Return to Transcripts main page

CNN This Morning

Brian Moynihan is Interviewed about the Economy; Supreme Court to Release Major Decisions; Dueling New Hampshire Campaign Events. Aired 8:30-9a ET

Aired June 27, 2023 - 08:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(COMMERCIAL BREAK)

[08:31:31]

(BEGIN VIDEO CLIP)

ANTIA DUNN, WHITE HOUSE SENIOR ADVISER: If Reaganomics was based on the idea that if you cut taxes for the wealthiest corporation, the wealthiest people in the society and that at some point the remnants of those will trickle down to the middle class and the working class, Bidenomics is the exact opposite. Bidenomics says that the way you grow the economy in this country is you grow the middle class.

(END VIDEO CLIP)

POPPY HARLOW, CNN ANCHOR: The White House putting out some new messaging in its effort to tout the president's handling of the economy. Bidenomics is what they're calling it. Biden will be in Chicago tomorrow. He's expected to speak on this. And we're told underscore recent job gains and low unemployment. But the president is facing some serious headwinds. Not only do polls suggest voters are skeptical of him on the economy, but there's also the nagging threat of a potential recession.

Let's talk about all of this with the CEO of Bank of America, Brian Moynihan, who joins us exclusively this morning with some news that we'll get to in a moment.

But, good morning, and thanks for being here.

BRIAN MOYNIHAN, CEO, BANK OF AMERICA: It's great to be here again.

HARLOW: Do you think Bidenomics, this is the new term, is it working for most Americans?

MOYNIHAN: Well, I think if you look, the U.S. has bet (INAUDIBLE) fighting inflation. So, after the pandemic, the amount of fiscal stimulus and monetary stimulus, i.e. the money - the lower rates and the money the government pushed out to offset the benefit - the impact of the Covid-19 pandemic, you now have a situation where inflation has to be fought. So, sates have gone up.

And so what we have predicted as a recession starting the first part of next year, actually we moved it from the latter part of this year to the first part of next year, but it's a mild recession. And that's given the strong jobs, the strong employment levels, wage growth is so strong, but inflation is still higher than they wants, than it should be, and so the Fed has the rates to push that down.

And that's going to be a little bit of a collision course. Interestingly enough you're starting to see the aspect of a slowdown come through. Our consumer spending shows it. You know, the behavior is slowing down, which is good and bad. Good in that that's what the Fed needs to see inflation under control. Not so good because it does mean we have a higher probability that mild recession coming true.

HARLOW: What is this collision course you just mentioned?

MOYNIHAN: Well -

HARLOW: How does that play out? Because I'm just wondering, could this recession be so mild most Americans don't even notice it?

MOYNIHAN: I mean our projection is for two quarters of negative GDP growth minus 1 percent and minus a half a percent. That is not a huge downturn.

HARLOW: Right.

MOYNIHAN: You know, in the pandemic we dropped 30 percent annualized on the quarter or something like that, you know. So, you know, it will be mild. And What that means is the unemployment levels will get maybe -- we get it up as high as almost 5 percent, high 4s. The -- but that's kind of interesting because we used to think 4.5 percent was full employment.

HARLOW: Right.

MOYNIHAN: And now we're sitting at 3.7. So -

HARLOW: So, are you saying most Americans might not even notice it?

MOYNIHAN: They'll notice it in that - that - what they're noticing now is the cost of things went up. And that's causing them to change their behavior. So, spending '21 to '22 for our customer base for the whole year was up 9 percent. Year to date it's up 5 percent. And it slowed during this year.

HARLOW: Yes.

MOYNIHAN: That's more consistent with low inflation. So, they're adjusting their behavior based on the cost side. And they will be affected by the rates if they're trying to get a new mortgage, trying to buy a new car. So, they'll feel the impacts of what's going on.

If they keep their job, they won't feel the impacts of recession. And that is the great debate is, will unemployment get a lot worse or just a little bit worse.

HARLOW: Yes. MOYNIHAN: And that's the most important thing is to have people employed and earn money.

HARLOW: I thought it was interesting because you said this a few weeks ago, that you're seeing patterns, which you just illuded to, that people are spending in a way that's more consist went a 2 percent inflation economy, not a 4 percent inflation economy. And economists would agree that, you know, inflation jumps as consumers are spending more. If spending has moderated so much, why hasn't inflation gotten markedly better?

[08:35:01]

MOYNIHAN: It's just - there's a lag to all this. You know, so I'm talking about data that's literally coming for the month of June through June 21st or something like that. What you're reading about inflation is a calculation that is a year (ph).

HARLOW: So we'll get there.

MOYNIHAN: Yes. So we'll get there. And that's a - I think they've - they've sort of tipped it down, it's flattened out - it's tipped down in some areas. You know, but there are areas where it's not necessarily tipping down to a level they want. And that's why we think it will take them all of this year and all of next year to actually get more (INAUDIBLE).

HARLOW: All of next year.

MOYNIHAN: And into '25 before they get inflation in line with their long-term target.

HARLOW: Fed Chair Jerome Powell said a few weeks ago it was a, quote, pretty good guess that the central bank would rate - hike rates twice more this year. They paused for now. Will twice be enough to get inflation where we - to a 2 percent target?

MOYNIHAN: I think the first 5 percent was the big move. The next half a percent is not going to make as much difference. So, the question is how long they hold him at this level. We have that till next May before they start cutting rates. So whether they raise rates a couple more times, and you can have a great debate on how the market, you know, six - four weeks ago was no more great -- increases, now it's two. But the reality is, is the duration of holding is what he says that people I think are now paying more attention to. It will take them longer to wrangle (ph) inflation.

HARLOW: For how long? Given the recent bank failures and what we've seen with Silicon Valley Bank, Signature Bank, the takeover of First Republic, is Bank of America considering buying up any small regional banks right now?

MOYNIHAN: We are prohibited by law for 30 plus years from buying a bank other than through an FDIC liquidation. It -

HARLOW: Like what we saw with JP Morgan and First Republic? MOYNIHAN: Yes. And so would there be opportunities? I don't know.

HARLOW: Well, do you think -

MOYNIHAN: I actually hope there won't be because I don't -- I don't want other banks to fail.

HARLOW: You hope there will be - do you think --

MOYNIHAN: I hope there won't be because you don't want anybody to fail.

HARLOW: Right, you hope there won't be.

MOYNIHAN: Yes.

HARLOW: Do you think there might be? Are more - should we prepare for more situations like we saw?

MOYNIHAN: I think it depends on where the (INAUDIBLE). The industry has strong capital, strong liquidity. These specialized businesses had a problem that went through the system. The system's recovered. And you'll see in the earnings reports this quarter, you know, some good earnings and you can see that data comes out every week, the deposits are stabilizing the industry.

The deposits are coming down because of the Fed actions and stuff. So, it's a little hard to get people to really understand the Fed's intention is to bring the deposits down in our industry, otherwise it can't slow down the economy. And so that's what's going on. And so I think the industry has very strong capital, very strong earnings and is in good shape with good reserves. The question will be how deep the recession is will be the question that we'll answer. The question that (INAUDIBLE).

HARLOW: Really tied -- tied to that.

Let me ask you this. The Senate Banking Committee just -- on a bipartisan fashion - so you've got Sherrod Brown and Tim Scott on the same page on this. They both - they passed this clawback executive compensation legislation for CEOs of failed banks like SVB and Signature. Do you support that?

MOYNIHAN: We have - we've had clawbacks now by -- what people don't understand is after the financial crisis, the supervisory architecture - (INAUDIBLE) put clawbacks in. So, we've had them in place, I think, since 2011.

HARLOW: But this is different.

MOYNIHAN: It is.

HARLOW: This is basically saying these CEOs should have their compensation taken away if you run a bank in the way that SVB was run.

MOYNIHAN: And - and that - we already have that in our - and, by the way, it applies to more than the CEO. It applies for other things. If you misbehave, we clawback. And so it -- this wouldn't be new to us. The regulation is -- the supervision had led us there. If they make a law, we'll deal with it.

HARLOW: OK. Let's ask about what you're doing right now. You're headed to Ohio after your stop in New York. You are announcing that Bank of America is expanding in a different and interesting way, into different and new markets. Why? Why now?

MOYNIHAN: Well, if you go back about ten years ago, 2014, we started this program. And you looked at the top 30 markets. We are the number one market share and the most of any company. We had the aggregate largest retail banking, but we weren't in seven of the top 30 markets and we weren't in like 15 of the top 50 markets. So, we're basically completing the franchise because of an historical accident, we weren't in Ohio. We weren't in Indiana. We weren't in Minneapolis. And so we started with Denver and Minneapolis --

HARLOW: The best city you just named, Minneapolis.

MOYNIHAN: Yes, and then we moved across. And so what we're announcing now is like sort of the third wave of that. So, Omaha, Boise, Birmingham, Huntsville, Dayton, these other cities that are just continuously fill (ph) in (ph). So, if you think about it, we're now at 76 percent of the population. We'll be at 80 percent of the population. And we're just basically pushing this great business that we have of great service. We offer customers great product sets. We offer pushing it deeper in. And, on top of that, we're also bringing our community bank, we call it, out to the LMI neighborhoods in - are increase -

HARLOW: LMI, lower middle income.

MOYNIHAN: Yes, lower middle income neighborhoods. Increasing the numbers of those from 600 to 700. So, the idea is, it's not only our great digital capabilities, it's our branch capabilities, our advice, but also geared towards the neighborhoods we can provide great support.

HARLOW: More access to that banking, including what I found was interesting is non-English-speaking customers.

MOYNIHAN: Oh, yes, we've had, you know, Spanish-speaking, mobile presence, web presence for many years. And it's a big part of what we do, including our account opening has a - has a high percentage of Hispanic Latino U.S. citizens.

HARLOW: Before we go - we'll talk more about this next time, but I have to ask you about AI, because it's what everyone is taking about right now.

[08:40:03]

Are you using it, like ChatGPT, at Bank of America, and are you preparing for a world where you believe that AI will give people financial advice at Bank of America, not a human, but AI? MOYNIHAN: Yes. Machine learning, yes. Generative AI, where it thinks

-- thinks for itself, that's still not (INAUDIBLE). But - so, if Erica, which is a product we have today, has 18, 20 million users, they use 150 million times a quarter, that is basically ask a question, it gives you an answer. It's more of a controlled environment. We've - we've got to work with AI and generative AI to get that right so it doesn't hallucinate in the words you hear about it. So, we're working on all of that. That will be down the read.

But we believe in the machine learning and the ability to supplement humans, our models that we have, that do portfolio construction that goes through Merrill Lynch (ph) and stuff.

HARLOW: Wow. But can that be empathy to understand what a family needs?

MOYNIHAN: That's where the human is still critically important. And so the theory is that AI would replicate the human brain and human thinking. We'll see what happens. That's still out there.

HARLOW: Wow, I'd love to not get replaced, but we'll see.

Brian Moynihan, thank you very much and good luck in Ohio. Appreciate the time.

MOYNIHAN: Thank you, Poppy.

HARLOW: Phil.

PHIL MATTINGLY, CNN ANCHOR: I have like three pages of notes I want to talk to you about - about that interview, Poppy.

Also this morning, the Supreme Court set to announce major rulings inn this final week of the session. What we can expect coming up next.

But before we go to break, "Happy Gilmore" is heading to college.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You guys are going to pay for that! Ow!

UNIDENTIFIED MALE: You hit that guy.

UNIDENTIFIED MALE: He shouldn't have been standing there.

(END VIDEO CLIP)

MATTINGLY: Not that "Happy Gilmore," but this Happy Gilmore. Seventeen-year-old Landon "Happy" Gilmore, from Indiana, just committed to Ball State University to play golf in pursuit of a career on the professional career, just like the movie character played by Adam Sandler, Landon won a long drive contest. And since that day, nearly a decade ago, he's gone by "Happy Gilmore." Of course, Adam Sandler took the time to support the other Happy's decision, re- tweeted Landon and writing, quote, go get em, Happy. Pulling for you.

(COMMERCIAL BREAK)

[08:45:39]

MATTINGLY: That is a live look at the Supreme Court this morning where we could get at least one major ruling today. We're still waiting on several big decisions, just four days left in the summer session. That means we're going to be talking to CNN's senior Supreme Court analyst Joan Biskupic. She's here.

Joan, we had these kind of handful of big decisions we're still waiting for. Do we expect any of them to come today?

JOAN BISKUPIC, CNN SENIOR SUPREME COURT ANALYST: Reporter: Yes, we do, Phil. And, you know, the court never tells us in advance which cases we'll be getting on which days of this last week. And the suspense in the courtroom is especially heightened because they announce their opinions in reverse order of seniority. So, we usually start with some of the junior justices with the less anticipated cases and then we get the biggies.

So, let's - let me just mention a couple. Two of them really will affect students nationwide and higher education. But along with those we have a North Carolina redistricting case that could change election law nationwide. We have a religion versus gay rights clash brought by a website designer who wants to start a wedding website business but does not want to serve same-sex couples.

But the two that I'll highlight for us, Poppy and Phil, involve, you know, higher education and affirmative action for starters, whether racial affirmative action policies that have been in place for decades and that have enhanced campus diversity and really given black and Hispanic students a leg up, whether they will be ended. A group of conservatives has challenged that.

And then the other one that will really affect students nationwide involves President Biden's planned loan forgiveness program in the wake of Covid. It's a $1 billion program that Republican states have challenged saying that only Congress could have done this, not the executive. But that program could affect some, you know, 40 million students, giving them loan reprieve up to about $20,000 apiece. So those - those two cases involving higher education probably will be most consequential.

HARLOW: Joan, on the affirmative action case, it appears that this court is ready to reverse where it has stood since, you know, Greta versus Bollinger in 2003 when the court said, the majority said, we think there is a compelling state interest in diversity. And that is such a compelling interest that universities can use race as a factor.

Do you expect, if you're reading the tea leaves from the oral arguments, that all may change this week?

BISKUPIC: I do, Poppy. And if there's -- if I'm going to be shocked by anything this term, it's going to be if they do not roll it back because this has been something that Chief Justice John Roberts has been working towards. He has a conservative majority to do it. I anticipate that he will, which will be staggering for the country.

HARLOW: Yes.

BISKUPIC: As you mentioned, it's been more than 40 years of policies. But we never say never and this court could surprise us, Poppy. We'll see sometime this week.

HARLOW: We will.

Joan, thank you very much. We know you'll be with us as those decisions come down. Thanks, Joan.

MATTINGLY: All right, well, Trump, DeSantis, they are set to collide on the campaign trail in New Hampshire. The latest on the 2024 race coming up ahead.

(COMMERCIAL BREAK)

[08:52:55]

HARLOW: Happening today, Florida Governor Ron DeSantis campaigning in New Hampshire on the same day as his rival, former President Donald Trump. DeSantis has gotten himself into some hot water in the state as he faces some backlash from major Republican women's groups for scheduling one of his events at the same time as their annual fundraising lunch, which Trump is headlining.

Back with us, former Republican Congressman Adam Kinzinger, and our very own Bianna Golodryga.

Good morning, guys.

ADAM KINZINGER, CNN : Good morning.

MATTINGLY: This is like the most New Hampshire fight.

HARLOW: Do tell. Explain.

MATTINGLY: There's a way to campaign in New Hampshire. And if you don't campaign the way you're supposed to campaign in New Hampshire, New Hampshire gets mad. And you - you chuckle about the idea of it.

HARLOW: So, two Florida guys don't know how to campaign in New Hampshire?

MATTINGLY: No, I think Trump's team knows how to campaign in New Hampshire. You chuckle about the idea of it, but it's especially in that state, a town hall state, every voter counts state, it matters. And I think the issue - and I'll ask you guys this - but the issue has been, everybody kind of thought there'd be a breakout for DeSantis in New Hampshire. Perhaps it fit his profile. Is this --

KINZINGER: No, it's not happening because DeSantis, it -- the campaign, he spends a lot of money on great people. And it's completely not getting out of the gate. Part of it's the candidate. He's not good with people. Part of it's just, you know, whenever you have a candidate - a campaign --

MATTINGLY: Is that real though or is that kind of become just the caricature?

KINZINGER: No, I think it's pretty real. I served with him.

MATTINGLY: Oh.

KINZINGER: And he's - he's - I mean, look, I'm not going to go after his personality, but he's not -- he doesn't love shaking hands, right? He doesn't love interacting with -- I remember talking to him in the cloak room once and in the middle of the conversation he just picks up his phone and walks away. I'm like, oh, cool, all right.

But -

MATTINGLY: I mean, I've also wanted to do that when talking to you.

KINZINGER: Yes, I get it. I understand that.

But the - the thing -- I think Chris Christie is stepping in on his territory. Chris Christie is the truth sayer. I mean he's been saying some great stuff as far as I'm concerned. And I think he's really taking a lot from DeSantis in the New Hampshire lane.

BIANNA GOLODRYGA, CNN SENIOR GLOBAL AFFAIRS ANALYST: Well, and it does appear that DeSantis is sort of trolling Trump but not actually going there, as you said about Chris Christie.

KINZINGER: Right.

GOLODRYGA: So, encroaching upon his space and territory but not addressing the issues that Chris Christie really is, and that is these indictments. I'm curious to see if he says anything at all about this new audio that CNN obtained. So, he seems to be taking him on in terms of, I can outtrump Trump with regards to policies and, look, he's failed on that front.

[08:55:06]

But when it comes to the character issues and the legal issues, he's not going there. And that coupled with what you said, that the weakness really is his lack of personality, is what people are describing.

KINZINGER: Well, and as Chris Christie says, how are you going to run against the frontrunner and never talk about him?

GOLODRYGA: Yes.

KINZINGER: So, DeSantis' play is, Trump collapses --

HARLOW: He did talk about it at the border yesterday.

KINZINGER: Yes. I mean he'll - he'll - he'll tap around it.

HARLOW: A little bit.

KINZINGER: But DeSantis' play is Trump collapses, DeSantis is there to pick up all his - all his pieces. That was the play in 2016, too, and it didn't work.

HARLOW: Adam, Bianna - it's like weird for me to call you Adam.

KINZINGER: You can call me Adam.

HARLOW: Congressman Kinzinger. The one and only Bianna. Thank you very much, guys. We appreciate it.

MATTINGLY: Yes, thanks, guys, we appreciate it.

HARLOW: Thanks to all of you for joining us.

MATTINGLY: It was a fun show.

HARLOW: Yes, it was a good -

MATTINGLY: Can we do it again tomorrow?

HARLOW: Yes. Yes, I'll come back.

MATTINGLY: Thanks, pal. Well, you have to allow me to come back.

HARLOW: See you tomorrow.

MATTINGLY: "CNN NEWS CENTRAL" starts right after this break. Have a good day.

(COMMERCIAL BREAK)

[09:00:00]