Aug. 11, 2024.

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MARGARET BRENNAN: We’re joined now by the CEO of Financial institution of America, Brian Moynihan. Good to have you ever right here.

BRIAN MOYNIHAN, CEO OF BANK OF AMERICA: It is nice to be right here once more. Margaret, good to see you.

MARGARET BRENNAN: Good to see you. And it is a week the place we had a whole lot of turbulence within the monetary markets and a few jitters right here. We all know that each presidential campaigns within the coming days will define their imaginative and prescient for the economic system. So I am hoping you possibly can type of stage set for us. What’s the actuality of what you might be seeing with American shoppers proper now?

BRIAN MOYNIHAN: Properly, in our client base of 60 million prospects spending each week, what you are seeing is that they’re spending at a fee of progress of this yr over final yr, for July and August thus far, about 3%. That’s half the speed it was final yr right now. And so the patron has slowed down. They’ve cash of their accounts, however they’re depleting a bit of bit. They’re employed, they’re incomes cash, however if you happen to look at- they’ve actually slowed down. 

So the Fed is ready they must watch out that they do not decelerate an excessive amount of. Proper now, the place they’re spending at is constant the place they spent in ’17, ’18,’19, a decrease inflation, a extra regular progress economic system. 

MARGARET BRENNAN: I noticed in considered one of your Financial institution of America experiences that, and also you simply alluded to this extra worth sensitivity and that financial savings accounts are being diminished. That will counsel folks actually usually are not bringing in sufficient that they’ve to enter their- into their financial savings. Like, is that this all simply inflation that is pressuring?

BRIAN MOYNIHAN: When you look throughout totally different segments of earnings energy, these solutions are considerably totally different. However if you happen to have a look at it general, there’s been some huge cash moved to devices that pay increased rates of interest out of the checking accounts. They cleaned up as a result of it went from 0% curiosity to five% curiosity. And so if you happen to take away that, principally, the individuals who had an account with us in January 2020, earlier than the pandemic, you have a look at them now, they’re nonetheless sitting with rather more, even inflation adjusted, rather more, of their account. 

The issue is it began drifting down, which signifies that they are utilizing that cash now to take care of a way of life that is not that uncommon in the summertime months, frankly, as a result of the journey, holidays and every thing. And the place the cash is being spent by our shoppers is on these sorts of experiences. However if you happen to look inside it, they’re nonetheless going to eating places and so they’re taking journey, however however, they’re spending a bit of bit- They are going to the meals retailer the identical variety of instances it is spending a bit of bit much less, which implies they’re principally discovering bargains and issues like that. And also you’re seeing companies discount to answer that. And so it is the best way the economic system works and it is slowing down, and that is the place we now have to watch out, as a result of we have gained the conflict on inflation, it is come down. It isn’t the place folks need it but, however we obtained to watch out that we do not attempt to get so good that we really put us in recession. 

However our crew is a good crew at Financial institution of America Analysis doesn’t have any recession predicted anymore. Final yr, this time, it was a recession. This yr we talked about now there isn’t any recession. And principally they are saying we go to 2% progress, the one and a half % progress over the subsequent six quarters and type of bump alongside at that progress fee plus or minus– 

MARGARET BRENNAN: — And so they’re betting that in September, the Federal Reserve does go forward with an rate of interest reduce. 

BRIAN MOYNIHAN: Yeah, and I feel that is the- that is the market consensus is definitely extra cuts than our crew is. Ours is 2 this yr, September, December. 4 subsequent yr, and a pair subsequent yr. However I feel one of many ideas you hear on the market loads Margaret is this idea of upper for longer. The fact is our crew, and most of the people assume we’ll set them with three, three and a half % Fed funds fee, which is far totally different than the final 15,17 years folks have lived it. So folks got here into the enterprise world in 2007, 2008 haven’t seen this sort of rate of interest setting. And so we’re getting again to regular, and that is going to take some time for folks to regulate to. Each on the company aspect and industrial aspect and on the patron aspect.

MARGARET BRENNAN: So, I am not asking a political query right here. The Federal Reserve is ready up by Congress as politically impartial. It, you understand, has to cope with employment and stabilizing costs. This previous week, Donald Trump was requested if, as president, he might handle a gentle touchdown of the economic system with the present Federal Reserve management in place. Right here is how he responded.

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FORMER PRESIDENT DONALD TRUMP: I really feel the president ought to have not less than say in there. Yeah, I really feel that strongly. I feel that, in my case, I made some huge cash, I used to be very profitable, and I feel I’ve a greater intuition than, in lots of circumstances, folks that may be on the Federal Reserve or the chairman.

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MARGARET BRENNAN: The chairman was appointed by Donald Trump, Jerome Powell, and continues to serve. However what he is speaking about now’s political leaders influencing or overriding economists in setting the Fed funds fee and setting rates of interest. What can be the implication of that?

BRIAN MOYNIHAN: I feel if you happen to look around the globe’s economies and also you see the place Fed central banks are unbiased and function freely, they have a tendency to fare higher than those that do not. And so I feel that that is type of the American approach. It has been that approach. Does that cease folks from giving Chair Powell recommendation, or different folks? No, I give him recommendation. So all of us give him recommendation. And so I feel he must watch out, you understand, when he goes up and does the Humphrey Hawkins, he will get numerous recommendation about the place charges ought to go. So there’s lots of people which have a view of it, however their job is to type by means of all of it and say what’s greatest for the US economic system on these two dimensions you talked about and be constant. 

I feel proper now, Brian Moynihan, giving recommendation, is that they obtained to be extra cautious than the draw back of not beginning to transfer down charges to revive a sense that, you understand, there’s mild on the finish of the tunnel. They’ve instructed folks charges in all probability aren’t going to go up, but when they do not begin taking them down comparatively quickly, you may dispirit the American client. As soon as the American client actually begins going very detrimental, then it is onerous to get them again. And on the industrial aspect, the upper fee setting is slowing down industrial progress, so companies aren’t utilizing their traces of credit score. Center markets, small companies, they’ve gone backwards in using traces of credit score. So why do not they use a line of credit score? Both there is a chance or the fee is excessive, or each. And proper now, that is a bit of bit they’re anxious in regards to the future. 

So I feel proper now, it is time for them to begin to take the- grow to be a bit of extra accommodative, and take off the restrictions and let the factor put cool. I am giving them recommendation. All people does, and I feel the sturdy central financial institution has to take all that recommendation and course of it. 

MARGARET BRENNAN: It is commonplace throughout a political marketing campaign to listen to among the populist concepts. However one factor I’ve heard from Jamie Dimon of JP Morgan, I’ve heard from you at Financial institution of America is that this concern of while you ship checks to folks, as we mentioned with JD Vance, while you speak about not taxing suggestions, as now each campaigns are doing that, there may be nonetheless that onerous query of, how does America cope with the money owed and deficit it already has. These conversations simply aren’t occurring. What’s that value?

BRIAN MOYNIHAN: Properly, I feel proper now, the fee is just not that top. I imply, there is a mathematical value. As rates of interest go up, the debt carry value goes up for the federal authorities, identical to it goes up for the patron firms. And in order that’s a damage to the economic system, as a result of that cash might have been used for one thing else had they not borrowed a lot. The second query is, was there extra stimulus utilized to the covid points than wanted? And the reply is sure, by most economists. A number of. And in order that we gotta let that work its approach out of the system. That is what helped inflation, and it occurred on each administrations’ watch. However the third query actually is that this query of dealing with the debt. And on the finish of the day, 15 years or so in the past, the Bowles-Simpson fee got here out with methods to do it. There was an concept: we’ll elevate taxes. 

The response to the enterprise neighborhood is, if you are going to elevate taxes for what. If you are going to do it to pay down debt, you understand, people and firms would in all probability say, I obtained that. We- we have needed to wage a conflict on covid. We gained the conflict. Now we obtained to move- However we will not simply elevate taxes and stuff that does not actually present product- for productiveness or, frankly, assist handle the debt. And that is a priority folks have that shall be a political meals struggle of excessive order right here for the subsequent few months.

MARGARET BRENNAN: And we will certainly be speaking about that as we go into 2025, and the expiration of a few of these tax insurance policies. Brian Moynihan, it is nice to have you ever right here. 

BRIAN MOYNIHAN: It is at all times good to be right here. Margaret, thanks. 

MARGARET BRENNAN: We’ll be again in a second.