| WHEN: TODAY, FRIDAY, DECEMBER 14TH WHERE: CNBC'S "SQUAWK ON THE STREET" Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Bank of America CEO Brian Moynihan today, Friday, December 14th on CNBC's "Squawk on the Street." All references must be sourced to CNBC. |
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| OLICK: WE'RE ABOUT TO TALK ABOUT WHAT WE'RE GOING TO SEE GOING DOWN THE ROAD. OF COURSE, WE HAVE TO TALK ABOUT THE PRESIDENT AND WHO BETTER TO DO THAT THAN CEO OF BANK OF AMERICA BRIAN MOYNIHAN. THANK YOU FOR SO MUCH FOR JOINING US. OBVIOUSLY THE ELEPHANT IN THE ROOM IS THE FISCAL CLIFF. WE'RE TOLD IT'S ALREADY AFFECTING THE ECONOMY BY FED CHAIRMAN BEN BERNANKE SAYING THAT ALREADY. HOW IS IT AFFECTING YOUR BUSINESS, AND THE MORTGAGE BUSINESS GOING FORWARD? SHOULD WE GO OVER THE CLIFF, EVEN TEMPORARILY? MOYNIHAN: I THINK OUR BUSINESS IS AFFECTED BY IT BUT REMEMBER WE ARE A REFLECTION OF OUR LARGE CLIENT BASE IN THE UNITED STATES. SO IF YOU THINK ABOUT BUSINESSES, THE IMPACT OF THE UNCERTAINTY AROUND THE FISCAL POLICIES IN THE UNITED STATES STARTING LAST SUMMER, SUMMER OF 2011, EXCUSE ME, WITH THE ISSUES AROUND THE DEFAULT AND DEBT CEILING, AND THEN CONTINUING ON THROUGH TO NOW, HAS CAUSED BUSINESSES TO TAKE LESS AGGRESSIVE ACTION. AND I THINK ITS BEEN FELT IN THE ECONOMY. THE REAL QUESTION NOW IS DOES IT AFFECT THE CONSUMERS. AND WE'VE NOT SEEN THE CONSUMERS GO BACKWARDS, ALTHOUGH YOU SAW SOME CONFIDENCE NUMBERS COME DOWN. AND I THINK IF WE GET THIS SOLVED SOON THE CONSUMERS WHO HAVE BEEN PRETTY STEADY WILL CONTINUE TO BE THERE. OLICK: NOW WE HEARD CHAIRMAN BERNANKE SAY HE'S PUTTING A DEADLINE ON UNEMPLOYMENT RATES AND WHEN HE'LL START SEEING RATES GOING UP SO WHEN YOU TALK ABOUT THE CONSUMER AND THE FEAR THAT MORTGAGE INTEREST RATES COULD GO UP SOON, DO YOU EXPECT TO SEE RATES RISE AT ALL THIS COMING YEAR? MOYNIHAN: THE INTEREST RATES? OLICK: YES. MOYNIHAN: I THINK THE CHAIRMAN'S BEEN VERY CLEAR ABOUT KEEPING THE RATE STRUCTURE DOWN TO ALLOW THIS HUGE ECONOMY, WHICH IS MULTIPLES BIGGER THAN OTHER ECONOMIES IN THE WORLD WILL CONTINUE TO MOVE FORWARD. AND I THINK OUR EXPERTS WOULD SAY THE INTEREST RATES WILL STAY WHERE THEY ARE MORE OR LESS FOR QUITE A LONG PERIOD OF TIME. AND I THINK THE TRANSPARENCY FROM THE CHAIRMAN AND THE MONETARY POLICY HAS BEEN ABOUT AS CLEAR AS YOU CAN BE. OLICK: WHAT ABOUT THE MORTGAGE INTEREST DEDUCTION THOUGH THAT'S ON THE TABLE DURING THE CLIFF NEGOTIATIONS? DO YOU THINK THAT'S A REAL POSSIBILITY TO LOSE THAT FOR CONSUMERS? MOYNIHAN: I THINK THAT'S SOMETHING, MY GUESS IT WILL COME MORE IN THE STRUCTURAL CHANGES AROUND TAX REFORM. WHICH PART OF THE DEBATE IS AGREE TO THINGS NOW, AND TO AGREE TO ACTUALLY GO LOOK AT CORPORATE TAXES AND PERSONAL INCOME TAXES. MY VIEW WOULD BE PROBABLY BETTER SUITED TO TAKE THE TIME THAT IT TAKES TO THINK ALL THOSE THINGS THROUGH. I DON'T THINK AMERICA IS READY FOR MASSIVE CHANGES IN THE CORE STRUCTURE TAXATION OVERNIGHT. OLICK: SO YOU DON'T THINK IT'S ON THE TABLE? MOYNIHAN: I DON'T KNOW IF IT'S ON THE TABLE OR NOT. BUT I THINK FROM GENERAL CONSUMERS YOU WOULD RATHER HAVE THAT TO COME UP AS A DISCUSSION ON WHAT TO DO IN THE LONG TERM TO CHANGE THE WAY, BROADEN THE BASE, CHANGE DEDUCTIONS THINGS LIKE THAT AND TO TRY TO PUT IT IN IN A TIME WHEN PEOPLE ARE LEAST EXPECTING IT. OLICK: NOW BEFORE YOU CAN TALK ABOUT THE FUTURE OF HOME OWNERSHIP YOU HAVE TO DEAL WITH THE PAST, AND THAT IS THE ILLS OF THE HOUSING CRISIS. BANK OF AMERICA HAS ALREADY WIPED OUT OVER $7 BILLION IN MORTGAGE PRINCIPAL UNDER THE MORTGAGE SERVICING SETTLEMENT. YOU'RE SET TO FINISH YOUR OBLIGATIONS, YOU'VE SAID, BY THE END OF THAT FIRST YEAR, WHICH IS IN MARCH. DO YOU EXPECT BANK OF AMERICA TO CONTINUE WRITING DOWN MORTGAGE PRINCIPAL EVEN AFTER THAT, IN THE FORM OF LOAN MODIFICATIONS AND SHORT SALES, AS AGGRESSIVELY AS YOU HAVE BEEN? MOYNIHAN: LET'S START BACK FROM THE BEGINNING. WE MODIFIED SHORT SALES AND OTHER REMEDIATION PROGRAMS FOR CONSUMERS WHO HAVE BEEN STRUGGLING FOR 1.5 MILLION BORROWERS. ALL THOSE PROGRAMS CONTINUE. THE ACTUAL PART OF THE MORTGAGE SETTLEMENT AGREEMENT WE WILL COMPLETE MOSTLY BY THE END OF THE YEAR, AND CLEARLY BY THE END OF FEBRUARY, END OF MARCH, AND HAVE COMPLETED THE ENTIRE UNDERTAKING UNDER THAT SETTLEMENT. THE PROGRAMS GOING FORWARD WILL PROVIDE FOR SIMILAR RELIEF. I THINK WE HAVE OFFERED PRINCIPAL REDUCTION TO ALL OUR BORROWERS ALL THE PEOPLE WE OWN, THE ASSET WE CAN OFFER TO THAT'S BEEN DONE. THAT IS LARGELY DONE. AFTER THAT, IT WILL BE MORE THE MODIFICATIONS, IN THAT DEBT OF GONE ON UNDER HAMP AND OTHER TYPES OF PROGRAMS. OLICK: WHEN YOU TALK ABOUT MOVING THE MORTGAGE MARKET FORWARD AND WINDING DOWN FANNIE MAE AND FREDDIE MAC, DO YOU SEE THAT PRIVATE LABEL THAT IS PRIVATE INVESTORS GETTING BACK INTO THE MORTGAGE MARKET, AS A REAL POSSIBILITY IN THE NEAR FUTURE? HOW WOULD YOU DO THAT GOING FORWARD? MOYNIHAN: WELL I THINK IT'S NOT ONLY IN THE POSSIBILITY, IT'S A CERTAINTY. THE QUESTION IS, WHAT WE NEED FOR THAT IS TO GET THE RULES STRAIGHT. I THINK THE CAPITAL IS OUT THERE. AS THE RATE STRUCTURE MOVES BACK TO NORMALIZED, AND AS THE FHFA AND OTHERS HAVE LOWERED THE – INCREASED THE COST, OF THE GOVERNMENT SUPPORT, YOU'LL SEE THE PRIVATE MARKET WILL COME IN AND START TO ABSORB IT. I THINK LONG TERM WE HAVE TO GET IT BACK IN. IT IS UNSUSTAINABLE IN THE CURRENT POSITION NOW WITH NINE IN TEN MORTGAGES GOING THROUGH GOVERNMENT SUPPORT. WE'VE GOT TO GET THE GOVERNMENT PART OUT, THE PRIVATE LABEL IN. AND I THINK WITH THE HOUSE PRICE STABILIZATION NOW THE ASSET HAS A VALUE SO PEOPLE CAN HAVE THAT CERTAINTY. AGAIN, THE RULES HOPEFULLY BECOMING CERTAIN OVER THE NEXT 6, 12 MONTHS, THAT WILL COME TOGETHER. THE INVESTORS WANT THE PRODUCT TODAY. AND THE QUESTION IS, CAN WE GET A PRODUCT TOGETHER TO GIVE THEM. OLICK: FINALLY, FOR YOUR BUSINESS. YOU'VE BEEN WINDING DOWN YOUR MORTGAGE BUSINESS, WHETHER IT'S CORRESPONDENT LENDING, WAREHOUSE LENDING EVEN SELLING OFF PART OF YOUR SERVICING PORTFOLIO. IS BANK OF AMERICA GOING TO STAY IN THE MORTGAGE BUSINESS? MOYNIHAN: SURE. WE'RE GOING TO BE GROWING THE MORTGAGE BUSINESS FOR OUR CUSTOMERS. WE HAVE 30 MILLION CHECKING CUSTOMERS AND A LOW PENETRATION OF MORTGAGES. AS WE WATCH THIS THING SHAKE DOWN FROM THE PART THAT WE BOUGHT THROUGH COUNTRYWIDE AND OTHERS AND GET THAT BEHIND US, WE'LL HAVE 5 MILLION, 6 MILLION MORE MORTGAGE CUSTOMERS. WE WILL HAVE A 10% MARKET SHARE. WE INTEND TO GROW IN OUR PRODUCTION DIRECT TO CONSUMERS. IT'S GROWN EVERY SINGLE QUARTER FOR THE LAST 3 OR 4 QUARTERS AND WE'LL CONTINUE TO DO THAT. WE'VE CHANGED OUR POSITIONING TO BE DIRECT TO CONSUMER AWAY FROM PROVIDING WHOLESALE CREDIT TO THIRD PARTIES TO MAKE MORTGAGES. WE THINK THAT'S A BETTER POSITION FOR OUR COMPANY. OLICK: MR. MOYNIHAN. THAT'S ALL THE TIME WE HAVE. THANK YOU SO MUCH FOR JOINING US. |
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