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

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

BRIAN MOYNIHAN, CEO OF BANK OF AMERICA: It’s great to be here again. Margaret, good to see you.

MARGARET BRENNAN: Good to see you. And this is a week where we had a lot of turbulence in the financial markets and some jitters here. We know that both presidential campaigns in the coming days will outline their vision for the economy. So I’m hoping you can kind of level set for us. What is the reality of what you are seeing with American consumers right now?

BRIAN MOYNIHAN: Well, in our consumer base of 60 million customers spending every week, what you’re seeing is they’re spending at a rate of growth of this year over last year, for July and August so far, about 3%. That is half the rate it was last year at this time. And so the consumer has slowed down. They have money in their accounts, but they’re depleting a little bit. They’re employed, they’re earning money, but if you look at- they’ve really slowed down. 

So the Fed is in a position they have to be careful that they don’t slow down too much. Right now, where they are spending at is consistent where they spent in 17, 18,19, a lower inflation, a more normal growth economy. 

MARGARET BRENNAN: I saw in one of your Bank of America reports that, and you just alluded to this more price sensitivity and that savings accounts are being diminished. That would suggest people really are not bringing in enough that they have to go into their- into their savings. Like, is this all just inflation that’s pressuring?

BRIAN MOYNIHAN: If you look across different segments of earnings power, those answers are somewhat different. But if you look at it overall, there’s been a lot of money moved to instruments that pay higher interest rates out of the checking accounts. They cleaned up because it went from 0% interest to 5% interest. And so if you remove that, basically, the people who had an account with us in January 2020, before the pandemic, you look at them now, they’re still sitting with much more, even inflation adjusted, much more, in their account. 

The problem is it started drifting down, which indicates that they’re using that money now to maintain a lifestyle that’s not that unusual in the summer months, frankly, because the travel, vacations and everything. And where the money is being spent by our consumers is on those types of experiences. But if you look within it, they’re still going to restaurants and they’re taking travel, but on the other hand, they’re spending a little bit- They’re going to the food store the same number of times it’s spending a little bit less, which means they’re basically finding bargains and things like that. And you’re seeing corporations cut price to respond to that. And so it’s the way the economy works and it’s slowing down, and that’s where we have to be careful, because we’ve won the war on inflation, it’s come down. It’s not where people want it yet, but we got to be careful that we don’t try to get so perfect that we actually put us in recession. 

But our team is a great team at Bank of America Research does not have any recession predicted anymore. Last year, this time, it was a recession. This year we talked about now there’s no recession. And basically they say we go to 2% growth, the one and a half percent growth over the next six quarters and kind of bump along at that growth rate plus or minus– 

MARGARET BRENNAN: — And they’re betting that in September, the Federal Reserve does go ahead with an interest rate cut. 

BRIAN MOYNIHAN: Yeah, and I think that’s the- that’s the market consensus is actually more cuts than our team is. Ours is two this year, September, December. Four next year, and a couple next year. But I think one of the concepts you hear out there a lot Margaret is this concept of higher for longer. The reality is our team, and most people think we’ll set them with three, three and a half percent Fed funds rate, which is much different than the last 15,17 years people have lived it. So people came into the business world in 2007, 2008 have not seen this kind of interest rate environment. And so we’re getting back to normal, and that’s going to take a while for people to adjust to. Both on the corporate side and commercial side and on the consumer side.

MARGARET BRENNAN: So, I’m not asking a political question here. The Federal Reserve is set up by Congress as politically neutral. It, you know, has to deal with employment and stabilizing prices. This past week, Donald Trump was asked if, as president, he could manage a soft landing of the economy with the current Federal Reserve leadership in place. Here is how he responded.

[START SOUND ON TAPE]

FORMER PRESIDENT DONALD TRUMP: I feel the president should have at least say in there. Yeah, I feel that strongly. I think that, in my case, I made a lot of money, I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.

[END SOUND ON TAPE]

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

BRIAN MOYNIHAN: I think if you look around the world’s economies and you see where Fed central banks are independent and operate freely, they tend to fare better than the ones that don’t. And so I think that that’s kind of the American way. It’s been that way. Does that stop people from giving Chair Powell advice, or other people? No, I give him advice. So we all give him advice. And so I think he ought to be careful, you know, when he goes up and does the Humphrey Hawkins, he gets lots of advice about where rates should go. So there’s a lot of people that have a view of it, but their job is to sort through it all and say what’s best for the US economy on those two dimensions you talked about and be consistent. 

I think right now, Brian Moynihan, giving advice, is they got to be more careful than the downside of not starting to move down rates to restore a feeling that, you know, there’s light at the end of the tunnel. They’ve told people rates probably aren’t going to go up, but if they don’t start taking them down relatively soon, you could dispirit the American consumer. Once the American consumer really starts going very negative, then it’s hard to get them back. And on the commercial side, the higher rate environment is slowing down commercial progress, so corporations aren’t using their lines of credit. Middle markets, small businesses, they’ve gone backwards in the use of lines of credit. So why don’t they use a line of credit? Either there is an opportunity or the cost is high, or both. And right now, that’s a little bit they’re worried about the future. 

So I think right now, it’s time for them to start to take the- become a little more accommodative, and take off the restrictions and let the thing put cool. I’m giving them advice. Everybody does, and I think the strong central bank has to take all that advice and process it. 

MARGARET BRENNAN: It’s not unusual during a political campaign to hear some of the populist ideas. But one thing I’ve heard from Jamie Dimon of JP Morgan, I’ve heard from you at Bank of America is this concern of when you send checks to people, as we discussed with JD Vance, when you talk about not taxing tips, as now both campaigns are doing that, there is still that hard question of, how does America deal with the debts and deficit it already has. Those conversations just aren’t happening. What is that cost?

BRIAN MOYNIHAN: Well, I think right now, the cost is not that high. I mean, there’s a mathematical cost. As interest rates go up, the debt carry cost goes up for the federal government, just like it goes up for the consumer companies. And so that’s a hurt to the economy, because that money could have been used for something else had they not borrowed so much. The second question is, was there more stimulus applied to the covid issues than needed? And the answer is yes, by most economists. Multiple. And so that we gotta let that work its way out of the system. That’s what helped inflation, and it happened on both administrations’ watch. But the third question really is this question of handling the debt. And at the end of the day, 15 years or so ago, the Bowles-Simpson commission came out with ways to do it. There was an idea: we’ll raise taxes. 

The response to the business community is, if you’re going to raise taxes for what. If you’re going to do it to pay down debt, you know, individuals and companies would probably say, I got that. We- we’ve had to wage a war on covid. We won the war. Now we got to move- But we can’t just raise taxes and stuff that doesn’t really provide product- for productivity or, frankly, help manage the debt. And that’s a concern people have that will be a political food fight of high order here for the next few months.

MARGARET BRENNAN: And we will definitely be talking about that as we go into 2025, and the expiration of some of those tax policies. Brian Moynihan, it’s great to have you here. 

BRIAN MOYNIHAN: It’s always good to be here. Margaret, thank you. 

MARGARET BRENNAN: We’ll be back in a moment.