WEBVTT - Charlie Scharf 0:00:02.720 --> 0:00:06.480 One of America's most experienced financial service executives is Charlie Sharff. 0:00:06.680 --> 0:00:09.920 He's currently the CEO and chairman of Wells Fargo. Previously, 0:00:09.960 --> 0:00:13.800 he'd served as CEO of Visa and CEO of BNY Mellon. 0:00:13.960 --> 0:00:17.880 He's also held senior positions at JP Morgan and City Corp. Recently, 0:00:17.920 --> 0:00:19.760 I had a chance to sit down with Charlie Sharff 0:00:19.920 --> 0:00:22.000 to meet with him in Washington, d C. To talk 0:00:22.040 --> 0:00:25.840 about his extraordinary career. Right now the Federal Reserve as 0:00:25.920 --> 0:00:31.680 a chairman J. Powell, and obviously there's some dispute about 0:00:31.800 --> 0:00:33.960 whether he should be investigator or not, at least in 0:00:34.000 --> 0:00:36.680 the view of the president. What is the view of 0:00:36.720 --> 0:00:39.720 the banking community. Do you think that fed's independence is 0:00:39.720 --> 0:00:40.760 being compromised. 0:00:41.080 --> 0:00:45.000 The independence of the FED is critically important, not just 0:00:45.040 --> 0:00:47.040 here in the US but in other parts of the country. 0:00:47.440 --> 0:00:48.200 And when you think. 0:00:48.080 --> 0:00:52.120 About just the way our governing system works, you know, 0:00:52.120 --> 0:00:55.200 it's different than a place like China, where there's long 0:00:55.280 --> 0:01:01.160 term management, long term goals, high coordination across all the 0:01:01.160 --> 0:01:04.040 different areas of government. You know, here we have, you know, 0:01:04.080 --> 0:01:08.400 a political infrastructure that turns over, which has points of 0:01:08.480 --> 0:01:11.959 views and we have a more long term structure in 0:01:12.000 --> 0:01:15.920 place at the FED. The committee vote is extremely important, 0:01:16.000 --> 0:01:18.480 and so you know, creating the right kind of balance 0:01:18.520 --> 0:01:22.280 between physical and monetary policy to get to the best 0:01:22.319 --> 0:01:25.600 outcome is extremely important. There's no reason in my mind 0:01:25.600 --> 0:01:28.040 why the president should have a point of view. All 0:01:28.160 --> 0:01:30.920 presidents have for a long period of time. They've done 0:01:30.920 --> 0:01:33.640 it in different ways. This president does it very vocally 0:01:33.680 --> 0:01:36.360 in terms of what his points of views are. But 0:01:36.440 --> 0:01:39.000 even as it comes to you know, who he's choosing 0:01:39.040 --> 0:01:41.559 to nominate for the FED. You know, in this case, 0:01:41.560 --> 0:01:45.199 he's chosen someone who has a point of view on 0:01:45.480 --> 0:01:47.960 what's going on in the world, AI, what it's going 0:01:48.000 --> 0:01:50.440 to mean for jobs, what it's going to mean for productivity, 0:01:50.480 --> 0:01:54.120 and it's got to be approved by Congress. But this 0:01:54.280 --> 0:01:58.520 idea that there's total separation is just not true. 0:01:59.040 --> 0:01:59.680 But it is true. 0:01:59.800 --> 0:02:01.480 It's the actual decision making. 0:02:02.320 --> 0:02:05.360 Eventually the person nominated by the president will be confirmed. 0:02:05.800 --> 0:02:08.519 Do you think would be difficult for him the lower 0:02:08.560 --> 0:02:10.760 interest rates at this point, given where the economy is. 0:02:11.040 --> 0:02:13.720 Yeah, I think right now there's pretty clear consensus that 0:02:13.720 --> 0:02:17.239 would be the wrong thing to do. Until the Iran 0:02:17.360 --> 0:02:21.480 conflict is clear, what the end is in sight. There's 0:02:21.520 --> 0:02:23.760 real risk out there, and I think as you hear 0:02:24.240 --> 0:02:26.720 voting committee members talk about if there's a high degree 0:02:26.720 --> 0:02:30.120 of consistency, including I think from the Treasury Secretary in 0:02:30.200 --> 0:02:32.240 terms of you know, waiting to see how this all 0:02:32.280 --> 0:02:34.920 plays out, and that seems like the prudent thing to do. 0:02:35.720 --> 0:02:38.160 What do you think the impact is on the economy 0:02:38.240 --> 0:02:39.160 of the war today? 0:02:39.520 --> 0:02:42.800 Right now? From everything that we see, the economy is 0:02:42.840 --> 0:02:45.760 still extremely strong. We just we all just reported our 0:02:45.760 --> 0:02:50.600 first quarter results. In the banking space, loan demand is decent, 0:02:51.080 --> 0:02:56.520 Delinquencies on the consumer side are extremely well controlled. Consumer 0:02:56.600 --> 0:03:00.480 spend is growing on a year every basis. Need more 0:03:00.520 --> 0:03:03.760 money on gas, but making adjustments in some of the 0:03:03.800 --> 0:03:08.320 other categories. Businesses have gone into this in strong financial shape. 0:03:08.800 --> 0:03:10.720 So those are all the good things. But then when 0:03:10.720 --> 0:03:13.680 you ask them how they feel, everyone's nervous and so 0:03:14.000 --> 0:03:16.840 you know, they're not laying off, but they're not hiring 0:03:16.880 --> 0:03:20.520 to the extent that they would hire. Neutral to just 0:03:20.639 --> 0:03:25.560 beginning to see some potential for some negative impacts. The 0:03:25.600 --> 0:03:27.959 real question is going to be is how long does 0:03:28.040 --> 0:03:31.160 oil and gas prices stay high. People always think about, 0:03:31.360 --> 0:03:32.960 you know, the gas pump but it's all these other 0:03:33.000 --> 0:03:35.480 things that matter. They're fine for a while because they 0:03:35.480 --> 0:03:37.840 have long term contracts to buy some of these things, 0:03:38.320 --> 0:03:42.360 but that will come down the pike, and if the 0:03:42.480 --> 0:03:47.320 conflict ends, the straits open up, production returns in some 0:03:47.520 --> 0:03:51.320 reasonable period of time, there will be this impact on 0:03:51.480 --> 0:03:54.280 consumer spend on some of these other things. But in 0:03:54.320 --> 0:03:57.560 that kind of environment, it won't be damaging. If this 0:03:57.640 --> 0:03:59.480 goes on for a longer period of time, it can 0:03:59.520 --> 0:03:59.720 be more. 0:04:00.880 --> 0:04:03.560 Is it better for banks generally? If interest rates go 0:04:03.680 --> 0:04:04.520 up or go down. 0:04:04.680 --> 0:04:06.720 There's the short term impact and then there's a longer 0:04:06.800 --> 0:04:09.680 term impact. You know, we have a lot of money 0:04:09.840 --> 0:04:14.400 where we pay zero rates, and so when what we 0:04:14.520 --> 0:04:18.320 earn falls, then that squeezes our margins because we can't 0:04:18.360 --> 0:04:21.800 lower zero what we pay customers or point five basis points. 0:04:22.279 --> 0:04:25.400 Rising rate environment is certainly helpful for something like that, 0:04:25.720 --> 0:04:28.920 but what's most important is like, what are the reasons 0:04:29.000 --> 0:04:30.840 underlying it? Because the amount of money that will make 0:04:30.880 --> 0:04:34.640 in any given quarter from a favorable interest rate curve 0:04:34.680 --> 0:04:38.440 for us is deminimus compared to what it does to 0:04:38.520 --> 0:04:41.880 the underlying base of our customers. So if the economy 0:04:41.920 --> 0:04:45.600 is healthy, the economy is growing, inflation's under control, people 0:04:45.640 --> 0:04:48.960 are growing inventories, people are spending. That's what's going to 0:04:48.960 --> 0:04:52.039 really drive Profitabilitia Banks, ninety five percent of our revenues 0:04:52.040 --> 0:04:54.840 come from the US. We really live and breathe by 0:04:54.880 --> 0:04:57.760 the success of the US customer in the US business. 0:04:58.200 --> 0:05:00.160 Are you worried about the value of the dollar? The 0:05:00.240 --> 0:05:03.240 dollar has gone down since President Trump has been office. 0:05:03.520 --> 0:05:05.800 I think it's something we've got to be conscious about. 0:05:05.960 --> 0:05:08.360 You know, the position the US dollar has in the world. 0:05:08.400 --> 0:05:11.200 We can't assume that we just have this God give 0:05:11.240 --> 0:05:14.400 and right to be the reserve currency. But it's going 0:05:14.440 --> 0:05:18.640 to take a long time for people to get comfortable 0:05:18.640 --> 0:05:20.600 with something else other than the dollar, and it's in 0:05:20.640 --> 0:05:21.159 our control. 0:05:21.200 --> 0:05:23.559 But about the US debt, we have, you know, thirty 0:05:23.640 --> 0:05:25.240 nine trillion dollars of debt. 0:05:25.080 --> 0:05:26.760 And that's one of the issues that's got to get solved. 0:05:26.800 --> 0:05:28.600 Because you've got people who are in office for four 0:05:28.680 --> 0:05:31.400 or eight years, they've got their own agenda on what 0:05:31.440 --> 0:05:34.039 they want to accomplish. They're not going to be there 0:05:34.400 --> 0:05:37.400 to solve that problem. And they don't have the same 0:05:37.520 --> 0:05:41.800 kinds of immediate pressures that companies have when they become overleveraged. 0:05:42.200 --> 0:05:46.040 Recently, the concern has been in the Financial Committee about 0:05:46.080 --> 0:05:50.000 something called private credit. So is that legitimate concern? Is 0:05:50.000 --> 0:05:51.960 private credit about the crumble in some way? 0:05:52.440 --> 0:05:54.880 No, I don't think private credit's about to crumpline when 0:05:54.880 --> 0:05:56.479 you look at private credit, when you just look at 0:05:56.520 --> 0:05:59.200 the size of private credit, it's not big enough to 0:05:59.279 --> 0:06:02.000 be a sis stemic risk broadly the way we think 0:06:02.000 --> 0:06:06.159 about systemic risks that have existed in the past. But 0:06:06.200 --> 0:06:09.520 it's credit, and there's been a huge amount of money 0:06:09.560 --> 0:06:13.800 that's flown into these products, both institutional and retail. And 0:06:13.839 --> 0:06:15.880 we've all seen this in the past when there's just 0:06:16.160 --> 0:06:18.919 when there's a lot of money that needs to get invested, 0:06:18.920 --> 0:06:21.520 because that's the only way that these firms get paid 0:06:22.040 --> 0:06:26.560 is to actually invest. It doesn't always work out well. 0:06:26.800 --> 0:06:28.320 And we're in an area where we've been in this 0:06:28.360 --> 0:06:30.440 bull market for a long period of time. We haven't 0:06:30.480 --> 0:06:35.480 seen any recession in over a decade. You will see 0:06:35.480 --> 0:06:38.279 credit deterioration at some point in time. 0:06:38.720 --> 0:06:41.480 Has AI changed your job very much? You use AI 0:06:41.880 --> 0:06:43.599 in running Wells Fargo. 0:06:43.520 --> 0:06:47.960 I personally do. We've enabled most of the company with 0:06:48.040 --> 0:06:49.840 some of the basic AI tools, but we're at the 0:06:49.960 --> 0:06:52.320 very beginning, and you know, we're kind of going through 0:06:52.320 --> 0:06:53.880 pieces because we've got a monitor it in a couple 0:06:53.920 --> 0:06:56.400 of different ways. Number one is how we use the 0:06:56.400 --> 0:07:00.000 tools ourselves to either become more efficient or deliver differentiated 0:07:00.400 --> 0:07:03.400 products and services for our customers. Number two is we 0:07:03.480 --> 0:07:05.040 lent a lot of money to a lot of people, 0:07:05.279 --> 0:07:08.880 and so understanding how AI is can impact their businesses 0:07:08.960 --> 0:07:11.600 matters a lot to us. And then we've got the 0:07:11.680 --> 0:07:14.679 question of just like, how how's AI going to change 0:07:14.720 --> 0:07:19.680 our business model? We're most advanced in that order, but 0:07:19.680 --> 0:07:23.120 we're towards the beginning of it. But it's incredibly powerful 0:07:23.120 --> 0:07:24.560 and we're going to see meaningful benefits. 0:07:25.000 --> 0:07:28.360 Revolute is a company with now a private market value 0:07:28.360 --> 0:07:32.480 of seventy five billion dollars, headquartered in the UK, and 0:07:32.480 --> 0:07:34.760 now they're trying to get a US banking license. Does 0:07:34.800 --> 0:07:38.080 that worry you as a potential competitor to Wells Fargo 0:07:38.120 --> 0:07:40.360 and other banks like yourself, that they can build a 0:07:40.440 --> 0:07:42.520 whole banking system without any bricks and order. 0:07:42.840 --> 0:07:47.000 We think about the competitive advantages that we have versus 0:07:47.040 --> 0:07:49.000 who we compete with. When you just kind of step 0:07:49.040 --> 0:07:51.000 back and look over the last ten or fifteen years 0:07:51.000 --> 0:07:54.320 and say, you know, what have the FinTechs done to 0:07:54.400 --> 0:07:57.360 the banking space. I think, first and foremost, it's made 0:07:57.360 --> 0:08:00.240 it very clear to people who run banks that the 0:08:00.280 --> 0:08:02.440 motes that have existed that have allowed you to move 0:08:02.520 --> 0:08:07.440 slowly are no longer going to protect you. In fact, 0:08:07.480 --> 0:08:09.640 you've got government and regulators that are telling it you 0:08:09.640 --> 0:08:11.880 need to do more. So banks have woken up to 0:08:11.880 --> 0:08:14.760 the fact that you have to compete not just with 0:08:14.840 --> 0:08:19.880 regulated institutions, but non regulated institutions. And we come at 0:08:19.880 --> 0:08:22.000 this with this great position of strength, which is we 0:08:22.080 --> 0:08:27.400 have trust, we have the FDIC insurance, we have a 0:08:27.520 --> 0:08:30.600 huge customer base. When you're at a big company, you 0:08:30.640 --> 0:08:33.160 sit and look at small companies and say, oh my god, 0:08:33.200 --> 0:08:35.320 look how quick they can move, the great products, they 0:08:35.400 --> 0:08:38.760 understand the customer. All those things are true. And then 0:08:38.760 --> 0:08:40.320 when you go to one of those companies, you look 0:08:40.360 --> 0:08:41.920 at a company like us and say, they have seventy 0:08:41.960 --> 0:08:44.720 million customers, and if they were to get some of 0:08:44.760 --> 0:08:47.120 these things right, think about how hard it's going to 0:08:47.120 --> 0:08:49.200 be for us to compete with them. So it puts 0:08:49.200 --> 0:08:51.720 a huge amount of pressure on us to have to 0:08:51.760 --> 0:08:54.439 deliver things in different ways. If we didn't have that 0:08:54.520 --> 0:08:56.360 kind of competition, but we know it's there. 0:08:56.440 --> 0:09:01.280 So today on Wells Fargo, what is your the market capitalization? 0:09:01.360 --> 0:09:03.520 The market value today of Wells Fargo's what. 0:09:03.679 --> 0:09:06.200 Two hundred and fifty two hundred and sixty billion. 0:09:06.280 --> 0:09:08.160 Okay, And how many employees do you have? 0:09:08.400 --> 0:09:09.600 Two hundred thousand? 0:09:09.760 --> 0:09:10.960 How many customers do you have? 0:09:11.240 --> 0:09:12.000 Seventy million? 0:09:12.120 --> 0:09:14.160 Wow, it's a lot. And what about credit cards? You 0:09:14.240 --> 0:09:15.160 have a big credit. 0:09:14.920 --> 0:09:17.319 Cards, twenty something million cards. 0:09:17.360 --> 0:09:19.080 Hey, have you ever used a credit card and had 0:09:19.120 --> 0:09:19.560 it denied? 0:09:23.000 --> 0:09:24.959 One of the truth. 0:09:25.240 --> 0:09:25.400 Yes. 0:09:25.559 --> 0:09:27.839 I get to Wells and first thing I want to 0:09:27.880 --> 0:09:30.480 do is get a Wells Fargo credit card. And so 0:09:30.559 --> 0:09:33.560 I get the new card, and I was out to 0:09:33.640 --> 0:09:37.600 dinner with some good friends who run some big companies, 0:09:38.360 --> 0:09:39.920 and I pull up my card and I got denied. 0:09:41.240 --> 0:09:43.600 It's that person in charge of that division still there. 0:09:44.360 --> 0:09:47.360 We've learned an awful lot. It doesn't get denied anymore. 0:09:47.679 --> 0:09:50.600 That hasn't happened since, hasn't happened since? Okay? What about 0:09:50.640 --> 0:09:53.520 the ATM business? Is that a profitable business for banks? 0:09:53.800 --> 0:09:57.600 The ATM business, it's marginally profitable, but it's important. It's 0:09:57.640 --> 0:10:01.800 convenience and you know, it's cash is becoming less important 0:10:01.840 --> 0:10:04.480 over a period of time. People are able to deposit 0:10:04.600 --> 0:10:06.560 checks on their phones and not having to go to 0:10:06.640 --> 0:10:09.640 ATMs anymore. But it's a little like branches. You know, 0:10:09.679 --> 0:10:11.840 we can debate about, you know, what the future is 0:10:11.840 --> 0:10:13.800 going to look like in twenty or thirty years, but 0:10:14.200 --> 0:10:16.520 customers tell you what they want and what they like, 0:10:17.120 --> 0:10:20.800 and they like convenience. There's still plenty of cash that 0:10:20.840 --> 0:10:24.559 circulates out there, especially in our customer base, and until 0:10:24.600 --> 0:10:27.200 they stop using ATMs, we're going to still have them 0:10:27.200 --> 0:10:27.440 for them. 0:10:27.800 --> 0:10:31.120 Let's talk about your background. Where were you born? 0:10:31.480 --> 0:10:34.679 I was born in Manhattan, raised in New Jersey. 0:10:35.040 --> 0:10:35.880 What do your parents do? 0:10:36.480 --> 0:10:39.839 My dad was what the time was called a stockbroker, 0:10:39.920 --> 0:10:42.319 now we call it a financial advisor. He worked till 0:10:42.320 --> 0:10:45.880 he was seventy seven. Loved the markets, still loves the markets. 0:10:46.320 --> 0:10:48.880 My mom was a teacher because she wanted to be 0:10:48.920 --> 0:10:50.600 able to be there when we came home from school, 0:10:51.240 --> 0:10:53.480 and then ultimately went to work at AT and T 0:10:53.600 --> 0:10:54.720 and went into technology. 0:10:54.840 --> 0:10:55.840 Where'd you go to college? 0:10:56.000 --> 0:10:59.640 JOHNS Hopkins? I wanted to be a research chemist and 0:11:00.800 --> 0:11:04.480 I loved science. In high school, I loved math and 0:11:04.520 --> 0:11:07.840 I love science My parents were always encouraging of learning 0:11:07.880 --> 0:11:10.040 broad things and trying to find what you wanted, and 0:11:10.320 --> 0:11:12.600 both my brother and I were both very much math 0:11:12.640 --> 0:11:16.360 and science people. And I go to Hopkins and I 0:11:17.240 --> 0:11:20.959 first semester I take organic chemistry, where you're in with 0:11:21.000 --> 0:11:23.360 all the Hopkins pre meds, which was probably the worst 0:11:23.360 --> 0:11:24.240 experience of my life. 0:11:24.920 --> 0:11:26.480 All Right, So you said, I want to be the 0:11:26.520 --> 0:11:27.160 head of a bank. 0:11:27.400 --> 0:11:30.160 No banking was like, was not there yet. I said, 0:11:30.720 --> 0:11:32.520 I want like a better education, I want a much 0:11:32.559 --> 0:11:35.520 broader education. And I just got convinced in talking to 0:11:35.559 --> 0:11:39.440 people that college is this great opportunity to learn a 0:11:39.480 --> 0:11:42.560 broad set of things. I've got nothing against business schools 0:11:42.679 --> 0:11:44.960 or things like that, but you know, there's plenty of 0:11:45.000 --> 0:11:48.040 time to learn accounting. Most of that stuff you learn 0:11:48.160 --> 0:11:50.760 on the job. Anyway, college is a great example to 0:11:50.800 --> 0:11:55.760 learn about international relations, political science, psychology, sociology. So I 0:11:55.880 --> 0:11:58.320 changed my major to what Hopkins had, this wonderful thing 0:11:58.720 --> 0:12:02.040 called Social and Behavioral Science's area major, where you were 0:12:02.160 --> 0:12:04.640 allowed to take a broad set of classes in all 0:12:04.679 --> 0:12:07.720 those types of things that I just said. And I 0:12:07.760 --> 0:12:10.479 loved it. I loved the people, I loved the professors, 0:12:11.880 --> 0:12:15.360 the students, I love the work, and I think I'm 0:12:15.400 --> 0:12:16.360 a better person for it. 0:12:16.800 --> 0:12:18.080 So you graduated one year. 0:12:18.320 --> 0:12:21.040 I graduated college in eighty seven, and so I started 0:12:21.040 --> 0:12:26.680 going through all these interview programs, you know, the different 0:12:26.679 --> 0:12:28.640 investment banks up in New York, because I was from 0:12:28.679 --> 0:12:32.160 the New York area. And then something else came along. 0:12:32.600 --> 0:12:34.760 So you got a job at a place called Commercial 0:12:34.800 --> 0:12:39.280 Credit was a young guy was working there. Then Jamie 0:12:39.320 --> 0:12:40.480 Diamond I think his name was. 0:12:40.760 --> 0:12:43.319 Jamie was twenty nine thirty years old at the time. 0:12:44.200 --> 0:12:47.920 Was CFO played a really important role, but he was 0:12:47.960 --> 0:12:52.120 one of like six or seven really senior people, and 0:12:52.400 --> 0:12:55.320 it was really over the next you know, three four, five, 0:12:55.400 --> 0:12:58.480 six years that Jamie asserted himself in terms of what 0:12:58.520 --> 0:13:00.280 his capabilities were. It's one of the things I talk 0:13:00.320 --> 0:13:01.360 to younger people all the time. 0:13:01.400 --> 0:13:02.360 I say, you know, they. 0:13:02.320 --> 0:13:04.280 Always ask about you know, who you role models and 0:13:04.280 --> 0:13:06.960 who do you learn the most from, and like for me, 0:13:07.320 --> 0:13:10.600 it's just being able to see. You think you can 0:13:10.679 --> 0:13:13.560 learn a whole lot from someone who's the most successful, 0:13:13.920 --> 0:13:18.319 but in reality, you learn bits and pieces from different 0:13:18.360 --> 0:13:20.400 people and figure out how it works for you. 0:13:20.640 --> 0:13:22.360 How long were you at JP Morgan before you. 0:13:22.600 --> 0:13:25.320 I was there until twenty twelve. So I got to 0:13:25.320 --> 0:13:28.400 Bank One in two thousand. So I started out as CFO, 0:13:28.400 --> 0:13:30.640 wound up running the retail businesses for a couple of 0:13:30.720 --> 0:13:34.240 years when we sold Bank One to JP Morgan. I 0:13:34.320 --> 0:13:39.240 ran the retail businesses until twenty eleven, then a year 0:13:39.280 --> 0:13:41.600 in the private equity business, and then I went to 0:13:42.040 --> 0:13:42.640 run Visa. 0:13:43.200 --> 0:13:45.200 So you went to Visa, but Visas headquartered in San 0:13:45.200 --> 0:13:46.880 Francisco and your families in New York. 0:13:46.920 --> 0:13:50.080 So my wife eventually moved out to California. Our kids 0:13:50.080 --> 0:13:51.080 were on the East Coast. 0:13:51.360 --> 0:13:54.240 She moved out, she moved with you, She moved, she 0:13:54.559 --> 0:13:55.680 moved out, she moved. 0:13:55.440 --> 0:13:59.440 She came to join me with the dog. We were 0:13:59.440 --> 0:14:02.880 all reunited in San Francisco. And then it just became 0:14:03.040 --> 0:14:06.040 very clear, for personal reasons with one of my kids, 0:14:06.080 --> 0:14:08.040 that we just couldn't be that far away. 0:14:08.400 --> 0:14:10.720 Okay, so you moved back to the East Coast. 0:14:10.840 --> 0:14:15.840 So I left Visa without a job and moved back 0:14:15.840 --> 0:14:16.320 to New York. 0:14:16.520 --> 0:14:18.160 Why wouldn't you want to go to a bank that 0:14:18.280 --> 0:14:21.480 can't grow? How did they induce you to leave where 0:14:21.520 --> 0:14:22.360 you were first? 0:14:22.400 --> 0:14:24.360 I was very hard to leave because I was at 0:14:24.520 --> 0:14:27.600 Bank of New York Mellon, which I went in maybe 0:14:27.600 --> 0:14:29.640 a year and a half before I started these conversations, 0:14:29.640 --> 0:14:31.480 and I didn't intend to leave. I intended to stay 0:14:31.480 --> 0:14:32.720 there for the rest of my career if they would 0:14:32.760 --> 0:14:35.800 have had me. But I knew someone on the Wells 0:14:35.840 --> 0:14:38.960 Fargo board from another board that I'm on, and he 0:14:39.040 --> 0:14:41.680 was on me about you should engage, you should engage, 0:14:42.080 --> 0:14:43.480 you can be in New York. We have a lot 0:14:43.520 --> 0:14:45.280 more in New York than you think, which was important 0:14:45.280 --> 0:14:48.680 to me. And then I just kind of go through 0:14:48.760 --> 0:14:52.400 what Wells is and I competed against them for years 0:14:53.040 --> 0:14:55.640 and I believed, and I believed today more than ever. 0:14:55.760 --> 0:15:00.560 It's an incredibly important, amazing financial institution in this kind 0:14:59.920 --> 0:15:04.520 of which lost its way on a series of things. 0:15:05.000 --> 0:15:07.600 And if you sit there and say, if those things 0:15:07.640 --> 0:15:10.160 are all fixable, and someone were to hand you the 0:15:10.200 --> 0:15:14.000 Wells Fargo franchise that had been underperforming, that had been 0:15:14.040 --> 0:15:17.760 restrained for so long, that's like a dream job. So 0:15:18.200 --> 0:15:19.520 you know, you got to take the risk that you 0:15:19.600 --> 0:15:22.280 believe you can get through these problems with the government, 0:15:22.640 --> 0:15:26.000 by the way, in a difficult environment with the Biden administration. 0:15:26.640 --> 0:15:28.600 But if you come out on the other side. It's 0:15:28.640 --> 0:15:29.560 incredibly exciting. 0:15:29.840 --> 0:15:33.600 Before you came to Wells, they had a problem and 0:15:33.840 --> 0:15:37.800 Wells was put under some constraints by the federal government. 0:15:37.880 --> 0:15:41.040 Yeah, what were those constraints. We've had multiple constraints. The 0:15:41.040 --> 0:15:45.160 biggest one that people know about is there was an 0:15:45.200 --> 0:15:49.400 asset cap put in place. So at the time, I 0:15:49.400 --> 0:15:52.640 think it was twenty eighteen, we were told that our 0:15:52.720 --> 0:15:56.880 assets at the time were one point nine to five 0:15:57.120 --> 0:16:01.080 two trillion and they couldn't go higher than that until 0:16:01.320 --> 0:16:07.040 the consent order work was done to their satisfaction. 0:16:06.920 --> 0:16:09.160 Well, how do you grow the company if you can't 0:16:09.160 --> 0:16:10.320 grow your asset. 0:16:10.000 --> 0:16:12.240 It's very very hard. So there are things you can't 0:16:12.240 --> 0:16:14.840 do and the things you can do. You've got to be, 0:16:14.880 --> 0:16:17.000 first of all, very selective and looking at your balance 0:16:17.000 --> 0:16:19.840 sheet and saying, okay, it's not the worst thing in 0:16:19.840 --> 0:16:21.640 the world to say, we need to become more efficient 0:16:21.640 --> 0:16:23.640 on our balance sheet. What's less efficient? Where do we 0:16:23.680 --> 0:16:27.320 make less money? How do we reallocate that balance sheet usage? 0:16:27.680 --> 0:16:31.080 You then turn to certain things and say we're just 0:16:31.200 --> 0:16:33.920 not going to be active about soliciting loans, We're not 0:16:33.960 --> 0:16:36.920 going to be active about soliciting deposits. We were very 0:16:36.960 --> 0:16:41.000 careful not to throttle consumer deposits. Because you tell a 0:16:41.000 --> 0:16:44.239 consumer to please bring your deposit elsewhere, you've lost that relationship. 0:16:44.640 --> 0:16:47.440 Large Corpus understand, they understand we have an asset cap. 0:16:47.520 --> 0:16:49.480 They understand we want to take their money, but we 0:16:49.560 --> 0:16:52.720 just can't right now. So we turned away massive amounts 0:16:52.800 --> 0:16:55.720 of deposits at the time, and we focused a lot 0:16:55.840 --> 0:17:01.080 on businesses that drove fee based revenues. So we've grown 0:17:01.120 --> 0:17:04.720 our credit card business dramatically, which includes a significant portion 0:17:04.920 --> 0:17:07.880 of increasing the spend. We've grown our trading capabilities, We've 0:17:07.920 --> 0:17:11.640 grown our investment banking advisory capabilities. We have our fee 0:17:11.720 --> 0:17:16.280 based treasury management businesses, and so you know that along 0:17:16.320 --> 0:17:19.359 with our wealth management business when get paid on fees. 0:17:19.520 --> 0:17:20.520 That's what we focused on. 0:17:20.800 --> 0:17:23.359 What led to these sanctions? Why did this happen? 0:17:23.760 --> 0:17:27.880 There were a series of individual things that the regulators identified. 0:17:28.920 --> 0:17:31.320 They were right about them. We can argue about whether 0:17:31.320 --> 0:17:34.520 the punishment fit the crime, whether an asset cap was 0:17:34.560 --> 0:17:36.520 the right thing to do for a company like ours, 0:17:36.800 --> 0:17:39.760 but they weren't wrong about the underlying issues. And what 0:17:39.840 --> 0:17:42.800 happens is you get to the point where if you're 0:17:42.840 --> 0:17:46.040 not resolving the issues quickly, enough, they say, Okay, we 0:17:46.080 --> 0:17:48.840 need to get your attention. We're not getting your attention. 0:17:49.000 --> 0:17:51.359 So the next step is you can't grow, and so 0:17:51.400 --> 0:17:54.360 that's what they did. We need banks of all sizes. 0:17:54.720 --> 0:17:57.359 Our banks do have to scale with the growth in 0:17:57.400 --> 0:18:01.240 the economy. It doesn't mean that big versus small both 0:18:01.280 --> 0:18:05.040 are necessary. We do different things, and we try and 0:18:05.080 --> 0:18:08.280 support small banks because we know they play an incredibly 0:18:08.280 --> 0:18:08.880 important role. 0:18:08.920 --> 0:18:11.159 You're in town, I guess, to meet regulators and to 0:18:11.200 --> 0:18:13.479 meet members of Congress. How do you find that an 0:18:13.520 --> 0:18:16.840 uplifting experience When you're meeting with members of Congress, they're exciting. 0:18:17.200 --> 0:18:20.320 I think it's incredibly important. And I really dislike when 0:18:20.359 --> 0:18:23.960 people talk about lobbying like it's some awful, horrible thing. 0:18:24.359 --> 0:18:27.320 Showing up and trying to convince a senator or a 0:18:27.359 --> 0:18:32.440 congress person at the last minute that what I think 0:18:32.760 --> 0:18:35.280 is right when it's clear that it's just going to 0:18:35.320 --> 0:18:39.040 benefit me goes nowhere. What really matters is over a 0:18:39.040 --> 0:18:42.960 period of time, building a relationship with members and their staffs, 0:18:43.680 --> 0:18:48.920 where you're where you're honest about what works, what doesn't work, 0:18:49.119 --> 0:18:53.040 what the risks are, and so that when they need 0:18:53.080 --> 0:18:56.920 to actually have a position on something, they're more educated, 0:18:57.200 --> 0:18:59.880 and sometimes we agree on those things. I mean, they're 0:19:00.040 --> 0:19:02.520 plenty of members who I've got a huge amount of 0:19:02.560 --> 0:19:05.200 respect for. We don't agree on something, but it doesn't 0:19:05.200 --> 0:19:06.520 mean I'm not going to talk to them, and it 0:19:06.520 --> 0:19:09.000 doesn't mean that we might not agree on the next thing. 0:19:09.359 --> 0:19:11.240 What is the biggest problem in the United States is 0:19:11.280 --> 0:19:13.240 facing now in the financial service world? 0:19:13.400 --> 0:19:16.560 We have uncertainty with what's going on with the around conflict. 0:19:16.760 --> 0:19:20.200 It's been a bull market for a long time. There's 0:19:20.240 --> 0:19:23.199 a huge amount of liquidity in the system. There's this 0:19:23.400 --> 0:19:25.800 underlying current that things are going to be fined for 0:19:25.840 --> 0:19:28.159 a long period of time. There are a lot of 0:19:28.160 --> 0:19:30.960 people in the financial services space, in banks and that 0:19:31.080 --> 0:19:33.960 side of banks that have never been through cycles, like 0:19:34.000 --> 0:19:37.080 a real cycle in terms of what that means. And 0:19:37.280 --> 0:19:39.560 there's a point in which that's going to turn and 0:19:39.880 --> 0:19:42.480 that's going to have a whole bunch of impacts that 0:19:42.520 --> 0:19:45.320 I'm not sure we all really understand something's going to happen. 0:19:45.840 --> 0:19:48.080