The Invaluable Lesson Bank of America Corp Learned From Warren Buffett

Many people know Bank of America has a major investment from Warren Buffett, but the changes in its business may have come from his wisdom.

Jun 9, 2014 at 7:00AM

Bank of America (NYSE:BAC) is changing for the better, and its CEO, Brian Moynihan, has the evidence to prove it.


Brian Moynihan. Source: Bank of America.

In a wide-ranging interview with Forbes magazine, Moynihan discussed the last four-and-a-half years as he stood atop Bank of America. There was conversation around the troubles that once plagued it, the questions surrounding its solvency in 2011, and the countless other issues that have come up since January 2010.

But when discussing where Bank of America is now and where it is heading into the future, Moynihan had one quote investors must see:

We've fined-tuned the business around basic principles: Who are our customers? What do they need from us? And what can we be good at? Changing the mind-set requires getting people to stop thinking about the market share, and start thinking more about the value of a product for the customer.

The reason for optimism
Many investors have heard of the Project New BAC program spearheaded by Moynihan, which was announced in September of 2011. This is the bank seeking to become more efficient as it slashes expenses across its divisions and units. In the latest annual report, the bank noted $8 billion worth of yearly expenses would be cut as a result of the Project New BAC initiative, of which $6 billion has already been realized. 

But based on Moynihan's words above, Bank of America won't improve by just slashing its expenses, but the true thing that will make Bank of America "new" is its insistent focus on meeting the needs of the customers and doing what is best for them.


The article reminds us Bank of America has slashed its checking account options from 70 to 3. It also changed its overdraft policy -- which formerly allowed customers to use their debt cards even with insufficient funds so a fee could be charged -- costing the bank an estimated $2 billion in revenue. And Bank of America has done countless other things to change how it operates.

B of A's president of strategic initiatives, Terry Laughlin, suggests the bank understood "it's not about stretching for every last dollar from a client," and Moynihan "has broken a lot of traditionally held beliefs," about the way a bank should function.

Lesson from Buffett
Warren Buffett -- whose Berkshire Hathaway has a position now worth nearly $11 billion in Bank of America -- once said:

If we are delighting customers, eliminating unnecessary costs and improving our products and services, we gain strength. But if we treat customers with indifference or tolerate bloat, our businesses will wither. On a daily basis, the effects of our actions are imperceptible; cumulatively, though, their consequences are enormous.

It appears Bank of America understands the wisdom of Warren and is doing its best to ensure it is "delighting customers, eliminating unnecessary costs and improving [its] products and services."


Yet it doesn't simply understand it, but it is executing on it. J.D. Power revealed that Bank of America's customer service ratings have jumped. Laughlin himself remarked the bank has "sacrificed some earnings to do the right thing for the customer."

Troubles characterized Bank of America for years and years, but under Moynihan, and perhaps thanks to the guidance of Buffett, the turnaround has begun, and its best days are undoubtedly ahead of it.

These stocks beat the big banks...
Here's your chance to pocket big dividends. Over time, dividends can make you significantly richer. And guess what? Bank of America is a laggard when it comes to paying dividends. So instead of waiting for a cash windfall that may never come, check out these stocks that are paying big dividends to their investors RIGHT NOW. Click here for the exclusive free report.

Patrick Morris owns shares of Bank of America and Berkshire Hathaway. The Motley Fool recommends Bank of America and Berkshire Hathaway. The Motley Fool owns shares of Bank of America and Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers