When were you last in Ireland?
We went last August . We took my father and mother, and three of my siblings and our children went, so we had about 18 people traveling around in a bus, and it was a lot of fun. We went to Dublin for a few days and then took off down to the southwest. We had a bus driver who had that great Irish humor; we just laughed.
Did you discuss the economy?
He [the bus driver] and other Irish people we met along the way had the common view that it was United States property values and subprime mortgages and all that that created this worldwide financial crisis which was starting to affect Ireland. But at the end of the day, it is local conditions that drive housing prices. Irish housing prices had gotten so out of control relative to what a person could pay that you knew they were going to face what they faced. It’s a classic problem that if you try to outgrow your normal growth rate there’s always a bubble on the other side of it. And as soon as the economy slowed down a little it just all came crashing down. It’ll adjust and come back.
Will the U.S. economy also adjust?
Our view, as a company, is that we’ll start to see a little growth in the latter part of this year and into next year, but the American consumer is still struggling to pay their debts. American companies are more – they’re stabilizing, I think would be the word we’d say right now, in terms of their employment, in terms of their view of their future. They’re not robust and growing but they’re stabilizing, so they’ve come through the worst of it, and we see we’re starting to come out the other side. And I think that bodes well for the whole world because when the American consumer spends, that helps everyone.
The Irish government was the first to guarantee bank deposits. And after its bailout it now has 75 percent voting rights now in Anglo-Irish Bank. How does that compare to here?
I thought the Irish government did a good job of stabilizing the situation. What’s hard to appreciate here is how much more consolidated most [national] economies are compared to the U.S. – like Ireland in banking. When you have three or four key institutions that aren’t stable and people start pulling their money out, it’s really tough. So I think the government did the right thing to calm the population down by guaranteeing their deposits, guaranteeing the liability side, and injecting their capital. I assume their goal would be to sell their stock positions down over time as the economy stabilizes. But in the U.S. because of the number of institutions and the size of the capital markets, we were able to raise our capital, our company and other companies, through private investors, after the government gave us capital.
Are there lessons to learn from the crisis?
Ireland and America and UK and Europe and China and Japan, everybody’s going to learn a series of lessons from all this, but I think the common lesson is going to be about leverage, and too much borrowing. In Ireland for example, I saw houses that were valued at over $2 million, beautiful houses but miles from the city in the countryside, where population pressures were nonexistent. People bought outside their means, they could’ve taken cash out to do something else with it, just the same as the United States. A financial crisis was created by the same thing that creates most of them – too much borrowing, and then when the day of reckoning came, when people had to pay it back and they weren’t earning as much money, because the economy slowed down, everybody got in trouble.
Do you think the banks are at fault in any of that?
We’re all at fault. Everybody’s at fault, all the participants are at fault, from the banks to the regulatory environment to the corporations to the – we all sort of participated and when the liquidity bubble popped it was probably –
And I think we as an industry must do all we can to help educate people. We all, as consumers, have to be more responsible. It comes down to less complexity and less leverage. My children will probably be more conservative in how they save just because of the experience [of this crisis] that they’ve read about in the papers.
How global is Bank of America?
Three hundred thousand people work at Bank of America [worldwide]. We’ve got a big [credit] card business in Ireland; we’ve got investment bankers and corporate bankers in Ireland.