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Charlie Scharf · The David Rubenstein Show

• 0:02
  Speaker 1: One of America's most experienced financial service executives is Charlie Sharff.
• 0:06
  Speaker 1: He's currently the CEO and chairman of Wells Fargo. Previously,
• 0:09
  Speaker 1: he'd served as CEO of Visa and CEO of BNY Mellon.
• 0:13
  Speaker 1: He's also held senior positions at JP Morgan and City Corp. Recently,
• 0:17
  Speaker 1: I had a chance to sit down with Charlie Sharff
• 0:19
  Speaker 1: to meet with him in Washington, d C. To talk
• 0:22
  Speaker 1: about his extraordinary career. Right now the Federal Reserve as
• 0:25
  Speaker 1: a chairman J. Powell, and obviously there's some dispute about
• 0:31
  Speaker 1: whether he should be investigator or not, at least in
• 0:34
  Speaker 1: the view of the president. What is the view of
• 0:36
  Speaker 1: the banking community. Do you think that fed's independence is
• 0:39
  Speaker 1: being compromised.
• 0:41
  Speaker 2: The independence of the FED is critically important, not just
• 0:45
  Speaker 2: here in the US but in other parts of the country.
• 0:47
  Speaker 1: And when you think.
• 0:48
  Speaker 2: About just the way our governing system works, you know,
• 0:52
  Speaker 2: it's different than a place like China, where there's long
• 0:55
  Speaker 2: term management, long term goals, high coordination across all the
• 1:01
  Speaker 2: different areas of government. You know, here we have, you know,
• 1:04
  Speaker 2: a political infrastructure that turns over, which has points of
• 1:08
  Speaker 2: views and we have a more long term structure in
• 1:12
  Speaker 2: place at the FED. The committee vote is extremely important,
• 1:16
  Speaker 2: and so you know, creating the right kind of balance
• 1:18
  Speaker 2: between physical and monetary policy to get to the best
• 1:22
  Speaker 2: outcome is extremely important. There's no reason in my mind
• 1:25
  Speaker 2: why the president should have a point of view. All
• 1:28
  Speaker 2: presidents have for a long period of time. They've done
• 1:30
  Speaker 2: it in different ways. This president does it very vocally
• 1:33
  Speaker 2: in terms of what his points of views are. But
• 1:36
  Speaker 2: even as it comes to you know, who he's choosing
• 1:39
  Speaker 2: to nominate for the FED. You know, in this case,
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  Speaker 2: he's chosen someone who has a point of view on
• 1:45
  Speaker 2: what's going on in the world, AI, what it's going
• 1:48
  Speaker 2: to mean for jobs, what it's going to mean for productivity,
• 1:50
  Speaker 2: and it's got to be approved by Congress. But this
• 1:54
  Speaker 2: idea that there's total separation is just not true.
• 1:59
  Speaker 1: But it is true.
• 1:59
  Speaker 2: It's the actual decision making.
• 2:02
  Speaker 1: Eventually the person nominated by the president will be confirmed.
• 2:05
  Speaker 1: Do you think would be difficult for him the lower
• 2:08
  Speaker 1: interest rates at this point, given where the economy is.
• 2:11
  Speaker 2: Yeah, I think right now there's pretty clear consensus that
• 2:13
  Speaker 2: would be the wrong thing to do. Until the Iran
• 2:17
  Speaker 2: conflict is clear, what the end is in sight. There's
• 2:21
  Speaker 2: real risk out there, and I think as you hear
• 2:24
  Speaker 2: voting committee members talk about if there's a high degree
• 2:26
  Speaker 2: of consistency, including I think from the Treasury Secretary in
• 2:30
  Speaker 2: terms of you know, waiting to see how this all
• 2:32
  Speaker 2: plays out, and that seems like the prudent thing to do.
• 2:35
  Speaker 1: What do you think the impact is on the economy
• 2:38
  Speaker 1: of the war today?
• 2:39
  Speaker 2: Right now? From everything that we see, the economy is
• 2:42
  Speaker 2: still extremely strong. We just we all just reported our
• 2:45
  Speaker 2: first quarter results. In the banking space, loan demand is decent,
• 2:51
  Speaker 2: Delinquencies on the consumer side are extremely well controlled. Consumer
• 2:56
  Speaker 2: spend is growing on a year every basis. Need more
• 3:00
  Speaker 2: money on gas, but making adjustments in some of the
• 3:03
  Speaker 2: other categories. Businesses have gone into this in strong financial shape.
• 3:08
  Speaker 2: So those are all the good things. But then when
• 3:10
  Speaker 2: you ask them how they feel, everyone's nervous and so
• 3:14
  Speaker 2: you know, they're not laying off, but they're not hiring
• 3:16
  Speaker 2: to the extent that they would hire. Neutral to just
• 3:20
  Speaker 2: beginning to see some potential for some negative impacts. The
• 3:25
  Speaker 2: real question is going to be is how long does
• 3:28
  Speaker 2: oil and gas prices stay high. People always think about,
• 3:31
  Speaker 2: you know, the gas pump but it's all these other
• 3:33
  Speaker 2: things that matter. They're fine for a while because they
• 3:35
  Speaker 2: have long term contracts to buy some of these things,
• 3:38
  Speaker 2: but that will come down the pike, and if the
• 3:42
  Speaker 2: conflict ends, the straits open up, production returns in some
• 3:47
  Speaker 2: reasonable period of time, there will be this impact on
• 3:51
  Speaker 2: consumer spend on some of these other things. But in
• 3:54
  Speaker 2: that kind of environment, it won't be damaging. If this
• 3:57
  Speaker 2: goes on for a longer period of time, it can
• 3:59
  Speaker 2: be more.
• 4:00
  Speaker 1: Is it better for banks generally? If interest rates go
• 4:03
  Speaker 1: up or go down.
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  Speaker 2: There's the short term impact and then there's a longer
• 4:06
  Speaker 2: term impact. You know, we have a lot of money
• 4:09
  Speaker 2: where we pay zero rates, and so when what we
• 4:14
  Speaker 2: earn falls, then that squeezes our margins because we can't
• 4:18
  Speaker 2: lower zero what we pay customers or point five basis points.
• 4:22
  Speaker 2: Rising rate environment is certainly helpful for something like that,
• 4:25
  Speaker 2: but what's most important is like, what are the reasons
• 4:29
  Speaker 2: underlying it? Because the amount of money that will make
• 4:30
  Speaker 2: in any given quarter from a favorable interest rate curve
• 4:34
  Speaker 2: for us is deminimus compared to what it does to
• 4:38
  Speaker 2: the underlying base of our customers. So if the economy
• 4:41
  Speaker 2: is healthy, the economy is growing, inflation's under control, people
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  Speaker 2: are growing inventories, people are spending. That's what's going to
• 4:48
  Speaker 2: really drive Profitabilitia Banks, ninety five percent of our revenues
• 4:52
  Speaker 2: come from the US. We really live and breathe by
• 4:54
  Speaker 2: the success of the US customer in the US business.
• 4:58
  Speaker 1: Are you worried about the value of the dollar? The
• 5:00
  Speaker 1: dollar has gone down since President Trump has been office.
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  Speaker 2: I think it's something we've got to be conscious about.
• 5:05
  Speaker 2: You know, the position the US dollar has in the world.
• 5:08
  Speaker 2: We can't assume that we just have this God give
• 5:11
  Speaker 2: and right to be the reserve currency. But it's going
• 5:14
  Speaker 2: to take a long time for people to get comfortable
• 5:18
  Speaker 2: with something else other than the dollar, and it's in
• 5:20
  Speaker 2: our control.
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  Speaker 1: But about the US debt, we have, you know, thirty
• 5:23
  Speaker 1: nine trillion dollars of debt.
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  Speaker 2: And that's one of the issues that's got to get solved.
• 5:26
  Speaker 2: Because you've got people who are in office for four
• 5:28
  Speaker 2: or eight years, they've got their own agenda on what
• 5:31
  Speaker 2: they want to accomplish. They're not going to be there
• 5:34
  Speaker 2: to solve that problem. And they don't have the same
• 5:37
  Speaker 2: kinds of immediate pressures that companies have when they become overleveraged.
• 5:42
  Speaker 1: Recently, the concern has been in the Financial Committee about
• 5:46
  Speaker 1: something called private credit. So is that legitimate concern? Is
• 5:50
  Speaker 1: private credit about the crumble in some way?
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  Speaker 2: No, I don't think private credit's about to crumpline when
• 5:54
  Speaker 2: you look at private credit, when you just look at
• 5:56
  Speaker 2: the size of private credit, it's not big enough to
• 5:59
  Speaker 2: be a sis stemic risk broadly the way we think
• 6:02
  Speaker 2: about systemic risks that have existed in the past. But
• 6:06
  Speaker 2: it's credit, and there's been a huge amount of money
• 6:09
  Speaker 2: that's flown into these products, both institutional and retail. And
• 6:13
  Speaker 2: we've all seen this in the past when there's just
• 6:16
  Speaker 2: when there's a lot of money that needs to get invested,
• 6:18
  Speaker 2: because that's the only way that these firms get paid
• 6:22
  Speaker 2: is to actually invest. It doesn't always work out well.
• 6:26
  Speaker 2: And we're in an area where we've been in this
• 6:28
  Speaker 2: bull market for a long period of time. We haven't
• 6:30
  Speaker 2: seen any recession in over a decade. You will see
• 6:35
  Speaker 2: credit deterioration at some point in time.
• 6:38
  Speaker 1: Has AI changed your job very much? You use AI
• 6:41
  Speaker 1: in running Wells Fargo.
• 6:43
  Speaker 2: I personally do. We've enabled most of the company with
• 6:48
  Speaker 2: some of the basic AI tools, but we're at the
• 6:49
  Speaker 2: very beginning, and you know, we're kind of going through
• 6:52
  Speaker 2: pieces because we've got a monitor it in a couple
• 6:53
  Speaker 2: of different ways. Number one is how we use the
• 6:56
  Speaker 2: tools ourselves to either become more efficient or deliver differentiated
• 7:00
  Speaker 2: products and services for our customers. Number two is we
• 7:03
  Speaker 2: lent a lot of money to a lot of people,
• 7:05
  Speaker 2: and so understanding how AI is can impact their businesses
• 7:08
  Speaker 2: matters a lot to us. And then we've got the
• 7:11
  Speaker 2: question of just like, how how's AI going to change
• 7:14
  Speaker 2: our business model? We're most advanced in that order, but
• 7:19
  Speaker 2: we're towards the beginning of it. But it's incredibly powerful
• 7:23
  Speaker 2: and we're going to see meaningful benefits.
• 7:25
  Speaker 1: Revolute is a company with now a private market value
• 7:28
  Speaker 1: of seventy five billion dollars, headquartered in the UK, and
• 7:32
  Speaker 1: now they're trying to get a US banking license. Does
• 7:34
  Speaker 1: that worry you as a potential competitor to Wells Fargo
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  Speaker 1: and other banks like yourself, that they can build a
• 7:40
  Speaker 1: whole banking system without any bricks and order.
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  Speaker 2: We think about the competitive advantages that we have versus
• 7:47
  Speaker 2: who we compete with. When you just kind of step
• 7:49
  Speaker 2: back and look over the last ten or fifteen years
• 7:51
  Speaker 2: and say, you know, what have the FinTechs done to
• 7:54
  Speaker 2: the banking space. I think, first and foremost, it's made
• 7:57
  Speaker 2: it very clear to people who run banks that the
• 8:00
  Speaker 2: motes that have existed that have allowed you to move
• 8:02
  Speaker 2: slowly are no longer going to protect you. In fact,
• 8:07
  Speaker 2: you've got government and regulators that are telling it you
• 8:09
  Speaker 2: need to do more. So banks have woken up to
• 8:11
  Speaker 2: the fact that you have to compete not just with
• 8:14
  Speaker 2: regulated institutions, but non regulated institutions. And we come at
• 8:19
  Speaker 2: this with this great position of strength, which is we
• 8:22
  Speaker 2: have trust, we have the FDIC insurance, we have a
• 8:27
  Speaker 2: huge customer base. When you're at a big company, you
• 8:30
  Speaker 2: sit and look at small companies and say, oh my god,
• 8:33
  Speaker 2: look how quick they can move, the great products, they
• 8:35
  Speaker 2: understand the customer. All those things are true. And then
• 8:38
  Speaker 2: when you go to one of those companies, you look
• 8:40
  Speaker 2: at a company like us and say, they have seventy
• 8:41
  Speaker 2: million customers, and if they were to get some of
• 8:44
  Speaker 2: these things right, think about how hard it's going to
• 8:47
  Speaker 2: be for us to compete with them. So it puts
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  Speaker 2: a huge amount of pressure on us to have to
• 8:51
  Speaker 2: deliver things in different ways. If we didn't have that
• 8:54
  Speaker 2: kind of competition, but we know it's there.
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  Speaker 1: So today on Wells Fargo, what is your the market capitalization?
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  Speaker 1: The market value today of Wells Fargo's what.
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  Speaker 2: Two hundred and fifty two hundred and sixty billion.
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  Speaker 1: Okay, And how many employees do you have?
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  Speaker 2: Two hundred thousand?
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  Speaker 1: How many customers do you have?
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  Speaker 2: Seventy million?
• 9:12
  Speaker 1: Wow, it's a lot. And what about credit cards? You
• 9:14
  Speaker 1: have a big credit.
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  Speaker 2: Cards, twenty something million cards.
• 9:17
  Speaker 1: Hey, have you ever used a credit card and had
• 9:19
  Speaker 1: it denied?
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  Speaker 2: One of the truth.
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  Speaker 1: Yes.
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  Speaker 2: I get to Wells and first thing I want to
• 9:27
  Speaker 2: do is get a Wells Fargo credit card. And so
• 9:30
  Speaker 2: I get the new card, and I was out to
• 9:33
  Speaker 2: dinner with some good friends who run some big companies,
• 9:38
  Speaker 2: and I pull up my card and I got denied.
• 9:41
  Speaker 1: It's that person in charge of that division still there.
• 9:44
  Speaker 2: We've learned an awful lot. It doesn't get denied anymore.
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  Speaker 1: That hasn't happened since, hasn't happened since? Okay? What about
• 9:50
  Speaker 1: the ATM business? Is that a profitable business for banks?
• 9:53
  Speaker 2: The ATM business, it's marginally profitable, but it's important. It's
• 9:57
  Speaker 2: convenience and you know, it's cash is becoming less important
• 10:01
  Speaker 2: over a period of time. People are able to deposit
• 10:04
  Speaker 2: checks on their phones and not having to go to
• 10:06
  Speaker 2: ATMs anymore. But it's a little like branches. You know,
• 10:09
  Speaker 2: we can debate about, you know, what the future is
• 10:11
  Speaker 2: going to look like in twenty or thirty years, but
• 10:14
  Speaker 2: customers tell you what they want and what they like,
• 10:17
  Speaker 2: and they like convenience. There's still plenty of cash that
• 10:20
  Speaker 2: circulates out there, especially in our customer base, and until
• 10:24
  Speaker 2: they stop using ATMs, we're going to still have them
• 10:27
  Speaker 2: for them.
• 10:27
  Speaker 1: Let's talk about your background. Where were you born?
• 10:31
  Speaker 2: I was born in Manhattan, raised in New Jersey.
• 10:35
  Speaker 1: What do your parents do?
• 10:36
  Speaker 2: My dad was what the time was called a stockbroker,
• 10:39
  Speaker 2: now we call it a financial advisor. He worked till
• 10:42
  Speaker 2: he was seventy seven. Loved the markets, still loves the markets.
• 10:46
  Speaker 2: My mom was a teacher because she wanted to be
• 10:48
  Speaker 2: able to be there when we came home from school,
• 10:51
  Speaker 2: and then ultimately went to work at AT and T
• 10:53
  Speaker 2: and went into technology.
• 10:54
  Speaker 1: Where'd you go to college?
• 10:56
  Speaker 2: JOHNS Hopkins? I wanted to be a research chemist and
• 11:00
  Speaker 2: I loved science. In high school, I loved math and
• 11:04
  Speaker 2: I love science My parents were always encouraging of learning
• 11:07
  Speaker 2: broad things and trying to find what you wanted, and
• 11:10
  Speaker 2: both my brother and I were both very much math
• 11:12
  Speaker 2: and science people. And I go to Hopkins and I
• 11:17
  Speaker 2: first semester I take organic chemistry, where you're in with
• 11:21
  Speaker 2: all the Hopkins pre meds, which was probably the worst
• 11:23
  Speaker 2: experience of my life.
• 11:24
  Speaker 1: All Right, So you said, I want to be the
• 11:26
  Speaker 1: head of a bank.
• 11:27
  Speaker 2: No banking was like, was not there yet. I said,
• 11:30
  Speaker 2: I want like a better education, I want a much
• 11:32
  Speaker 2: broader education. And I just got convinced in talking to
• 11:35
  Speaker 2: people that college is this great opportunity to learn a
• 11:39
  Speaker 2: broad set of things. I've got nothing against business schools
• 11:42
  Speaker 2: or things like that, but you know, there's plenty of
• 11:45
  Speaker 2: time to learn accounting. Most of that stuff you learn
• 11:48
  Speaker 2: on the job. Anyway, college is a great example to
• 11:50
  Speaker 2: learn about international relations, political science, psychology, sociology. So I
• 11:55
  Speaker 2: changed my major to what Hopkins had, this wonderful thing
• 11:58
  Speaker 2: called Social and Behavioral Science's area major, where you were
• 12:02
  Speaker 2: allowed to take a broad set of classes in all
• 12:04
  Speaker 2: those types of things that I just said. And I
• 12:07
  Speaker 2: loved it. I loved the people, I loved the professors,
• 12:11
  Speaker 2: the students, I love the work, and I think I'm
• 12:15
  Speaker 2: a better person for it.
• 12:16
  Speaker 1: So you graduated one year.
• 12:18
  Speaker 2: I graduated college in eighty seven, and so I started
• 12:21
  Speaker 2: going through all these interview programs, you know, the different
• 12:26
  Speaker 2: investment banks up in New York, because I was from
• 12:28
  Speaker 2: the New York area. And then something else came along.
• 12:32
  Speaker 1: So you got a job at a place called Commercial
• 12:34
  Speaker 1: Credit was a young guy was working there. Then Jamie
• 12:39
  Speaker 1: Diamond I think his name was.
• 12:40
  Speaker 2: Jamie was twenty nine thirty years old at the time.
• 12:44
  Speaker 2: Was CFO played a really important role, but he was
• 12:47
  Speaker 2: one of like six or seven really senior people, and
• 12:52
  Speaker 2: it was really over the next you know, three four, five,
• 12:55
  Speaker 2: six years that Jamie asserted himself in terms of what
• 12:58
  Speaker 2: his capabilities were. It's one of the things I talk
• 13:00
  Speaker 2: to younger people all the time.
• 13:01
  Speaker 1: I say, you know, they.
• 13:02
  Speaker 2: Always ask about you know, who you role models and
• 13:04
  Speaker 2: who do you learn the most from, and like for me,
• 13:07
  Speaker 2: it's just being able to see. You think you can
• 13:10
  Speaker 2: learn a whole lot from someone who's the most successful,
• 13:13
  Speaker 2: but in reality, you learn bits and pieces from different
• 13:18
  Speaker 2: people and figure out how it works for you.
• 13:20
  Speaker 1: How long were you at JP Morgan before you.
• 13:22
  Speaker 2: I was there until twenty twelve. So I got to
• 13:25
  Speaker 2: Bank One in two thousand. So I started out as CFO,
• 13:28
  Speaker 2: wound up running the retail businesses for a couple of
• 13:30
  Speaker 2: years when we sold Bank One to JP Morgan. I
• 13:34
  Speaker 2: ran the retail businesses until twenty eleven, then a year
• 13:39
  Speaker 2: in the private equity business, and then I went to
• 13:42
  Speaker 2: run Visa.
• 13:43
  Speaker 1: So you went to Visa, but Visas headquartered in San
• 13:45
  Speaker 1: Francisco and your families in New York.
• 13:46
  Speaker 2: So my wife eventually moved out to California. Our kids
• 13:50
  Speaker 2: were on the East Coast.
• 13:51
  Speaker 1: She moved out, she moved with you, She moved, she
• 13:54
  Speaker 1: moved out, she moved.
• 13:55
  Speaker 2: She came to join me with the dog. We were
• 13:59
  Speaker 2: all reunited in San Francisco. And then it just became
• 14:03
  Speaker 2: very clear, for personal reasons with one of my kids,
• 14:06
  Speaker 2: that we just couldn't be that far away.
• 14:08
  Speaker 1: Okay, so you moved back to the East Coast.
• 14:10
  Speaker 2: So I left Visa without a job and moved back
• 14:15
  Speaker 2: to New York.
• 14:16
  Speaker 1: Why wouldn't you want to go to a bank that
• 14:18
  Speaker 1: can't grow? How did they induce you to leave where
• 14:21
  Speaker 1: you were first?
• 14:22
  Speaker 2: I was very hard to leave because I was at
• 14:24
  Speaker 2: Bank of New York Mellon, which I went in maybe
• 14:27
  Speaker 2: a year and a half before I started these conversations,
• 14:29
  Speaker 2: and I didn't intend to leave. I intended to stay
• 14:31
  Speaker 2: there for the rest of my career if they would
• 14:32
  Speaker 2: have had me. But I knew someone on the Wells
• 14:35
  Speaker 2: Fargo board from another board that I'm on, and he
• 14:39
  Speaker 2: was on me about you should engage, you should engage,
• 14:42
  Speaker 2: you can be in New York. We have a lot
• 14:43
  Speaker 2: more in New York than you think, which was important
• 14:45
  Speaker 2: to me. And then I just kind of go through
• 14:48
  Speaker 2: what Wells is and I competed against them for years
• 14:53
  Speaker 2: and I believed, and I believed today more than ever.
• 14:55
  Speaker 2: It's an incredibly important, amazing financial institution in this kind
• 14:59
  Speaker 2: of which lost its way on a series of things.
• 15:05
  Speaker 2: And if you sit there and say, if those things
• 15:07
  Speaker 2: are all fixable, and someone were to hand you the
• 15:10
  Speaker 2: Wells Fargo franchise that had been underperforming, that had been
• 15:14
  Speaker 2: restrained for so long, that's like a dream job. So
• 15:18
  Speaker 2: you know, you got to take the risk that you
• 15:19
  Speaker 2: believe you can get through these problems with the government,
• 15:22
  Speaker 2: by the way, in a difficult environment with the Biden administration.
• 15:26
  Speaker 2: But if you come out on the other side. It's
• 15:28
  Speaker 2: incredibly exciting.
• 15:29
  Speaker 1: Before you came to Wells, they had a problem and
• 15:33
  Speaker 1: Wells was put under some constraints by the federal government.
• 15:37
  Speaker 2: Yeah, what were those constraints. We've had multiple constraints. The
• 15:41
  Speaker 2: biggest one that people know about is there was an
• 15:45
  Speaker 2: asset cap put in place. So at the time, I
• 15:49
  Speaker 2: think it was twenty eighteen, we were told that our
• 15:52
  Speaker 2: assets at the time were one point nine to five
• 15:57
  Speaker 2: two trillion and they couldn't go higher than that until
• 16:01
  Speaker 2: the consent order work was done to their satisfaction.
• 16:06
  Speaker 1: Well, how do you grow the company if you can't
• 16:09
  Speaker 1: grow your asset.
• 16:10
  Speaker 2: It's very very hard. So there are things you can't
• 16:12
  Speaker 2: do and the things you can do. You've got to be,
• 16:14
  Speaker 2: first of all, very selective and looking at your balance
• 16:17
  Speaker 2: sheet and saying, okay, it's not the worst thing in
• 16:19
  Speaker 2: the world to say, we need to become more efficient
• 16:21
  Speaker 2: on our balance sheet. What's less efficient? Where do we
• 16:23
  Speaker 2: make less money? How do we reallocate that balance sheet usage?
• 16:27
  Speaker 2: You then turn to certain things and say we're just
• 16:31
  Speaker 2: not going to be active about soliciting loans, We're not
• 16:33
  Speaker 2: going to be active about soliciting deposits. We were very
• 16:36
  Speaker 2: careful not to throttle consumer deposits. Because you tell a
• 16:41
  Speaker 2: consumer to please bring your deposit elsewhere, you've lost that relationship.
• 16:44
  Speaker 2: Large Corpus understand, they understand we have an asset cap.
• 16:47
  Speaker 2: They understand we want to take their money, but we
• 16:49
  Speaker 2: just can't right now. So we turned away massive amounts
• 16:52
  Speaker 2: of deposits at the time, and we focused a lot
• 16:55
  Speaker 2: on businesses that drove fee based revenues. So we've grown
• 17:01
  Speaker 2: our credit card business dramatically, which includes a significant portion
• 17:04
  Speaker 2: of increasing the spend. We've grown our trading capabilities, We've
• 17:07
  Speaker 2: grown our investment banking advisory capabilities. We have our fee
• 17:11
  Speaker 2: based treasury management businesses, and so you know that along
• 17:16
  Speaker 2: with our wealth management business when get paid on fees.
• 17:19
  Speaker 2: That's what we focused on.
• 17:20
  Speaker 1: What led to these sanctions? Why did this happen?
• 17:23
  Speaker 2: There were a series of individual things that the regulators identified.
• 17:28
  Speaker 2: They were right about them. We can argue about whether
• 17:31
  Speaker 2: the punishment fit the crime, whether an asset cap was
• 17:34
  Speaker 2: the right thing to do for a company like ours,
• 17:36
  Speaker 2: but they weren't wrong about the underlying issues. And what
• 17:39
  Speaker 2: happens is you get to the point where if you're
• 17:42
  Speaker 2: not resolving the issues quickly, enough, they say, Okay, we
• 17:46
  Speaker 2: need to get your attention. We're not getting your attention.
• 17:49
  Speaker 2: So the next step is you can't grow, and so
• 17:51
  Speaker 2: that's what they did. We need banks of all sizes.
• 17:54
  Speaker 2: Our banks do have to scale with the growth in
• 17:57
  Speaker 2: the economy. It doesn't mean that big versus small both
• 18:01
  Speaker 2: are necessary. We do different things, and we try and
• 18:05
  Speaker 2: support small banks because we know they play an incredibly
• 18:08
  Speaker 2: important role.
• 18:08
  Speaker 1: You're in town, I guess, to meet regulators and to
• 18:11
  Speaker 1: meet members of Congress. How do you find that an
• 18:13
  Speaker 1: uplifting experience When you're meeting with members of Congress, they're exciting.
• 18:17
  Speaker 2: I think it's incredibly important. And I really dislike when
• 18:20
  Speaker 2: people talk about lobbying like it's some awful, horrible thing.
• 18:24
  Speaker 2: Showing up and trying to convince a senator or a
• 18:27
  Speaker 2: congress person at the last minute that what I think
• 18:32
  Speaker 2: is right when it's clear that it's just going to
• 18:35
  Speaker 2: benefit me goes nowhere. What really matters is over a
• 18:39
  Speaker 2: period of time, building a relationship with members and their staffs,
• 18:43
  Speaker 2: where you're where you're honest about what works, what doesn't work,
• 18:49
  Speaker 2: what the risks are, and so that when they need
• 18:53
  Speaker 2: to actually have a position on something, they're more educated,
• 18:57
  Speaker 2: and sometimes we agree on those things. I mean, they're
• 19:00
  Speaker 2: plenty of members who I've got a huge amount of
• 19:02
  Speaker 2: respect for. We don't agree on something, but it doesn't
• 19:05
  Speaker 2: mean I'm not going to talk to them, and it
• 19:06
  Speaker 2: doesn't mean that we might not agree on the next thing.
• 19:09
  Speaker 1: What is the biggest problem in the United States is
• 19:11
  Speaker 1: facing now in the financial service world?
• 19:13
  Speaker 2: We have uncertainty with what's going on with the around conflict.
• 19:16
  Speaker 2: It's been a bull market for a long time. There's
• 19:20
  Speaker 2: a huge amount of liquidity in the system. There's this
• 19:23
  Speaker 2: underlying current that things are going to be fined for
• 19:25
  Speaker 2: a long period of time. There are a lot of
• 19:28
  Speaker 2: people in the financial services space, in banks and that
• 19:31
  Speaker 2: side of banks that have never been through cycles, like
• 19:34
  Speaker 2: a real cycle in terms of what that means. And
• 19:37
  Speaker 2: there's a point in which that's going to turn and
• 19:39
  Speaker 2: that's going to have a whole bunch of impacts that
• 19:42
  Speaker 2: I'm not sure we all really understand something's going to happen.
• 19:45
  Speaker 2: But then more long term, it's just the question of
• 19:48
  Speaker 2: the deficit.
• 19:49
  Speaker 1: JP Morgan City, Bank of America, and Wells Fargo. Do
• 19:53
  Speaker 1: you think only having four gigantic banks is the right number.
• 19:57
  Speaker 2: We have four thousand banks in the country, and when
• 20:00
  Speaker 2: we think about financial services, you really do have to
• 20:03
  Speaker 2: think beyond banks these days. Right, you've talked about private credit.
• 20:06
  Speaker 2: One point seven trillion dollars of lending is now done
• 20:10
  Speaker 2: away from banks. You've got all of the different things
• 20:14
  Speaker 2: that are being done in the private equity space, and
• 20:18
  Speaker 2: so you know, the definition of you know, what's done
• 20:21
  Speaker 2: in the banking sphere has changed very dramatically. We need
• 20:24
  Speaker 2: banks of all sizes. We're not going to have branches
• 20:27
  Speaker 2: in every location. We don't have the relationships that they have.
• 20:30
  Speaker 2: The standards that we have to live with under when
• 20:32
  Speaker 2: it comes to lending are different than small banks do.
• 20:35
  Speaker 2: If you're in a small bank in a local community,
• 20:37
  Speaker 2: I can I'll make a loan to you based upon
• 20:39
  Speaker 2: what I know about you. I knew you as a kid,
• 20:42
  Speaker 2: I knew your parents, I know you're going to pay
• 20:43
  Speaker 2: me back. I know exactly what you're going through. We
• 20:45
  Speaker 2: can't do that. The OECC is going to come in
• 20:47
  Speaker 2: and they're going to so any crazy no way. So
• 20:49
  Speaker 2: we need a broad cross section of banks to serve
• 20:52
  Speaker 2: people locally. We have big companies in this country and
• 20:56
  Speaker 2: we need big banks to do things for those companies.
• 20:59
  Speaker 2: Netflix decides that it wants to enter the bidding fray
• 21:02
  Speaker 2: for Time Warner they called the Sin We were involved
• 21:05
  Speaker 2: in the transaction. We made a thirty billion dollar commitment.
• 21:08
  Speaker 2: Those things have to get done if we're going to
• 21:11
  Speaker 2: continue to see the capital markets activity, and you need
• 21:14
  Speaker 2: big banks to do that. And if it's not us,
• 21:17
  Speaker 2: it's going to be the Europeans, it's going to be
• 21:20
  Speaker 2: the Japanese who are coming back, ultimately the Chinese. And
• 21:23
  Speaker 2: so you know, our banks do have to scale with
• 21:26
  Speaker 2: the growth of the economy. It doesn't mean that big
• 21:29
  Speaker 2: versus small both are necessary. We do different things and
• 21:32
  Speaker 2: we try and support small banks because we know they
• 21:35
  Speaker 2: play an incredibly important role.
• 21:37
  Speaker 1: So what is the most profitable part of the business
• 21:40
  Speaker 1: for big banks.
• 21:41
  Speaker 2: We have looked at all of the things we do
• 21:44
  Speaker 2: within welles. We've sold twenty two businesses. We did it
• 21:48
  Speaker 2: to eliminate hobbies, to get rid of things that we
• 21:51
  Speaker 2: just weren't interested investing in. We have four big lines
• 21:54
  Speaker 2: of businesses. We're incredibly excited about all four. All four
• 21:58
  Speaker 2: have really strong we'rens have really great growth prospects. Our
• 22:02
  Speaker 2: consumer deposit lending business it's our wealth management business, where
• 22:06
  Speaker 2: we have twelve thousand sum add advisors across the country.
• 22:09
  Speaker 2: It's our commercial bank where we've got almost fifteen percent
• 22:12
  Speaker 2: share and a lot of the things that we do,
• 22:14
  Speaker 2: and it's our in corporate investment bank. All of them
• 22:16
  Speaker 2: have very strong returns and strong opportunities to grow, and
• 22:20
  Speaker 2: they fit together inside the Wells Fargo franchise to allow
• 22:24
  Speaker 2: us to have just greater breadth and greater depth of
• 22:28
  Speaker 2: what we can do for customers.
• 22:30
  Speaker 1: Thanks for listening to hear more of my interviews. You
• 22:33
  Speaker 1: can subscribe and download my podcast on Spotify, Apple, or
• 22:37
  Speaker 1: wherever you listen.