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CNBC Exclusive: CNBC Transcript: Billionaire Investor Warren Buffett and Bank of America CEO Brian Moynihan Sit Down with Becky Quick Today

Thursday, 19 Sep 2013 | 5:21 PM ET

WHEN: THURSDAY, SEPTEMBER 19TH

WHERE: CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with CNBC's Becky Quick who sat down with billionaire investor Warren Buffett and Bank of America CEO Brian Moynihan on CNBC's "Closing Bell with Maria Bartiromo" today, Thursday, September 19th. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000200839. The interview will continue on CNBC's "Squawk Box" tomorrow, Friday, September 20th.

All references must be sourced to CNBC.

BECKY QUICK: MARIA, THANK YOU VERY MUCH. GENTLEMEN, THANK YOU BOTH FOR JOINING US TODAY. AGAIN, WE ARE HERE WITH BRIAN MOYNIHAN AND WARREN BUFFETT. I KNOW YOU GENTLEMEN ARE HERE BECAUSE YOU'RE GOING TO BE SPEAKING TO ABOUT 700 PEOPLE JUST AFTER THIS AT THE CENTER FOR GLOBAL SOCIAL ENTERPRISE HERE AT GEORGETOWN. BUT WE WANT TO THANK YOU FOR JOINING US IN ADVANCE. THERE HAS BEEN AN AWFUL LOT OF NEWS. AN AWFUL LOT OF SURPRISE ABOUT WHAT HAPPENED WITH THE FEDERAL RESERVE. AND WARREN, I JUST WANT TO WONDER, IT TOOK US BY SURPRISE. DID THIS CATCH YOU BY SURPRISE THAT THE FED DECIDED NOT TO TAPER?

WARREN BUFFETT: WELL ONLY BECAUSE I'VE BEEN READING EVERY PLACE THAT PEOPLE EXPECTED SOMETHING. BUT I DON'T HAVE ANY -- I DIDN'T HAVE ANY GREAT EXPECTATIONS ONE WAY OR THE OTHER. AND IT DOESN'T REALLY MAKE ANY DIFFERENCE TO ME IN TERMS OF OUR BUSINESS OR INVESTMENTS WHETHER IT'S ZERO OR 10 BILLION OR 20 BILLION. SOME DAY IT'LL STOP. MAYBE IT'LL GO THE OTHER DIRECTION.

QUICK: ALTHOUGH YOU HAVE BEEN TELLING US FOR A WHILE THAT YOU DIDN'T THINK QE-3 WAS AS EFFECTIVE AS SOME OF THE EARLIER PROGRAMS.

BUFFETT: WELL, I THINK THAT'S RIGHT. WHICH IS PROBABLY WHY IT'S BEING CONTINUED. IT HASN'T DONE THE JOB YET THAT THEY HOPED IT WOULD. BUT IT -- I DON'T THINK IT'S BEEN HARMFUL. WHAT YOU SEE IN THE ECONOMY IS JUST THIS GRADUAL INCREASE, WHICH HAS BEEN GOING ON EVER SINCE THE FALL OF 2009. EVERY NOW AND THEN PEOPLE THINK IT'S ACCELERATING. SOMETIMES I THINK IT'S DECELERATING. JUST KIND OF CREEPS ALONG.

QUICK: BRIAN, EVER SINCE THIS DECISION WAS MADE JUST ABOUT 26 HOURS AGO WE'VE BEEN TRYING TO FIGURE OUT WHAT THE FED SAW THAT EVERYONE ELSE DIDN'T. OR AT LEAST EVERYBODY THAT WE WERE TALKING TO AHEAD OF TIME. YOU'VE MADE AN ANNOUNCEMENT RECENTLY THAT YOU'D BE LAYING OFF ABOUT 2,000 PEOPLE BECAUSE OF THE HUGE DECLINE IN DEMAND FOR MORTGAGES. I GUESS YOU'RE SEEING SOME OF THE WHAT THE FED HAS SEEN IN TERMS OF MORTGAGE BUSINESS. DO YOU THINK THAT THIS MOVE TO CONTINUE WITH 85 BILLION A MONTH WILL MAKE A DIFFERENCE WHEN IT COMES TO WHAT YOU'RE SEEING IN TERMS OF DEMAND FOR MORTGAGES?

BRIAN MOYNIHAN: WELL, YOU SAW IT YESTERDAY. AND CONSTANT MATURITY MORTGAGES TIGHTEN FAIRLY DRAMATICALLY. YOUKNOW, I THINK I'D SECOND WHAT WARREN SAID. YOU HAVE AN ECONOMY WHICH WE SEE VERY CONSTRUCTIVE. GROWING 1.5%, 2%. WE DON'T SEE A LOT OF DOWNSIDE RISK ABSENT THE USUAL THINGS YOU CAN MAKE UP. YOU DON'T SEE A LOT OF DOWNSIDE RISK. I THINK THE FED JUST THINKS, I THINK THE CHAIRMAN WAS CLEAR ABOUT IT YESTERDAY, UNTIL UNEMPLOYMENT IS DOWN HE'S GOT TO KEEP THIS ECONOMY GOING THE RIGHT DIRECTION FOR FEAR IT MIGHT GO IN THE WRONG DIRECTION. MORTGAGES ARE ANOTHER WAY, LOW MORTGAGE RATES HELPS HOUSE, HELPS HOUSING STARTS, HELPS WARREN'S CARPET FACTORIES. HELPS ALL THAT GO ON.

QUICK: WHAT ARE YOU SEEING JUST IN TERMS OF THE OVERALL ECONOMY, BRIAN? YOU'VE GOT, I THINK, ONE OUT OF EVERY TWO AMERICAN HOUSEHOLDS DOES BUSINESS WITH BANK OF AMERICA. WHAT ARE YOU SEEING IN TERMS OF THE ECONOMY?

MOYNIHAN: WE STILL SEE CONSUMERS SPENDING. I MEAN, IN THE DATA THAT WE SEE, SPENDING FOR THE MONTH OF SEPTEMBER SO FAR IS ABOUT 5% TO 6% OVER LAST YEAR'S SEPTEMBER. THE INTERNET SPENDING GROWS AT TWICE THAT RATE. YOU MIGHT HEAR DIFFERENT RETAILERS HAVE DIFFERENT OUTCOMES DEPENDING ON WHETHER THEY'RE ON THE INTERNET MORE OR LESS. BUT THE OVERALL SPENDING LEVELS ARE UP ABOUT 5% TO 6% FROM LAST YEAR. WE SEE IT CONTINUE TO MOVE FORWARD. AND THEN WHEN YOU TALK ABOUT CORPORATE SIDE, THEY'RE VERY CONSTRUCTIVE. ACCESS TO MARKETS IS THERE. AND SO IT'S OKAY. THE QUESTION IS, IT JUST TAKES TIME. I THINK PEOPLE WISH THIS WERE GOING FASTER. BUT IT'S JUST A LOT OF WORK TO TAKE A HUGE ECONOMY LIKE OURS AND GET IT COMPLETELY BACK TO WHERE PEOPLE WANT IT, 3% PLUS GROWTH.

QUICK: RIGHT. WARREN, IF QE-3 HASN'T BEEN WORKING TO THIS POINT AND THE FED IS NOW SAYING WE HAVE TO WAIT UNTIL WE SEE THE UNEMPLOYMENT LEVEL TO COME DOWN BEFORE THIS HAPPENS, IS IT GOING TO GET US THERE FASTER?

BUFFETT: WELL, I DON'T WANT TO SAY IT ISN'T WORKING AT THIS POINT -- IT'S HARD TO SAY WHAT WOULD HAVE HAPPENED IF THEY'D GONE THE OTHER DIRECTION. THE ECONOMY IS IMPROVING. BUT I THINK PROBABLY BERNANKE WAS HOPING TO SEE AN ACCELERATION OF THE RATE OF IMPROVEMENT. AND WHAT HE'S SEEING, I THINK, IS A CONTINUATION OF MORE OR LESS THE SAME RATE. BUT MAYBE IF THEY HADN'T BEEN DOING IT, YOU'D HAVE SEEN EVEN LESS THAN 2%. WHO KNOWS.

QUICK: I THINK MY QUESTION WAS, THOUGH, IF YOU LOOK AT THEM SAYING WE NEED TO SEE A BIG PICKUP IN THE ECONOMY, THAT'S NOT NECESSARILY SOMETHING THAT'S GOING TO HAPPEN NEXT MONTH OR THE MONTH AFTER IT.

BUFFETT: NO. WHO KNOWS WHEN IT'S GOING TO HAPPEN. NO. YOU COULD BE LOOKING AT THIS RATE FOR QUITE A WHILE. BUT I'M NO GOOD ON THAT SORT OF THING. I REALLY DON'T TRY AND PREDICT IT.

QUICK: BRIAN, I KNOW THE NEXT FED CHAIRMAN IS GOING TO BE YOUR REGULATOR. DO YOU KNOW JANET YELLEN WELL? DO YOU HAVE ANY THOUGHTS ABOUT WHO YOU'D LIKE TO SEE AS THE NEXT FED CHAIRMAN?

MOYNIHAN: WE KNOW ALL THE CANDIDATES. SO NOT SURE THAT'S A QUESTION THAT ANYBODY WILL ANSWER. I THINK IT'S UP TO OTHER PEOPLE TO MAKE THAT DECISION. WE'LL WORK CONSTRUCTIVELY WITH ALL THE CANDIDATES I'VE HEARD MENTIONED. I'M SURE THERE'S SOME I HAVEN'T THOUGHT OF. WE WORK CONSTRUCTIVELY WITH THE FED AND ALWAYS WILL.

QUICK: WARREN, HOW ABOUT YOU? WHO DO YOU THINK THE NEXT FED CHAIRMAN SHOULD BE?

BUFFETT: WEL, I THINK BERNANKE. I THINK IF YOU'VE GOT A .400 HITTER IN THE LINEUP YOU DON'T TAKE HIM OUT. HE MAY WANT TO LEAVE. BUT I THINK -- I THINK HE'S DONE -- SINCE THE PANIC OF FIVE YEARS AGO, I THINK HE'S DONE A TERRIFIC JOB. I THINK HE OUGHT TO GET A CHANCE TO PLAY OUT A LITTLE MORE OF A HAND.

QUICK: YOU THINK THE PRESIDENT SHOULD ASK HIM TO STAY FOR ANOTHER TERM.

BUFFETT: THAT'S WHAT I WOULD -- YEAH. I DON'T THINK THAT'S NECESSARILY GOING TO HAPPEN. THAT'S WHAT I WOULD DO.

QUICK: IF BERNANKE DOESN'T WANT TO DO THAT, WHO DO YOU THINK SHOULD STEP IN? WHO WOULD BE YOUR SECOND CHOICE?

BUFFETT: YEAH. I DON'T HAVE A SECOND CHOICE. I DON'T KNOW. I DON'T KNOW JANET YELLEN AT ALL. I JUST DON'T KNOW ENOUGH ABOUT THE VARIOUS CANDIDATES TO COME UP WITH A SECOND CHOICE. I KNOW BERNANKE IN MY VIEW IS VERY, VERY GOOD. I WOULD NOT TRADE HIM AWAY ANYMORE. I'D TRADE SOME OF OUR GREAT MANAGERS AT BERKSHIRE AWAY.

QUICK: WHAT DO YOU WORRY ABOUT IN TERMS OF WHAT THE FED IS FACING AND HOW DIFFICULT THE EXIT STRATEGY MIGHT BE?

BUFFETT: WELL, WHOEVER HAS THAT JOB, AT SOME POINT IS GOING TO HAVE TO DO SOMETHING THAT'S PRETTY MUCH UNPRECEDENTED STARTING WITH A $3.5 TRILLION BALANCE SHEET, STILL GROWING. IT'S EASIER TO BUY THAN TO SELL. NOW, THEY DON'T HAVE TO SELL. I MEAN, BUT PLAYING OUT THE LAST HALF OF THIS GAME IS VERY DIFFERENT THAN THE FIRST HALF. BRIAN WOULD KNOW A LOT MORE ABOUT THAT THAN I WOULD. BUT I THINK BERNANKE OUGHT TO BE GIVEN A CHANCE TO PLAY THE WHOLE GAME RATHER THAN JUST THE BUYING END OF IT.

QUICK: BRIAN, WHAT DO YOU THINK JUST ABOUT THE EXIT STRATEGY? WE SPOKE WITH STAN DRUCKENMILLER TODAY AND HE SAID THAT HE WORRIES THE ACADEMICS AT THE FED DON'T NECESSARILY KNOW SOME OF THE PROBLEMS THAT COULD COME UP WITH THIS EXIT STRATEGY.

MOYNIHAN: I THINK THEY'VE STUDTIED IT. THEY'VE THOUGHT ABOUT IT. THEY'RE PLAYING OUT THE EXIT STRATEGY AS WE SPEAK. IN OTHER WORDS, THE DIALOGUE AND TRANSPARENCY AND CLARITY. IF YOU ASK THE PEOPLE WHO WORK ON A TRADING DESK AROUND WALL STREET YESTERDAY, A LOT OF THEM WERE SET UP THE WRONG WAY. THAT WILL HAPPEN. IT'LL GO THROUGH THE SYSTEM. THE 10 YEAR BOND'S RESTABILIZED AT A DIFFERENT LEVEL. BUT REMEMBER, IT DOESN'T GO FAR BACK THAT IT WAS 100 BASIS POINTS LOWER. THE FIRST 100 BASIS POINTS WAS A 60% MOVE AS OPPOSED TO 10% MOVE. IT HAS TO BE CAREFULLY CRAFTED. NOT ONLY IN THE UNITED STATES BUT AROUND THE WORLD. BUT I THINK PEOPLE CAN GET IN THE SCIENCE OF THIS. I THINK THE CLARITY THAT HAS BEEN THROUGH ALL THE CENTRAL BANKS, WE'LL GET OUT AS THE ECONOMY IMPROVES. THAT'S THE PIECE PEOPLE ARE MISSING. THEY'RE THINKING THEY'RE GETTING OUT WITHOUT THE ECONOMY IMPROVING TO THE RATE THEY WANT. GIVEN A STRONG ECONOMY GROWING AT WHATEVER RATE THEY NEED TO FEEL THAT UNEMPLOYMENT IS COMING DOWN, THIS WILL BE, I THINK, SOMEWHAT LESS OF A PRESSING QUESTION. GIVEN THE FIRST THING. THEY'RE NOT GOING TO GET OUT UNTIL THERE IS A STRONG ECONOMY. SO YOU HAVE SORT OF A CHICKEN AND EGG THING.

BUFFETT: I DON'T THINK IT'S IMPOSSIBLE THAT FIVE YEARS FROM NOW THAT YOU HAVE A $3.5 TRILLION FED BALANCE SHEET. THEY MAY TAKE IT BACK TO WHERE THEY'RE NOT GOING ONE DIRECTION OR THE OTHER. BUT I DON'T THINK IT'S IMPOSSIBLE THAT THEY JUST DECIDE THEY'LL SIT AT $3.5 TRILLION LIKE THEY USED TO SIT AT $1.5 TRILLION.

QUICK: STAN DRUCKENMILLER ALSO SAID TODAY IN TERMS OF QE-3 AS A CITIZEN HE'S CONCERNED. BUT HE SAID AS A MONEY MANAGER HE THINKS THIS IS GREAT NEWS. BECAUSE HE THINKS EQUITIES WILL MOVE HIGHER. AT LEAST IN THE INTERMEDIATE TERM. WHAT DO YOU THINK ABOUT THAT, WARREN?

BUFFETT: WELL, THE LOWER INTEREST RATES ARE -- THE MORE ASSETS ARE WORTH, BASICALLY. TO THE EXTENT THAT QE-3 IS KEEPING INTEREST RATES LOWER THAN THEY WOULD OTHERWISE, IT PROBABLY KEEPS ASSET PRICES SOMEWHAT HIGHER THAN THEY MIGHT BE OTHERWISE. BUT THERE'S OTHER VARIABLES. IF THAT DOESN'T EXIST IT'S MAYBE BECAUSE BUSINESS IS A LOT BETTER. THERE'S MORE THAN ONE VARIABLE. THERE'S REALLY DOZENS OF VARIABLES. BUT INTEREST RATES ARE A TERRIBLY IMPORTANT VARIABLE IN THE VALUATION OF ASSETS.

QUICK: WHEN YOU LOOK AROUND AT THE MARKET, THOUGH, IT'S DEFINITELY MOVED SIGNIFICANTLY OVER THE LAST FOUR OR FIVE YEARS.

BUFFETT: SURE.

QUICK: WE'VE SEEN SOME MAJOR PICKUP. WHEN YOU LOOK AROUND, ARE THERE STILL DEALS THAT YOU CAN SEE LIKE THE DEAL YOU DID WITH BRIAN WITH BANK OF AMERICA? DO YOU STILL SEE GOOD POSITIONS OR HAVE STOCKS JUST MOVED TOO FAR?

BUFFETT: THEY'VE MOVED A LONG WAY. THEY WERE VERY CHEAP FIVE YEARS AGO. RIDICULOUSLY CHEAP. THAT'S BEEN CORRECTED. THEY'RE PROBABLY MORE OR LESS FAIRLY PRICED NOW. I DON'T THINK -- WE DON'T FIND BARGAINS AROUND. BUT WE DON'T THINK THINGS ARE WAY OVERVALUED, EITHER. WE'RE HAVING A HARD TIME FINDING THINGS TO BUY.

QUICK: GREAT. WE'RE GOING TO CONTINUE THIS CONVERSATION. WE WILL AIR IT TOMORROW MORNING ON ""SQUAWK BOX." IN THE MEANTIME, MARIA, IS THERE A QUICK QUESTION YOU HAVE FOR EITHER BRIAN OR WARREN?

MARIA BARTIROMO: I'D LIKE TO GET THEIR THOUGHTS ON REGULATION. IT SEEMS THE PROFIT STORY IS VERY MUCH IN PLACE. BUT AS PROFITS HAVE GONE UP FOR SO MANY COMPANIES, SO HAVE THE EXPENSES OF REGULATION. JPMORGAN PAYING $800 MILLION. WHAT'S ON THE HORIZON FOR BANK OF AMERICA IN THAT REGARD?

QUICK: YEAH. BRIAN, MARIA ASKS JUST IN TERMS OF REGULATION, OBVIOUSLY YOU SEE WHAT'S HAPPENED WITH JPMORGAN TODAY WITH THE AMOUNT THEY'RE SPENDING ON THIS. WITH THE EXPENSES THAT HAVE GONE UP ALONG WITH THIS, CAN YOU JUST TELL US WHAT'S ON THE HORIZON WITH THE REGULATORY FRONT FOR BANK OF AMERICA?

MOYNIHAN: WELL, WE'VE HAD A LOT OF DISCUSSION ABOUT THIS THE LAST FEW YEARS WITH MARIA AND OTHERS AND YOURSELF. BECAUSE WE GOT THROUGH THIS -- WE GOT INTO SOME OF THESE ISSUES ESPECIALLY ON THE MORTGAGE AREA EARLIER. WE PUT A LOT OF THIS BEHIND US. WE CONTINUE TO WORK THROUGH IT. THIS IS A PERIOD A LOT OF REGULATIONS GOT PASSED TO STOP ALL THE DIFFERENT THINGS WE WEREN'T DOING RIGHT. IF YOU LOOK AT IT FROM A BROAD PERSPECTIVE, WE DOUBLED OUR CAPITAL. IN OUR COMPANY AND THE INDUSTRY. WE'VE QUADRUPLED LIQUIDITY. WE'VE REDUCED THE SIZE OF THE MERRILL-LYNCH BANK OF AMERICA COMBINATION BY A THIRD, AND WE'VE SIMPLIFIED THE COMPANY. THAT IS WHERE THE RIGHT PLACE TO TAKE IT FOR THE CUSTOMERS WAS AND THE SHAREHOLDERS. I THINK MOST OF THE PEOPLE IN THE INDUSTRY ARE DOING THAT. I THINK THE REGULATIONS ARE PUSHING US HARDER TOWARDS THAT OUTCOME.

QUICK: GENTLEMEN, THANK YOU VERY MUCH. WE'LL CONTINUE THIS CONVERSATION AS WE MENTIONED ON TAPE. MARIA, RIGHT NOW I'LL SEND IT BACK TO YOU AND WE WILL HAVE THE REST OF THIS CONVERSATION TOMORROW MORNING ON "SQUAWK BOX."

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