Bank of America CEO Brian Moynihan said employers considering places to locate jobs continue to pass over North Carolina because of House Bill 2, the state’s controversial law restricting protections for LGBT people.
“I know that’s going on because of my travels: I talk to people, and I know people that are making the decisions,” Moynihan said Friday in a wide-ranging interview with the Observer. “This is not theory. This is actually happening.”
Moynihan urged a “resolution” of the situation, noting that he and others with the Charlotte-based bank as well as the Charlotte Chamber “have been working on this hard.”
Democrat Roy Cooper, elected the state’s governor last month, has opposed the bill and called for its repeal, but the Republican legislature has shown no signs of supporting such a move.
Since its passage in March, the law has caused Charlotte to lose the ACC championship football game, the 2017 NBA All-Star Game and an expansion by payments firm PayPal, among other economic blows. In the latest fallout, the San Francisco Symphony announced Monday the cancellation of its North Carolina concerts, both in Chapel Hill.
Some people might measure HB2’s effect by the jobs and events that have pulled out of the state, Moynihan said.
“But the real risk is not the pulling out – that’s a risk and you feel it more – it’s the risk of never coming in,” the 57-year-old CEO said.
“Behind the scenes, people are making choices about where they’re going to do things, whether they’re going to hold a convention here, whether they’re going to locate jobs here,” he said.
“The question is: Do you stay on the list or do you get knocked off? That’s the challenge we’ve got to get through,” Moynihan said. “I think it’s got to get solved in a way that just gets you off the discussion set so you’re not in the knock-off list.”
North Carolina could be generating even more business than it is, if not for HB2, he said, adding: “The state is very conducive for people to come here. It always has been.”
Behind the scenes, people are making choices about where they’re going to do things, whether they’re going to hold a convention here, whether they’re going to locate jobs here.
Bank of America CEO Brian Moynihan, on continued fallout from North Carolina’s House Bill 2
Bank of America Chief Administrative Officer Andrea Smith, who participated in Friday’s interview, said Cooper’s election adds “a new voice in the conversation.” She stopped short of saying whether Cooper’s victory gives her hope for a repeal.
“We’ve been very vocal in opposition,” Smith said. “We’ve really been trying to get this discussion off the table.”
In addition to HB2, Moynihan on Friday discussed a host of issues with the Observer, from President-elect Donald Trump’s goal of reducing regulation, to the U.S. economy, to the bank’s rising stock price. Since the election, the bank’s shares are up about a third, closing Friday at $22.66.
“If we do our job it will keep going up,” said Moynihan, CEO since 2010.
The belief that Trump will overhaul the Dodd-Frank financial reform law is helping propel Bank of America’s shares and other financial stocks. This week’s move by the Federal Reserve to increase a key interest rate by a quarter of a point also helps big banks that make money on the difference between what they charge for loans and pay on deposits.
Questions and answers have been edited for brevity and clarity.
Q. President-elect Trump is talking about producing Gross Domestic Product growth of up to 4 percent. Is that possible?
A. I like people to set high goals, because then we might get more than we have today. Next year our projections for the economy are to grow about 2 percent. This year we expect to finish off at about 1.6 percent. The important thing is you have more growth. The question is we’ve got to realize it. Whether we grow 4 percent sometime in the future or not is not as important as making progress in the near term. I think everything we see in the economy supports that.
Q. Of the three biggest banks, you posted the smallest revenue growth for the first nine months of this year over last year. What do you need to do to drive that higher?
A. Our revenue growth was strong in the context of two things. One is we continue to shed revenues which aren’t core. Two is we continue to do it with an expense base that provides operating leverage no one else has (meaning revenue is increasing faster than expenses). So our growth in income was higher than anybody else’s.
Q: There has been a lot of talk about dismantling Dodd-Frank in the Trump administration. Are there regulations that you think should stay in place?
A. As a company and as an industry we’ve been clear that there are a lot of regulations that came out that helped – increased minimum capital levels, increased liquidity levels, decreased the scope of activities. On top of that it brought more people into the (regulatory) tent. A fact that gets lost in the dialogue about the survivors of the 2008 crisis is who the survivors weren’t. They were non-regulated enterprises in the broker-dealer industry or the non-bank industry. Those people are under the tent, so that is a good part of regulation.
Q. Is there any particular regulation you would like to see go away?
A. I think it’s just to have the discussion about them all and to get them calibrated right. The pendulum will swing back and forth. I think there is an issue in this (past financial crisis) to understand what went wrong and not to lose some of the principles of unregulated entities and shadow banking that are creeping back as we speak.
Q. Bank of America continues to cut jobs in some areas while hiring in others. Where would you expect to cut next?
A. We don’t give you forward projections on that stuff. We have a cost structure to keep fine-tuning, so we can provide these capabilities and services at a fair, low price for our consumers. We have to drive automation. The consumer automates, and we automate. We hired about 20,000 people last year. So we’re hiring, even though the headcount is drifting down, and that’s because we’re repositioning what people do and that will go on.
Q. You discussed last year the bank’s efforts to bring overseas jobs back to the U.S. Where does that process stand?
A. Last year we talked about bringing back several thousand positions from outside the United States. We completed 5,000 positions. These were positions (stemming from) other companies that we bought. We brought them back, and that’s largely complete, and we’ll continue to do some more.
Q. You told public television’s Charlie Rose this month that the U.S. has to get off fossil fuels. Are you troubled by the president-elect’s choice of top advisers who are allies of the fossil fuel industry?
A. We will not change how we drive our company based on who’s in office. Why do we do environmental? Why are we driving that? Because it’s the right thing for our clients and customers and the right thing for society. And there’s a huge business opportunity to help finance the transition (to sustainable business activities).
Q. Regulators are making queries about sales practices at banks beyond Wells Fargo in the wake of its sales scandal. Where does that process stand at Bank of America?
A. They’re still doing their examinations, and we’re comfortable with what we’ve done.
Q. Bank of America is raising minimum pay for its workers to $15 an hour. Do you plan to raise it further next year?
A. We have to ensure that our starting-wage scale is at a level that we feel good about it as a company. So we have a principle that we keep it above a certain level that we gauge on an index for a family of four, standards of living, across the country. One of the trade-offs to our total employment levels falling is if I apply automation I can give the workforce a much higher pay scale than society will give them.