By Andy Serwer

Bank of America CEO Brian Moynihan doesn't let the day-to-day rattle him, which serves him well -- especially as capital markets have been buffeted by unprecedented change and uncertainty coming from Washington, D.C.

I recently sat down with Moynihan, who is also the chancellor of Brown University, as part of our At Barron's interview series. Below are some highlights from my conversation with Moynihan, which have been edited and condensed for clarity.

Barron's: Brian, what do you make of Moody's recent downgrade of U.S. debt? Was this warranted?

Brian Moynihan: You can debate whether it is warranted or not. The answer is, it's done. Two other rating agencies lowered it years ago, this is the third. So it doesn't have a big impact. The market sort of shrugged it off, but there are certain investors who are restricted only to triple A securities, even if it's a U.S. Treasury. That will work through the system and there will be a little bit of resettling. It also caused the largest banks to be downgraded a notch, [including Bank of America], because we can't be rated higher than the country.

But it's not the downgrade, it's what the downgrade represents. Will we get our eyes and our stomach aligned as a country, where our revenue and our expenses get more in line? That's what the rating agencies are reflecting on. We have a tremendous country with prospects no one else has in the world. Great innovation, great capital markets, and all those good things. But we're operating a substantial deficit for many years in a row now, and they're saying, 'Can you bring that back in line so it doesn't hit certain triggers?'

What about the end of American exceptionalism that people are talking about? Is this a concern? You're talking about investors around the world not keeping their capital here, or not wanting to do business here. Are you seeing any evidence of that?

Not really. Look, at the end of day, the uncertainty about tax policy, the uncertainty about the incentives that were in the Infrastructure Act, the IRA Act, will those be continued? Those things are momentary. But what's fundamentally strong about the United States is the rule of law, the ability to have a flexible workforce, the ability to bring people in the country, even under different sets of rules over time. The ability to have innovation from research all the way through the process to commercialization at a level no one else has, and capital markets capability. Those are things America's had.

The other thing that makes America important is demand. We have the biggest economy in the world, two-thirds of it driven by consumer activity. That is a place where if I'm selling consumer goods of any kind in the world, or machines to make consumer goods, or whatever, I've got to think about the United States as a market. Because even though other places have more population, the size of spending and the [gross domestic product] per capita is not close. So I think there'll be ebbs and flows in the views of what to do for the next six months, year or two years, but across long periods of time, America's the best place to invest.

What about threats to our research universities and the rule of rule law? Do those things concern you?

Change in policies, deregulation, trying to maybe swing the pendulum back in some areas, those things happen all the time. The country's been around for 250 with those ebbs and flows. We've got to be careful that the basic fundamentals are there. The ability to operate and go through bankruptcy. That's foreign in a lot of countries. That doesn't exist. The ability of the capital markets and of public companies [to thrive], that's been driven by the United States. I think those fundamental principles are solid. If you think about the history of the extraction of value into commercial aspects, from research at universities and national labs, those are fundamental. Whether there'll be more or less funding, whether it be reimbursed for overhead, that is up for debate.

I think the world agrees that we need to keep funding research. The question of exactly how and what attributes will be attached is subject to debate. There's history of America being extremely strong and overtaking Japan, who was supposed to overtake us, because of the quality of our research capability. Our ability to drive the development of computers, the development of AI. Even go back to the development of plastics. Go back to the [movie] The Graduate [where a character said the future was] "Plastics, young man." My dad was a plastics PhD scientist who helped develop plastics in America. That's what America does.

Write to Andy Serwer at andy.serwer@barrons.com

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May 30, 2025 03:00 ET (07:00 GMT)

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