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CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC'S MARIA BARTIROMO SPEAKS WITH BANK OF AMERICA CEO BRIAN MOYNIHAN TODAY ON CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"

WHEN: Today, Tuesday, August 9th

WHERE: CNBC's "Closing Bell with Maria Bartiromo"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Bank of America CEO Brian Moynihan today at 4PM ET on CNBC's "Closing Bell with Maria Bartiromo." All references must be sourced to CNBC.

Moynihan One-on-One: Part 1:http://video.cnbc.com/gallery/?video=3000038269

Moynihan One-on-One: Part 2: http://video.cnbc.com/gallery/?video=3000038270

BARTIROMO: WELCOME BACK TO A WILD DAY ON WALL STREET, ONE OF THE BIGGEST BANKS IN THE MARKET, BANK OF AMERICA. IT'S BEEN ON A WILD RIDE IN THE LAST TWO TRADING SESSIONS. A BIG 20% SELL-OFF YESTERDAY AND TODAY UP ALMOST 17% IN THE SESSION IN HAVE A VOLUME.THE COMPANY AND CHIEF COMPETITIVE, BRIAN MOYNIHAN HAVE COME UNDER FIRE FOR THE DISMAL PERFORMANCE OF THE MORTGAGE MESS AND AIG'S $10 MILLION LAWSUIT OVER MORTGAGE SECURITIES. THE BANK HAS LOST MORE THAN $37 BILLION IN MARKET VALUE SINCE THE MARKET'S ROLLER COASTER RIDE BEGAN JULY 21st. WHAT WILL IT TAKE TO ASSURE INVESTORS AND SHAREHOLDERS. JOINING US NOW IS THE CEO OF B OF A, THANKS FOR JOINING US.

MOYNIHAN: GOOD TO BE HERE.

BARTIROMO: LET'S TALK ABOUT ISSUES. YEAR-TO-DATE STOCK DOWN 44%. DOWN 20% IN A WEEK ALONE. A MAJOR FEAR, FEAR OF DILUTION, IF YOU COME TO THE MARKETS, YOU WILL RAISE MORE CAPITAL. HOW WILL YOU TURN THIS AROUND?

MOYNIHAN: IF YOU LOOK WHERE WE STARTED IN JANUARY 2010, WE RAISED OUR MARKET CAPITAL SIGNIFICANTLY FROM THEM AND BUILT RESERVES. WE HAVE $128 BILLION OF COMMON EQUITY AND ABILITY TO RETAIN EARNINGS AND MANAGE OUR BALANCE SHEET AND CONTINUE TO DRIVE THE COMPANY FORWARD LIKE WE'VE DONE THE LAST SIX QUARTERS. THE LAST QUARTER ALONE, WE TOOK A $20 BILLION CHARGE TO PUT MORE MORTGAGE STUFF BEHIND US AND STILL HAD MORE CAPITAL THAN WE HAD IN THE THIRD QUARTER OF 2010.

BARTIROMO: CAN YOU REALLY GO FORWARD AND SAY YOU WILL DO THE SAME THING YOU'VE BEEN DOING. WHAT YOU'VE BEEN DOING IS NOT WORKING. THE MARKET IS NOT BELIEVING YOU. I MEAN LET'S GO BACK AND GO THROUGH SOME OF THESE PROMISES THAT YOU'VE MADE. YOU SAID FOR EXAMPLE YOU WERE VERY CLEAR ON YOUR INVESTOR DAY, SAID YOU WOULD RAISE THE DIVIDEND. PROMISED A DIVIDEND INCREASE ON INVESTOR DAYS. A FEW DAYS LATER, THE FED SAID, YOU CAN'T PAY A DIVIDEND AND THEN YOU GROSSLY UNDERESTIMATED THE COST OF MORTGAGE PUT-BACKS AND FORECLOSURE COSTS REPEATEDLY. EVEN A SETTLEMENT WITH THE PRIVATE LABEL INVESTORS AN $8.5 BILLION SETTLEMENT IS BEING QUESTIONED. WAS THAT A MISTAKE?

MOYNIHAN: NO SETTLING THAT LAWSUIT WAS CRITICALLY IMPORTANT FOR US. BECAUSE YOU HAD 20 INVESTORS WHO HAD A VIEW OF THE THING OWNED A SIGNIFICANT AMOUNT OF SECURITIES WITH THE BANK OF NEW YORK AND TOOK RISKS UNKNOWN AND BROUGHT IT TO THE TABLE AND WE FOUND A WAY TO GET SOMETHING DONE AND PUT IT BEHIND US. I THINK IT'S FAIR TO BOTH PARTIES AND PUT IT THROUGH THE COURT SYSTEM. WE EXPECT THE INTERVENORS TO COME IN WILL HAVE UNTIL THE END OF AUGUST TO FILE THEIR PROTESTS AND LET THE COURTS DECIDE.

BARTIROMO: YOUR CREDIBILITY IS OBVIOUSLY ON THE LINE RIGHT NOW. HOW ARE YOU GOING TO GET IT BACK? WHAT IS YOUR PLAN?

MOYNIHAN: WE WILL GET IT BACK BY CONTINUING TO DO WHAT WE'RE DOING. DRIVE OUR CUSTOMER DRIVEN BUSINESS, CONTINUE TO PERFORM IN THE MARKET. IN THE SECOND QUARTER WE GREW OUR CHECKING ACCOUNTS, GREW OUR DEPOSITS. GREW OUR INVESTMENT BANKING FEES SECOND IN THE WORLD IN THAT. HAD GOOD TRADING RESULTS ON A RELATIVE BASIS WEALTH MANAGEMENT BUSINESS CONTINUES TO MAKE MONEY. 5 OF OUR 6 BUSINESSES MAKING A PROFIT. WE HAVE TO KEEP DRIVING THOSE BUSINESSES AND THEN WE HAVE TO KEEP MOVING THE MORTGAGE MESS BEHIND US GETTING THROUGH THE PILE OF MORTGAGES THAT HAVE TO BE DEALT IN TERMS OF DEFAULTED CUSTOMERS AND MODIFYING EVERYONE WE CAN AND SECOND, CONTINUE TO BUILD THE BALANCE SHEET WE'VE BEEN BUILDING THE LAST 18 MONTHS TO PROVIDE THE CAPITAL AND LIQUIDITY AND CARE WE HAD WHEN WE THOUGHT WE MIGHT FACE ANOTHER DOWNTURNAND HAD A CHOPPY MARKET IN THE LAST FEW WEEKS AND GONE THROUGH IT FINE.

BARTIROMO: I WANT TO TALK ABOUT THE EARNINGS POWER OF THE BANK OBVIOUSLY THAT IS A VERY POSITIVE AND GOOD PART OF THIS STORY. LET ME GET BACK TO SOME OF THESE MORTGAGE RELATED LAWSUITS. WHEN WILL THEY END? YOU HAVE AN EXPECTATION IN TERMS OF LIABILITIES TO COME. WHAT IS IT?

MOYNIHAN: IT'S ALL IN OUR PUBLIC FILING. EACH QUARTER HAVE PUT AWAY MAJOR PIECES OF LIABILITY AND WE ACCRUED F0R OTHER LIABILITIES AND THAT’S ALL IN OUR DISCLOSURE AND PUT THAT BEHIND US. THE COURTS PRECEDINGS WILL TAKE A YEAR, YEAR AND A HALF TO GET THROUGH, NORMAL CASE FOR COURTS. AND ON THESE OTHER SECURITY SUITS WE’VE HAD THE SUIT LIKE AIG FILED YESTERDAY FOR THREE YEARS NOW, OTHER PEOPLE FILED THE SAME SUIT, CLASS ACTION, SECURITIES CLAIM. WE'LL LET THE COURTS WORK ON THAT THE NEXT SEVERAL WEEKS, MONTHS AND YEARS FRANKLY BECAUSE IT IS A VERY SLOW PROGRESS.

BARTIROMO: DID YOU MAKE A MISTAKE BY SETTLING THE STATE ATTORNEYS AND IN A SENSE SEEING THE DOORS THE FLOODGATES OPEN WITH OTHERS OR ARE YOU SAYING THIS WAS IN THE WORK THREE YEARS AND JUST FILED YESTERDAY.

MOYNIHAN: THE CLASS ACTION SECURITY SUITS WE HAD OTHER PEOPLE FILE THE SAME THING OTHER THAN AIG, GOING ON A COUPLE YEARS, TWO OR THREE YEARS AND OTHER PEOPLE FILED SIMILAR CLAIMS BECAUSE ALL THE INVESTORS WANT TO REPRESENT THEMSELVES AND MAYBE ONE OUT OF THE CLASS.

BARTIROMO: WHAT CAN YOU DO TO RAISE CAPITAL. WE KNOW WHAT BASEL 3 IS REQUIRING THEY’RE SAYING IT’S MANY YEARS OUT, A 10% TIER CAPITAL WOULD YOU CONSIDER SELLING THE STAKE IN THE CHINESE BANK?

MOYNIHAN: WE WON'T TALK ABOUT INDIVIDUAL POSITIONS. BUT WHAT WE’VE BEEN DOING IS THE SAME IS GENERATING EARNINGS, CONTINUING TO REPOSITION THE BALANCE SHEET THROUGH SELLING OFF NON-CORE BUSINESSES. WE SOLD 23 BUSINESSES THE LAST SIX QUARTERS AND SO THAT’S HELPED US RAISE OUR CAPITAL LEVELS AND RESERVES AT THE SAME TIME FOR ALL THE ISSUES YOU JUST TALKED ABOUT AND CONTINUE ON A COURSE. YOU WILL FIND US CONTINUING TO DISPOSE OF BUSINESSES WHICH ARE NOT CORE TO WHAT OUR CUSTOMERS NEED US TO DO AND WE WILL KEEP WORKING ON THAT AND THROUGH RETENTION OF EARNINGS AND THROUGH OPTIMIZATION OF OUR BALANCE SHEET, AND WE HAVE AS MUCH TANGIBLE COMMON EQUITY AS OUR OTHER COMPETITORS. IT’S A RISK WEIGHTED ASSET AND THE TECHNICAL BANKING RULES WE HAVE TO CONTINUE TO OPTIMIZE THROUGH.

BARTIROMO: HAS THE STAKE IN CHINA CONSTRUCTION REALLY DONE ANYTHING FOR YOU? YOU'RE A MINORITY PARTNER. OBVIOUSLY, THE CHINESE ARE IN CONTROL. WHAT WOULD THAT STAKE BE VALUED AT? WHAT CAN YOU GET FOR THAT STAKE?

MOYNIHAN: IT’S VALUED IN OUR CAPITAL TODAY, IT’S BEEN A VERY STRATEGIC RELATIONSHIP FOR US AND HAS PROVIDED A GREAT VALUE TO US IN TERMS OF EXCHANGE IN BUSINESSES AND WE’LL CONTINUE TO BE A STRATEGIC PARTNER WITH THEM.

BARTIROMO: BUT ARE YOU EXPLORING GETTING OUT OF THAT STAKE?

MOYNIHAN: WE DON'T COMMENT ON THOSE THINGS.

BARTIROMO: LET ME ASK YOU ABOUT MERRILL LYNCH, THIS IS ANOTHER AREA WHERE PEOPLE ARE WONDERING IF IT MAKES SENSE TO BREAK UP B OF A GIVEN WHAT'S GOING ON? WOULD YOU CONSIDER SELLING MERRILL?

MOYNIHAN: WHAT PEOPLE THINK OF MERRILL AS A MERRILL LYNCH, IS AN INEGRATED BANK OF AMERICA/MERRILL LYNCH COMBINATION. IT’S OCCURRED BOTH ON THE MANAGEMENT SIDE AND ALSO ON THE CAPITAL MARKET SALES AND TRADING INVESTMENT BANKING SIDE IT'S CORE TO OUR CUSTOMERS TO HAVE THOSE ACTIVITIES. THERE ARE PLENTY OF OTHER THINGS, LIKE WE HAVE BEEN DEMONSTRATING THE LAST SIX QUARTERS WE CAN SELL AND CREATE CAPITAL THAT ARE MUCH LESS IMPORTANT TO OUR CUSTOMERS THAN WHAT MERRILL LYNCH DOES FOR OUR CUSTOMERS EVERY DAY.

BARTIROMO: LIKE WHAT?

MOYNIHAN: WE SOLD OUR INTEREST IN ITALIA SAN TANDER. AND WE SOLD JUST LAST QUARTER WE SOLD A CREDIT CARD BOOKS BUSINESS REGIONS CREDIT CARD BOOKS AND OTHER THINGS, SOVEREIGN CREDIT CARD BOOKS WE HAD FOR OTHERBANKS. WE CONTINUE TO PEAR AWAY. ALL THESE ADD UP TO A LOT OF IMPROVEMENT IN THE BALANCE SHEET AND ALSO ALL OUR PRIVATE EQUITY BUSINESS WE’VE BEEN SELLING ALL LAST WEEK AND WE INTEND TO SELL ANOTHER CHUNK OF THAT. SELLING MORTGAGE SERVICING RIGHTS WE’VE BEEN SELLING THAT, ALL THAT ADD UP TO A LOT OF CAPITAL.

BARTIROMO: HAS THE BOARD SAID THEY WOULD LIKE YOU TO STAY. CLEARLY BRIAN SOMETHING HAS TO GIVE. YOU ARE TALK ABOUT A MORE THAN 40% SELL-OFF IN THE STOCK YEAR-TO-DATE. WOULD YOU BE PREPARED TO STEP ASIDE IF IN FACT THIS CONTINUES?

MOYNIHAN: I THINK WE'RE DOING THE RIGHT THING, MANAGEMENT TEAM IS DOING THE RIGHT THING. I THINK WE CONTINUE TO DRIVE THE BUSINESS OUR FRANCHISE BUSINESS CONTINUES TO PERFORM AND I THINK WE BUILT THE CAPITAL BASE AND WILL CONTINUE TO DO THAT.

BARTIROMO: SO YOU HAVE NO PLANS TO STEP ASIDE NOW?

MOYNIHAN: NO.

BARTIROMO: LET ME ASK YOU ABOUT TOMORROW'S CONFERENCE CALL. YOU'RE DOING THE CONFERENCE CALL WITH FAIR HOLME CAPITAL, THIS IS A BIG RISK YOU ARE TAKING RIGHT. I REMEMBER A COUPLE OF YEARS AGO WHAT HAPPENED WHEN THE CFO OF LEHMAN BROTHERS ERIN CALLAN DID THIS WITH INVESTOR DAVID EINHORN, SHE LOST HER JOB. GIVEN THE TRACK RECORD WE’RE TALKING ABOUT AND THE UPSET IN TERMS OF THE STOCK PRICE, DO YOU THINK THIS IS A GOOD IDEA TOMORROW?

MOYNIHAN: WELL WE SET THIS CALL UP FOUR OR FIVE WEEKS AGO AROUND OUR EARNINGS BECAUSE FAIR HOLME IS A MAJOR SHAREHOLDER AND ASKED OTHER CEOs TO COME FROM TIME-TO-TIME. IT BECOMES SOMETHING DIFFERENT BECAUSE OF THE MARKETS AND EVERYTHING THAT’S GOING ON. BUT WE TALK TO INVESTORS ALL THE TIME. I TALKED TO INVESTORS THIS WEEK IN MANY CALLS I TALKED FACE TO FACE TO INVESTORS. THEY ARE MAJOR INVESTORS IN OUR COMPANY AND DESERVE WITH THE AMOUNT OF STOCK THEY OWN IN US TO HAVE A CHANCE TO TALK TO US, ABOUT WHAT'S GOING ON. SO BRUCE THOMPSON AND I WILL BE THERE WE WILL TALK TO THEM JUST LIKE WE TALK TO INVESTORS ALL THE TIME.

BARTIROMO: THEY'RE INVITING MEDIA AND THEY’RE INVITING NEGATIVE QUESTIONS. THIS IS A LITTLE DIFFERENT THAN SPEAKING TO INVESTORS ON A REGULAR OCCURANCE.

MOYNIHAN: I AM CONFIDENT THE QUESTIONS WE WILL GET TOMORROW IS NO DIFFERENT THAN WE GET FROM INVESTORS EVERYDAY.

BARTIROMO: I WANT TO TALK A BIT ABOUT THE CREDIT DEFAULT SWAPS AND WHAT THEY'RE SHOWING AT B OF A AND SOME OF THE OTHER BANKS BEFORE I DO THAT, LET'S GET A SHORT BREAK. BRIAN, WILL YOU STICK AROUND?

MOYNIHAN: SURE.

BARTIROMO: WELCOME BACK. MORE NOW WITH OUR CNBC EXCLUSIVE INTERVIEW WITH BANK OF AMERICA, BRIAN MOYNIHAN. BEFORE WE WENT TO BREAK, I MENTIONED THE CREDIT DEFAULT SWAPS. LET’S TALK ABOUT WHAT THE MARKET IS TELLING US. THE DEFAULT SWAPS OBVIOUSLY SHOWS THAT INVESTORS THINK B OF A IS RISKIER THAN YOUR COLLEAGUES JP MORGAN, CITI, AND WELLS FARGO. DO YOU THINK B OF A'S REPUTATION IS UNDER SIEGE HERE?

MOYNIHAN: NO, I DON'T. THE MARKET HAS REACTED THE LAST FEWS DAYS AND SPREADS HAVE GONE OUT AND CAME BACK IN A LITTLE BIT TODAY THEY WILL SETTLED BACK IN. WE HAVE BEEN WIDER THAN OUR PEERS FOR A LONG WHILE AND OUR TRADING PARTNERS CONTINUE TO TRADE WITH US. I THINK THE MARKET REFLECTED EVERYBODY MOVED OUT. I THINK WE CONTINUED TO OPERATE THE COMPANY HAVE THE CAPITAL AND HAVE THE CAPABILITIES AND LIQUIDITY TO RUN THE BUSINESS AND WILL ALL SETTLE AFTER WE GET A LITTLE MORE NORMALIZED TIMES.

BARTIROMO: CAN YOU SAY THE BANK HAS ADEQUATE CAPITAL TO MEET THE REQUIREMENTS OF BASEL 3?

MOYNIHAN: YES WE HAVE A GOAL AT THE END OF 12 TO BE 6.75 TO 7%. THE MINIMUM REQUIRED IS 3.5%. AT THE TIME AND THAT AS IF YOU’VE HAD ALL THE RULES THAT COME IN FOR THE NEXT SIX YEARS OVER THAT WE WILL BE 100 BASIS POINTS PLUS BETTER THAN THAT, BASED ON THE CURRENT RULES. WE HAVE LOTS OF CAPITAL THAT'S ONE OF THE QUESTIONS WE HAVE. WE HAVE THIS FRANCHISE AND CAPITAL AND HAVE TO CONTINUE TO OPTIMIZE THAT TO PRODUCE THE CAPITAL NUMBERS TO MATCH OUR PEERS AND WE'VE BEEN WORKING ONTHAT AND WILL CONTINUE TO CATCH UP TO THEM AND WE WILL CONTINUE TO DO THAT.

BARTIROMO: WHY DO YOU THINK THE MARKET IS REACTING THE WAY IT IS?

MOYNIHAN: TWO OR THREE ISSUES AROUND OUR COMPANY THAT IS HOLDING US BACK. MORTGAGE ISSUES WE TALKED ABOUT BEFORE, AND SECOND, WILL IT RESULT IN US NEEDING TO RAISE CAPITAL AND WE'VE SHOWN WE’VE BEEN ABLE TO PUT ASIDE THE MORTGAGE WITHOUT RAISING CAPITAL. THE THIRD IS THE GENERAL ECONOMY. IF YOU BELIEVE THE AMERICAN ECONOMY IS GOING SLOWER, MOST PEOPLE WILL SAY BANK OF AMERICA WILL SUFFER.BUT WHAT WE’VE ACTUALLY SEEN IS THAT AS THE ECONOMY HAS SLOWED DOWN AND AS UNEMPLOYMENT HAS NOT GOTTEN BETTER IN THE LAST FOUR OR FIVE MONTH OUR CREDIT CONTINUES TO GET BETTER EVEN IN THE MONTH OF JULY DELINQUENCIES ARE DOWN, ALL THAT SEEMS TO SHOW THAT WE’VE BECAUSE THE UNDERWRITING CHANGE WAS MADE TWO OR THREE YEARS AGO THE PORTFOLIOS ARE IN MUCH BETTER SHAPE GOING INTO THIS SORT OF NO GROWTH ENVIRONMENT OR LOW GROWTH ENVIRONMENT THAN LAST TIME. TRADING ASSETS ARE DOWN, VARS ARE DOWN. WE MAKE A LOT MORE MONEY PER DOLLAR VAR THAN OUR COMPETITORS DO AND SO WE’VE MANAGED THE RISK OUT OF THIS BALANCE SHEET WHICH SERVES US WELL IN DIFFICULT TIMES LIKE THE WHOLE MARKET WENT THROUGH IN THE LAST COUPLE OF DAYS.

BARTIROMO: THE EARNINGS POWER OF BANK OF AMERICA IS OBVIOUSLY VERY STRONG YOU LOOK AT THE SECOND EARNINGS FOR THE SECOND QUARTER. THE WORRY IS WE'RE ENTERING A DOUBLE DIP RECESSION. ARE WE?

MOYNIHAN: WE DON'T SEE THAT IN OUR CUSTOMER DATA INTERESTING ENOUGH. OUR JULY 2011 SPENDING VERSUS JULY 2010 IS UP 5% IN TERMS OF PEOPLE SPENDING ON THEIR BANK OF AMERICA PLASTIC, DEBIT CARDSAND CREDIT CARDS. THAT'S ABOUT THE 15TH OR 18th MONTH OF YEAR-OVER-YEAR GROWTH, UP JUNE AND JULY A LITTLE BIT. WE DON'T QUITE SEE THE CONSUMER SLOWING DOWN, IT WAS UP 5% 2% OF THAT WAS GAS PRICES AND THE REST OF IT WAS DRVEN BY CORE CONSUMER SPENDING NOT AS ROBUST AS WE'D LIKE IT BUT KEEP MOVING FORWARD. LOOK AT THAT YOU LOOK AT OUR DELINQUENCIES AND PORTFOLIOS YOU LOOK AT MIDDLE MARKET COMPANIES THAT ARE VERY STRONG AND CAPABLE, LOOK AT THEM HAVING GREAT CAPITAL GREAT CASH THE CASH IN THE SYSTEM IS JUST HUGE. WE KEEP GROWING DEPOSITS IN THE MONTH OF JULY 25 BILLION DOLLARS MORE DEPOSIT COME IN FROM OUR CORE COMMERCIAL CUSTOMERS. SO YOU LOOK AT ALL THAT AND YOU SAY THE WORLD IS IN BETTER SHAPE TO HANDLING A FLATTENING OR NO GROWTH ENVORONMENT THAT DOESN'T MEAN IT WILL BE EASY. WE HAVE TO GRIND OUT EARNINGS. HOW WILL WE DO THAT? CONTROLLING COSTS, DRIVING THE HEADCOUNT DOWN AND TRYING TO CONTROL THE COSTS IN THE COMPANY AND WE HAVE A PROGRAM TO DO THAT, THAT WILL TAKE EFFECTIVE THE BEGINNING OF THIS FALL REALITY IS AT ALL OF US HAVE BEEN PREPARING FOR THIS CIRCUMSTANCE. BECAUSE IT WAS NOT SUCH ROBUST GROWTH THAT WOULDN’T BE UNEXPECTED WE MIGHT SLIDE BACK AND THAT’S WHAT WE'RE DOING.

BARTIROMO: I AM GLAD THAT YOU MENTIONED THAT YOU LOOK AT WHAT THE FED SAID TODAY THE FED IS GOING TO KEEP RATES EXCEPTIONALY LOW UNTIL 2013 DOESN'T THAT MEAN LOWER EARNINGS GOING FORWARD FOR B OF A?

MOYNIHAN: THE ISSUE WITH LOW RATES IS THAT THE REALITY IS OUR DEPOSITS CUSTOMERS ARE FREE TO DEPOSIT WE PAY NO INTEREST ON ARE WORTH LESS IF THE RATE ENVIRONMENT IS LOWER. WE'VE BEEN IN THIS ENVIRONMENT SEVERAL MONTHS AND ADJUSTED DOWN. SO THE NET INTEREST MARGINS OF BANKS HAS BEEN UNDER PRESSURE IS COMING DOWN. I THINK AT THIS POINT WE BELIEVE WE'VE SEEN THE BOTTOM. THE MARKET ALREADY PREDICTED THIS RATE ENVIRONMENT WAS GOING TO PREVAIL UNTIL THE FIRST QUARTER OF 2013. WHAT ARE WE DOING ABOUT IT AS MANAGEMENT? TAKING OUT COST SO IF YOU LOOK AT OUR RETAIL SYSTEM WE TOOK OUT 63 BRANCHES IN THE SECOND QUARTER WE CONTINUE TO TAKE OUT BRANCHES AND SAID LAST SPRING WE'D TAKE OUT 750 OR SO OVERALL. WE WILL CONTINUE TO DO THAT AND WE CONTINUE TO DRIVE DOWN OUR COST PER DEPOSIT TO A MUCH LOWER RATE WHICH IS SORT OF YOUR MARKER OF ARE YOU MAKING PROGRESS RELATIVE TOYOUR FRANCHISE SO YOU HAVE MORE DEPOSITS LESS COSTS, MORE CUSTOMERS THROUGH CHECKING ACCOUNTS AND PAYING LESS FOR THE DEPOSITS AND WE HAVE TO KEEP GRINDING IT OUT. IT'S NOT FUN, HOW YOU HAVE TO OPERATE THE BANKING ENVIRONMENT IN THIS KIND OF INTEREST RATE ENVIRONMENT.

BARTIROMO: I KNOW BANK OF AMERICA DOES NOT HAVE MUCH EXPOSURE OVERSEAS BUT THROUGH MERRILL LYNCH HAS REAL EXPOSURE IN TERMS OF COUNTERPARTY AGREEMENTS WITH COUNTRIES AND COMPANIES AROUND THE WORLD. HOW MUCH IS THE EUROPEAN PROBLEM AFFECTING YOU?

MOYNIHAN: WE KEEP MONITORING IT. I DON'T THINK IT'S AN EFFECTIVE LIKE A RISK WE PUT OUT OUR DATA AND HAVE A REALLY MODEST RISK, ESPECIALLY IN THE COUNTRIES OF CONCERN BUT IT CONTINUES TO SLOW DOWN THE ECONOMY, A BIG ECONOMY PUT IT ALL TOGETHER AN PUTS THAT UNDER RAPS. U.S. ECONOMY TRYING TO GROW OUTGROWTH AND OTHERS TRYING TO MAKE GROWTH IF YOU PUT IT TOGETHER THAT’S A LOT OF THE WORLD’S ECONOMY THAT IS STILL TRYING TO GRIND OUT A LITTLE BIT OF GROWTH, I THINK IT’S MORE THE IMPACT IT HAS AND THE UNCERTAINTY IT IS CAUSING THE DAMAGE TO THE MARKET.

BARTIROMO: A MOMENT AGO, I ASKED YOU ABOUT DIVIDENDS AND PROMISED A DIVIDEND ON INVESTOR DAY THE FED SAID YOU CAN'T PAY A DIVIDEND? ARE YOU EVEN GOING TO ASK TO PAY A DIVIDEND IN THE NEXT QUARTER?

MOYNIHAN: WE'RE NOT EVEN GOING TO ASK UNTIL WE ARE SURE WE CAN GET IT APPROVED. AND I THINK EVEN SINCE THAT TIME FRAME TO NOW THE VIEW OF THE ECONOMY IS DIFFERENT. WHEN WE HAVE ALL THE WORK DONE WE NEEDED TO HAVE AND SYSTEMS CONSOLIDATION AND MERRILL FULL INTEGRATED, WE CONCEDE WE'LL GO BACK AND ASK. AT THE TIME WE KNOW WE WON'T GET APPROVED, WE'RE NOT GOING THROUGH THAT AGAIN

BARTIROMO: SO NO DIVIDEND UNTIL 2012 OR 2013 AFFAIR?

MOYNIHAN: WHEN WE ARE COMFORTABLE WE WILL GET APPROVAL WE'LL ASK AND LET PEOPLE KNOW WHEN WE GET IT APPROVED.

BARTIROMO: NEXT YEAR AT THE EARLIEST?

MOYNIHAN: IT'S AUGUST SO WE'LL SEE.

BARTIROMO: WHAT ABOUT BUYING BACK STOCK?

MOYNIHAN: THAT GOES HAND AND HAND WITH THAT.

BARTIROMO: HOW WOULD YOU CHARACTERIZE THE ENVIRONMENT IN TERMS OF LENDING?

MOYNIHAN: THERE’S PLENTY OF CREDIT AVAILABILITY FOR GOOD CLIENTS LOANS PUTTING ON ARE HIGH CREDIT QUALITY HIGHER THAN WE'VE SEEN IN A LONG TIME WHETHER IT IS CONSUMER LOANS OR COMMERCIAL LOANS. THE ISSUE IS THE UNDERWRITING STANDARDS ARE BECAUSE WE’RE STILL WORKING THROUGH THE EXCESSES AS AN INDUSTRY, THE UNDERWRITING STANDARDS ARE PRETTY TIGHT. BUT IN THE LAST QUARTER MADE ONE HUNDRED SOME BILLIONS DOLLARS OF CREDIT AVAILABE WE CONTINUE TO DO THAT. MORTGAGE AVAILABILITY IS HIGH SO I THINK CREDIT IS THERE TYPICALLY WHEN A PERSON CAN’T GET CREDIT AS A BUSINESS IT IS THE BUSINESS PLAN IS STRUGGLING FROM REVENUE AND GROWTH. WHAT WE NEED TO DO IS CREATE MORE REVENUE FOR OUR BUSINESSES IN ANY WAY WE CAN AND THAT WOULD DRIVE IT. BY GIVING CREDIT OUT, WE CAN'T DRIVE THE ECONOMY. WE GIVE CREDIT OUT AS THE ECONOMY GROWS TO SUPPORT GROWTH. WE CAN'T GIVE CREDIT TO PEOPLE WHO DON'T HAVE SOLID BUSINESSES. THE GOOD NEWS IS COMPANIES SOLID PARTICIPATING IN THE NATIONAL ECONOMIES ARE GROWING VERY STRONGLY, THEY'RE USING CREDIT FOR EXAMPLE OUR INTERNATIONAL EXPANSION WE STARTED LAST YEAR, 18 MONTHS AGO OR SO. OUR LOANS INTERNATIONALLY FOR LARGE CORPORATIONS ARE NOW LARGER THAN IN THE U.S. AND GREW 25% LAST YEAR. SO THERE'S DEMANDS FOR LOANS IN PLACES WHERE GROWTH IS BUT NOT A LOT OF DEMAND IN THE UNITED STATES. HOPEFULLY THE FISCAL POLICIES AND STUFF WILL ULTIMATELY GENERATE SOME GROWTH AND IT WILL BE A BETTER LENDING ENVIRONMENT FROM A GROWTH AND LOAN BALANCES.

BARTIROMO: WHAT'S PLAN B? WHAT IF YOU CAN'T GET OUT OF THIS THROUGH GROWTH WHAT IF WE CONTINUE TO SEE INVESTORS NERVOUS AND THEY WANT TO KNOW YOU HAVE ADEQUATE CAPITAL THEY WANT TO BELIEVE IT. HOW ARE YOU GOING TO GET THEM TO BELIEVE IT WHAT IF IT CONTINUES THE WAY IT IS. WHAT’S YOUR PLAN B?

MOYNIHAN: WE HAVE TO CONTINUE TO DRIVE THE FRANCHISE AND WIN MARKET SHARE EVERYDAY WE DO IN CORE RETAIL BUSINESSES AND WEALTH MANAGEMENT BUSINESSES AND OUR COMMERICIAL BUSINESSES AND OUR TRADING BUSINESSES, ONE. SECOND THING, WE'RE REPOSITIONING THE FRANCHISE FAIRLY DRAMATICALLY TO TAKE AWAY THINGS WE CALL CAPITAL HOGS, PMSR, MORTGAGE SERVICING RIGHTS, NOT TO GET TOO TECHNICAL, WE SOLD SOME OF THAT LAST WEEK WE CONTINUE TO SELL THAT DOWN, WHETHER ALL THE DIFFERENT DEDUCTIONS OF CAPITAL. WE HAVE PLAN B, SELLING THE BUSINESS LIKE THE LAST 23 WE HAVE DONE IN THE SIX QUARTERS CONTINUE TO PEAR THE BALANCE SHEET DOWN AND OPTIMIZE ON THE BALANCE SHEET. OUR RISK WEIGHTED ASSETS VERSUS OUR REGULATORY ASSETS VERSUS REGULAR ASSETS IS 10 PERCENTAGE POINTS HIGHER THAN OUR PEERS LARGELY BECAUSE WE'RE STILL OPTIMIZING THE FRANCHISE AFTER WE BOUGHT MERRILL LYNCH AND GETTING THE SYSTEMS. THAT PROVIDES A LOT OF CAPITAL ESPECIALLY WHEN YOU ARE AS BIG AS WE ARE

BARTIROMO: YOU HAVE A BIG CONFERENCE CALL TOMORROW, INVESTORS WATCHING. EMPLOYEES WANT TO KNOW WHAT'S GOING ON, YOU EVER A BEEN COMMUNICATING TO THEM WHAT'S YOUR MESSAGE TO THE INVESTORS AND 300,000 EMPLOYEES?

MOYNIHAN: THE FRANCHISE CONTINUES TO WIN IT IS THE BEST FRANCHISE IN THE BUSINESS. WE CONTINUE TO REPOSITION OUR BALANCE SHEET WE WILL CONTINUE TO DO THAT WE HAVE MORE CAPITAL AND MORE RESERVES AND MORE CAPABILITY TO WITHSTAND A MARKET DOWNTURN OR SLOW ECONOMY THAN ANY OTHER TIME IN OUR HISTORY.

BARTIROMO: BRIAN, WE WILL BE WATCHING AND APPRECIATE YOUR TIME TODAY. BRIAN MOYNIHAN, CEO.

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