Bank of America Mythos Costs: Consultants Sit Off Headcount

Bank of America's CEO told CNBC the bank "put on 1,000 contractors" to patch software flaws exposed by advanced AI models, including Anthropic's Mythos. The earnings call transcript adds what the headlines skipped. Brian Moynihan told analysts those 1,000 people are "not in the headcount but in consultants," and he put Mythos and anti-money-laundering remediation together at "a couple of hundred million plus" of a roughly $400 million slice of expense growth.

What Moynihan Said Twice

In an interview after the third-quarter release on Wednesday, Oct. 14, Moynihan told CNBC, "We put on 1,000 contractors to help us do the patching work in the second quarter, and those people remain here today, helping us, on top of the 3,000 people we have in that area." CNBC said the comments were among the first by a major U.S. corporation to specify the people and dollars spent defending software against Mythos.

The same day, answering a question from analyst Mike Mayo on the earnings call, Moynihan said, "we expect that the Mythos remediation costs run down, because we added 1,000 extra staff to work on that, not in the headcount but in consultants." The transcript is the bank's own posted file, which has some garbled passages; quotes here come only from clean sentences.

Where the Cost Sits in the Expense Bridge

Moynihan walked through the year-over-year increase in expense. He said the "total expense base was up $1.2 billion" and that "$450-or-so million of that is wealth management incentives with revenue growth. About $300 million of it is in the Markets business." The remainder was "$400 million left, of which a couple of hundred million plus in the third quarter were 2 things: remediation for the AML and remediation for the Mythos implementation."

The $1.2 billion is the adjusted figure. Bank of America's earnings release, furnished with an 8-K accepted at 10:44 AM ET on Oct. 14, shows adjusted noninterest expense of $18.5 billion against $17.3 billion a year earlier. It excludes a $1.2 billion regulatory settlement charge that lifted reported expense to $19.7 billion.

By TradeFlock's calculation, if "a couple of hundred million" means about $200 million, the combined AML and Mythos bucket is roughly 17% of the $1.2 billion increase and about 1.1% of adjusted expense. The bank did not split the figure, so the Mythos share alone is unknown.

The supplemental slides show adjusted expense of $18.5 billion in the third quarter, about $0.1 billion below the second quarter, when the contractors were first added. Compensation and benefits was $7.5 billion, down from $7.6 billion, while all other expense was flat at $11.0 billion. Consultant fees would typically sit outside compensation, and the bank gave no line item for them.

The Headcount Footnote

Bank of America cites falling headcount as evidence of productivity gains. The release lists headcount of 209,911 at Sept. 30, against 213,384 a year earlier. That is a drop of 3,473, or about 1.6%, by TradeFlock's calculation. CFO Alastair Borthwick told analysts headcount was "down nearly 3,500 from a year ago."

The 1,000 consultants sit outside that count by Moynihan's own description. By TradeFlock's estimate, adding them back would shrink the net decline to about 2,473, or 1.2%, and the contractors equal about 29% of the reported drop. That is an illustration, not a bank figure.

By TradeFlock's calculation, 1,000 consultants plus 3,000 existing staff make a patching group of about 4,000, a quarter of it outside hires.

What We Still Do Not Know

Moynihan's phrase was "remediation for the Mythos implementation." CNBC framed the work as patching flaws exposed by AI models, and Moynihan told CNBC "that risk is real risk," but the transcript does not say whether the cost is scanning, fixing code or vendor-software work. The bank has not said how it accesses Mythos. Anthropic's Project Glasswing page names JPMorganChase among its launch partners, not Bank of America, and says more than 40 other organizations were also given access. Anthropic named the project for the glasswing butterfly, Greta oto.

Moynihan also said, per CNBC, "We've got to stay ahead of them, and we've got to be mindful that the people doing the software development are the people trying to sell us the services."

Bank of America shares closed Wednesday at $51.39, down 4.8% from $53.96, according to Yahoo Finance data, after falling about 8.7% at the low. Revenue rose 3% to $30.0 billion, per the release.

What to Watch Next

Moynihan expects remediation costs to fall as the "pipeline moves through." The test is whether the 1,000 consultants are still on site, and whether expense growth stays near the "1%, 2%" he described, when the bank reports again. The third-quarter Form 10-Q had not been filed as of Thursday evening. It could show whether the bank describes the work as a recurring cost.

For more on the quarter's other big bank item, see TradeFlock's explainer on the $1.2 billion FinCEN settlement. On the wider AI cyber picture, read our coverage of Interpol's warning on AI-driven cyberattacks and Kevin Mandia's new cybersecurity startup.

Cover photo: A glasswing butterfly (Greta oto) on a leaf. Photo: liz west / Wikimedia Commons, CC BY 2.0.