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John Stumpf, CEO of Wells Fargo at the Bay Area Council's Outlook Conference 2016 — Transcript

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0:00it is my great honor to introduce a
0:02business and Community leader who has
0:04been one of the baraya council's great
0:06Champions and strongest supporters
0:08please welcome to the stage Tony early
0:10chairman and CEO and president of
0:13[Applause]
0:21pg& well good afternoon everyone and
0:23thanks for coming you know Michael
0:25coming up here without his notes and
0:27reminding my worst fear is I bring the
0:28wrong notes and you give the wrong
0:31speech at the wrong place um let me
0:33first congratulate the Bay Area Council
0:35for putting together another great event
0:38this Outlook conference every year
0:39focuses on important and relevant uh
0:43issues uh and we're going to discuss
0:45some of the most important issues facing
0:47our region uh here today uh and the
0:50council brings people together uh
0:53various voices decision makers uh so
0:56that we can collaborate on Solutions uh
0:59and we're proud uh at PG to support this
1:02work H and it's my particular pleasure
1:05to be able to introduce uh our first
1:07Speaker today and that's to introduce
1:09the CEO of Wells Fargo John stump now
1:13I'm particularly happy to have this role
1:15because Wells Fargo and pg& have a lot
1:18in common when you think about the
1:20history of California both of our
1:23companies can trace their roots to the
1:25same year 1852 that's 164 years ago now
1:29neither John nor I were here then
1:31although there's some weeks where it
1:32feels like it's been that long um but
1:36over the years Californians have really
1:38counted on us they've looked to us for
1:40some of their most basic needs essential
1:42parts of like life like managing their
1:44money and delivering energy but as
1:47companies and as individuals they've
1:50looked for jobs and as companies we've
1:52provided hundreds of thousands of jobs
1:55to Californians uh over the last 164
1:58years and importantly both companies
2:01have had to learn to adapt to meet the
2:03changing needs of our customers and to
2:06solve the various challenges that we
2:08faced over time and the same can said
2:11for the role that we play today uh in a
2:13few minutes John and I are going to have
2:14a chance to talk more about the role
2:16that Wells Fargo is playing in meeting
2:18some of the biggest challenges that we
2:20Face uh both here in California and
2:23Across the Nation uh but first let me
2:25spend a minute introducing John uh
2:28before his long banking career uh began
2:30his working life on his family's farm he
2:33traces many of the core principles of
2:35his work ethic to those early years
2:36values like honesty persistence
2:40accountability and appreciation for
2:42teamwork in 1982 John began his Wells
2:45Fargo career where he joined the former
2:47Norwest uh Corporation in the loan
2:49administration department for the next
2:52several years he held numerous
2:53management positions and then served as
2:56Regional president for Norwest banks in
2:58Colorado and Arizona and then Norwest
3:00Bank in Texas now it's worth noting that
3:03during his time in Texas John LED
3:06Norwest acquisition of 30 Texas banks
3:09with total assets of 13 billion
3:11something tells me there was a little
3:13bit of an element of the Wild West there
3:15it was probably using that stage coach
3:17to round people up or at least round
3:18Banks up there uh when Norwest and Wells
3:22Fargo merged in 1998 John became head of
3:25the Southwest banking group and later
3:27head of the new Western banking group
3:29and by 2005 he was named president of
3:31the whole company and 2007 he was named
3:34chief executive
3:36officer and we got to that position he
3:38didn't waste any time he led one of the
3:40largest bank mergers in history with the
3:42purchase of wacovia North Carolina
3:45finally in 2010 John became Wills
3:47Fargo's chairman and I don't have to
3:49remind you the challenges that banks
3:52have faced during Jon's time as leader
3:55of One of America's leading Banks but
3:58today Wills Fargo is stronger than ever
4:00and John has been recognized for his
4:02remarkable leadership including Banker
4:04of the Year by the American Banker in
4:072013 and CEO of the Year by Morning Star
4:09in
4:112016 John is also active in the
4:13community he serves on the board of
4:14directors for the Clearing House the
4:17financial services Roundtable Target
4:19Corporation and Chevron Corporation he
4:22also serves on the federal advisory
4:24Council of the Federal Reserve board
4:26representing the San Francisco Federal
4:28Reserve Bank you know on a personal note
4:31um when I was a newcomer to San
4:33Francisco a few years ago John reached
4:34out to welcome me uh we found a common
4:37bond in our Midwestern roots and our
4:39commitment to the work of United Way and
4:42as a major customer of Wells Fargo PG
4:45pg& has been able to finance billions in
4:48energy infrastructure in California
4:50because of the support of Wells Fargo so
4:52it gives me particular pleasure to
4:54introduce to you John stump
4:58John
5:00thank you thank you thank you wow Tony I
5:03could listen to you all day you know
5:04that that might have been the second
5:07best introduction I've ever had I was in
5:09Texas last week the guidance shows I did
5:11it myself other than that one it was it
5:14was
5:14perfect first of all thank you for
5:16having me today uh Bankers don't get
5:18invited out a lot so uh it's nice to be
5:21with such a great group of people I'm
5:23going to share three things today and
5:25then Tony and I will have a conversation
5:27I want to talk a little bit about the
5:29economy the US
5:30economy and we have a
5:33particularly important and interesting
5:35view of the economy being the nation's
5:37largest hom lender small business lender
5:39one of the major Auto Lenders commercial
5:42real estate uh energy egg and so forth
5:44so we see a lot of the real
5:47economy I also want to Aline a bit on
5:50what I see in the Bay Area economy and
5:53finally I want to talk a bit about our
5:55company and our industry because lots of
5:57innovation is going on but before I do
6:00that uh you all should know how much I
6:03love living here I've lived and worked
6:05in four major cities in the US my native
6:09Minnesota I found my way from northern
6:11Minnesota a little town that had about
6:12this many people in it to Minneapolis St
6:15Paul then I went to Denver Colorado San
6:18Antonio Texas and then San Francisco
6:20California came here in late
6:222002 and the changes I have seen in
6:26these 14 years or 13 and a half years is
6:28incredible
6:30I did have an interesting experience I
6:31want to share with you so I came here to
6:34run the consumer side of the business
6:36across the country and as part of that
6:39business we have we have thousands of
6:41branches we have at that time we had an
6:43online business which of course we do uh
6:46we had a phone bank we had other things
6:48and by early 2003 I was starting to go
6:51out and meet people who I had not met
6:53before who worked for us and one
6:56particular day I had an appointment to
6:57go to Concord and we had a large phone
7:01bank operation in a 10-story building or
7:04so and conquered and people who know me
7:07know that I'm notorious for being a bad
7:09driver and getting lost so knowing that
7:13dick kosovich the CEO at the time said
7:16I'm going to give you a a real break
7:18today I'm going to have my driver take
7:20you out there so that's a pretty big
7:22deal so I put on my best suit clean
7:26start shirt tie I crawled in the
7:28backseat of Dick's Cadillac back and we
7:30went out to conquered as we pulled up to
7:34the phone Bank
7:36building as I got out of the back seat I
7:38immediately knew I had a big problem I
7:41was out of fashion and character I
7:44didn't get the dress code right there
7:46wasn't a suit and tie within 10
7:48miles so as I walked into the building
7:52these are all of our team members none
7:53of them know me and they're looking at
7:55me and I just make it to the elevator
7:57before it closes and and I go on the
8:00elevator I press the button I turn
8:02around everybody's at my
8:03back and as we start going up I hear it
8:06gets very quiet some guy says who's the
8:08guy in the
8:10suit another guy says that's Gray Davis
8:13he's being
8:16[Laughter]
8:19recalled
8:21so so later that day I come back to the
8:25bank dick said how'd your day go I said
8:28dick it was a terrible day he said
8:30what's wrong I said my people think I'm
8:32Gray Davis he says don't worry everybody
8:35thinks I'm Arnold
8:38so so let me talk about the US
8:42economy we went through the worst
8:45downturn in our nation's memory but for
8:49those who live through the Great
8:52Depression and I'm lucky that my parents
8:55are still alive my dad's 94 my mom's
8:58close but she's still fussy about her
9:00age let's just say she's about that age
9:02and they are children of the Great
9:04Depression that never left their
9:07mentality for their entire life I don't
9:10know what history will actually call
9:142008 but it was a very difficult time
9:18for our country for our economy and for
9:22lots of our citizens and participants
9:25small businessmen women uh uh homeowners
9:28and so forth so we had this big shock in
9:322008 and we've been building back
9:35since and there are some remarkable
9:38things about this
9:40recovery we've had
9:4273 consecutive months a positive job
9:46growth in the private sector unheard
9:49of in the record books of any kind and
9:54last couple years we've averaged over
9:56200,000 jobs a month we actually had a
9:59disappointing number in April 160,000
10:02most of us would you know in historical
10:05terms be thrilled about 160,000
10:09jobs 2015 was the best year for autos
10:13and Auto Sales since maybe the year 2000
10:16of my memories serves me
10:18right and it bods well for the future
10:21the average American car is over 11
10:23years
10:25old commercial real estate is booming
10:30as I look as I travel to cities and I do
10:32I travel all the time one of my favorite
10:35things is do is count the number of
10:36cranes in the air I don't know if these
10:39things multiply if they meet each other
10:41I don't know what there's going on but
10:42there's cranes everywhere the private
10:46sector infrastructure
10:48spend is in high
10:52gear campuses are being
10:55rebuilt the core of cities are being
10:58rebuilt bu people are moving
11:00back you see that everywhere not only in
11:04the primary major cities in America but
11:08even in the secondary and the tertiary
11:09cities people want to live back close to
11:13the urban
11:15core if you look at low energy prices
11:18while it's been difficult on the energy
11:21patch for the rest of us this is good
11:23news for those who have hydrocarbons as
11:25part of their operating whether it's a a
11:29an egg producer a
11:32manufacturer a
11:34distributor a homeowner a consumer who
11:37puts gas in at the
11:38pump it's been a real it's almost like a
11:40tax
11:43deduction and there's other parts of the
11:45economy that are also showing real signs
11:49of strength on the other side because
11:52this is the economy that you never say
11:54the economy is good without using the
11:55word
11:57butt this is the butt recovery
11:59everything's good
12:01but and the butt side
12:04is Wages have not grown the way we hoped
12:07they would have
12:09grown housing has not
12:11responded in the way housing we thought
12:15would have
12:17responded as a percentage of homeowners
12:20of of people who who have a dwelling the
12:23homeowner percentage has come down and
12:25continues to come
12:27down the rest of the
12:30world's influence on us is we can feel
12:34it we know it it's a global economy and
12:38their economies are in tougher shape or
12:40have recovered slower than we
12:42have and we feel that
12:46influence so it looks to me like it
12:49looks because I agree with a lot of the
12:52consensus out there that this will
12:55probably be about a 2% GDP growth year
12:59I think the big wild card
13:01is will the consumer continue to spend
13:06and increase their
13:08spending consumer balance sheets are in
13:10the best shape they've been in in
13:14decades last quarter when we reported
13:16our earnings I made a statement that
13:19today
13:2115% of consu of household earnings go
13:24for Debt Service it's the lowest number
13:27we've had in years and years and years
13:30because people are paying down debt and
13:32interest rates are so
13:35low but consumers tend to be spending
13:37more money today on
13:40experiences as opposed to
13:42things restaurants are full theaters are
13:46full airlines are full stores are not so
13:52full as it relates to the Bay
13:55economy everybody would love to have the
13:58problem we
14:01have not only are we seeing terrific
14:06private sector infrastructure spend
14:09we're seeing some public sector
14:11infrastructure spend in addition to
14:13that the housing challenge here is a bit
14:16different than the rest of the
14:19country I think the reason that we're
14:21not seeing even though housing starts
14:23new house starts are up 22% a year ago
14:26across the country in other parts of the
14:29country we they don't have some of the
14:32challenges we have like affordability
14:34and
14:36availability we've had too many years in
14:39San Francisco and the Bay Area San
14:40Francis specifically in the Bay Area
14:42generally where it was too difficult to
14:46manufacture housing whether single
14:49family or multif family we need to fix
14:52that we need to allow for the people who
14:55work here to be able to live
14:59and afford to rate a family
15:03here the the speaker before talked about
15:07the fact that that San Francisco in the
15:09Bay Area is much more than technology
15:11and it
15:13is four of the 10 top market cap
15:17companies in America are headquartered
15:19in the Bay Area and they're not all
15:23technology
15:25so as I see San Francisco if we can work
15:30together to solve for
15:33infrastructure and solve for
15:36housing we will have a leg or two up so
15:40we can continue make the
15:42Investments and produce products and
15:44services that continue to challenge and
15:46change the
15:49world let me go to the third area where
15:52I spend most of my time and that's our
15:55company and our
15:56industry Tony stole a line from me I was
16:00going to mention I will
16:02mention that Wells Fargo and San
16:05Francisco have had a 164e love
16:09affair we started here in
16:121852 the state was 2 years
16:16old we had about 50,000 people total
16:19population in the whole Bay
16:23Area where was the capital that
16:27year not bisha now Vallejo bonisha was a
16:31year after San Jose was a year
16:34before the year of incorporation was in
16:38uh someplace in uh uh someplace South I
16:42can't recall exactly but uh it went to
16:45San Franc or Sacramento the year after
16:47in two in
16:491854 so we've come
16:51from humble beginnings along with San
16:54Francisco we've grown up
16:56together today we have 27 ,000 team
16:59members across the globe most of them in
17:02the US 97% of our revenues are here from
17:05the US we served one in three
17:08customers last year our investment in
17:13communities total $281 Million number
17:16two among all corporations we helped
17:18over 16,000 nonprofits with partnership
17:22dollars to help them in their goals in
17:26San Francisco in the Bay Area we we have
17:28177,000 team members 8,000 here in San
17:31Francisco were the city's largest
17:34employer we did $20 million of
17:36philanthropy last year ranking US in the
17:40top uh uh
17:43cortile helping over 900
17:46nonprofits and if I were going to ask
17:49you what city in the world is
17:52headquarters is is home to the
17:55headquarters of the most valuable Bank
17:56on the planet what would you say
17:59well you already know the answer but
18:00I'll give you some I'll tease you maybe
18:03Paris maybe London oh it's got to be New
18:06York it'd be San
18:09Francisco now there's a couple of
18:10state-owned banks in China that would
18:12argue with that but let's put them
18:15aside we're the 15th largest bank in the
18:18world not that we ever set out to be
18:21large we're not even number one or two
18:23in the US but our market cap the number
18:26of shares times our stock price makes us
18:29the most valuable Bank on the
18:32planet and we owe much
18:35to this community this area and this
18:38state for the success we've
18:41enjoyed so in our industry you're
18:45reading a lot and hearing a lot about
18:47the so-called
18:49finex which is a madeup word half
18:54Financial well just a little bit
18:55financial and mostly technology and they
18:58put the two together it's also known as
19:00Shadow Banks or Marketplace
19:05something and rightfully so that
19:09industry is getting a lot of
19:13visibility as they
19:15innovate as they provide products and
19:19services consumers small businessmen and
19:22women entrepreneurs and large businesses
19:25want I think some of the biggest
19:29fex are the regulated side of the
19:31industry and Wells Fargo in
19:36particular if we were not an Innovative
19:38company we would still have stage
19:40coaches on the
19:43freeway we were the first bank to be
19:47actively online now Tony mentioned 18
19:51years ago Norwest where my part of the
19:54family I came from and Wells Fargo mer
19:58merged at the time Norwest did not have
20:01an internet offering now Al Gore had
20:03invented the Internet we just had not
20:05heard about it in
20:07Minnesota but thank goodness the folks
20:09from Wells
20:11did and we were the first bank on our
20:14industry and our bank specifically
20:16helped
20:17create visa and
20:20MasterCard it was called Bank
20:23americaart we created the ATM
20:26machines we created internet banking
20:28bill pay all the things that we just
20:30take for granted
20:32today 10 years ago we didn't have a
20:34mobile
20:35offering today Mobile Banking is our
20:38largest single channel of all of our
20:39channels 16 million
20:42customers see
20:45us access us transact with us through
20:50mobile
20:51devices every minute at Wells Fargo we
20:53have
20:5413,500 customer
20:56interactions all you you go one 2 3 four
21:00five a thousand transactions just
21:03happened and many of those happen
21:06through
21:08digits much of that technology invented
21:11just down the road from where we are
21:14today and we're going to see more
21:16innovation in our
21:18industry you'll be able to go to one of
21:21our ATMs this year without your card and
21:26use your mobile device to activate your
21:28ATM machine we'll be the last generation
21:31to use the term credit card and debit
21:33card why need a card same reason if you
21:36take a photograph why do you need
21:39film it'll be accessed through a mobile
21:42device of one type or
21:44another we'll be the last generation to
21:47ever use usernames and
21:50passwords you ready
21:52can I
21:54agree in fact today when you
21:58use your Apple iPhone and you put your
22:02thumb or your imprint on it to unlock
22:04the phone you touch the wells fireo app
22:07and you touch your thumb and the app
22:08comes up and you're
22:10online and you're going to continue to
22:12see more and more Innovations over time
22:15things that are possible today in our
22:18industry were Unthinkable two and three
22:22years
22:23ago things that are will be possible
22:26next year and the year after are un
22:28knowable
22:30today so as we
22:33see
22:35customers rightfully demanding more
22:38convenience more value more clarity and
22:42yes more
22:44safety we as an industry will continue
22:46to step up to
22:48that and safety is an important thing
22:51when I think about what it is that we
22:54really do and what is the core element
22:57what is the DNA of our relationships
22:59with our customers it's
23:02trust and we are spending a boatload of
23:05dollars more than a boatload a whole
23:09Armada on cyber
23:12security when customers do business with
23:14us they want to make sure their business
23:16is private it's secure it's not shared
23:19not sold and not
23:21lost let me end
23:23by we're surely in
23:26a political season this
23:30year and I'd like just to offer a couple
23:33of
23:35thoughts and no I'm not going to tell
23:37you who I'm voting
23:38for you know Dr or none of the above so
23:42we'll uh but I will say
23:46this we're the luckiest people on the
23:50planet we live in the best country ever
23:56known we share borders with friendly
24:00neighbors we are
24:03a group of people that do things and
24:08make stuff and
24:11innovate we have the best military we
24:14change government every two four 6 eight
24:17years without tanks on the street we
24:20have the deepest most
24:23transparent best capitalized financial
24:25service industry on the planet
24:30but as we look to the
24:34Future we're never going to save our way
24:36out of our problems we're never going to
24:39tax our way out of our problems we're
24:40not going to redistribute our way out of
24:42problems our challenges we're going to
24:44grow our way out of our problems growth
24:48is the cure to almost
24:51everything when I got in the industry in
24:561975 23 or 24% of our
25:01economy were things that we
25:03manufactured I grew up on a
25:06farm either were a Chevy Farm or a Ford
25:11couple people in town had a Chrysler but
25:13we didn't really count
25:15them we made those things here the
25:17furniture we had in our homes was made
25:20in the
25:22Carolinas those who would afford a
25:24TV an RCA or a Zenith was made here our
25:28clothing was made here today less than
25:3210% of our
25:34economy represents manufactured goods
25:37we're not going to manufacture
25:38everything
25:39here nor should we but we surely could
25:43do
25:44more but the biggest aha today if we
25:49want
25:50growth is
25:52infrastructure as I mentioned earlier
25:54across the United States the private
25:58sector is
26:00building like we've never seen
26:04before new
26:06buildings new
26:09facilities housing industrial
26:12buildings A lot of it in the urban
26:16core today is the best time to do a huge
26:19public sector
26:20infrastructure spend and investment
26:24interest rates are at 50-year
26:26lows commod ities are at all-time lows
26:30in many case you takeen real dollars and
26:33there's a able and ready
26:35Workforce so we can match what's already
26:37been done on the private sector with
26:40what needs to be done in the public
26:42sector and when that happens we all
26:46participate in the growth of the
26:49economy because after all good jobs are
26:51more than just good
26:54salaries it's about the decency and
26:58and the sense of
27:01Pride the Dignity of being part of the
27:04solution so thank you for your time
27:07thank you for giving me a little bit of
27:09uh uh this time this afternoon and I
27:11think Tony's coming up now we're going
27:13to have a bit of a taste great less
27:16filling Event John thanks for those
27:19insightful remarks um I discovered we
27:21have several other things in common um
27:24both of my parents are still alive
27:25they're in their 90s and I've learned
27:27you don't talk politics with them when
27:28they get to that age uh the other thing
27:31I discovered we have in common is the
27:33commitment to California so you talked
27:35about Wells Fargo's commitment um you
27:38know certainly pg& isn't going to be do
27:40a reverse um merger and move our wires
27:42to Ireland um and yet uh recently a CEO
27:47mag a chief executive magazine took a
27:50survey of 500 plus CEOs and California
27:54was voted the worst place to do business
27:56and I wouldn't ask you whether you agree
27:57or disagree but are there two or three
28:00things you can think of that the Bay
28:01Area Council ought to be working on to
28:03make California a better place to do
28:05business sure so we've been here 164
28:08years and I hope we're here for another
28:09164 years
28:11and and there are things about just
28:14being here as a large US base company
28:17you know um our location being on the
28:21west coast is not helpful as I have to
28:23You' be better be in the central part of
28:25the country of course um
28:28you look at the tax structure and some
28:29other things those all would be
28:33negatives but there are clearly things
28:37that can be done for us to continue to
28:39employ people here we have to have a
28:42place where they can raise a family uh
28:47live uh enjoy the things that are here
28:49so again housing housing housing um we
28:54surely need to make sure that
28:57that we don't have excessive regulation
29:00such that there is a disincentive to do
29:05the right thing in some cases when you
29:08have duplicative or you know three times
29:12the regulation sometimes the medicine is
29:14worse than what you're trying to cure so
29:16but I would say of all things that Bay
29:18Area council could influence the idea of
29:21infrastructure span and housing by far
29:25are are the biggest issues because
29:26there's so many advantages of being here
29:29a great Workforce a great place to live
29:31the diversity of our people of our
29:33thinking uh uh and the progressiveness
29:36of of of all the things that our people
29:40are interested in you know mean we used
29:43to walk down the street you know looking
29:45around today we're walking around the
29:46street like this that was invented here
29:49I mean so I mean there's just so much to
29:51be thankful for well
29:54um you know you've lived in lots of
29:56different place so you've seen a number
29:58of different states I'm sure you've had
30:00a similar reaction to me when you come
30:02here I mean California sets some really
30:06aggressive goals and they they're
30:08stretch goals and California has really
30:11been the leader in many different areas
30:13but one of the issues then is the
30:16micromanagement um and do you feel that
30:18they would just set the goals and let
30:19companies accomplish those goals rather
30:22than all the specifics of well to to
30:24achieve it you've got to do XYZ
30:27everything else you know I agree with
30:30that
30:31point it always comes to shock when I
30:34deal with a regulator whether at the
30:36state level at the federal level in most
30:38cases we agree with what's trying to be
30:41accomplished but in many cases we're
30:43left out of the out of the a decision-
30:46making and B implementation such that we
30:49could probably accomplish what's what's
30:52intended to be accomplished if we work
30:54together and I think too many times the
30:56public public sector and the private
30:58sector see each other with some set of
31:02Suspicion as opposed to
31:06collaboration um California's a leader
31:09in the environmental field uh and I was
31:13just speaking at a a fortune Tech
31:15conference yesterday down in carlbad and
31:18there are people who are very optimistic
31:20about environmental technology what it
31:22could do but then people uh also
31:24reminded there have been at least three
31:26crashes over over the years where there
31:28was uh exuberance around investment in
31:30green technologies you know as a bank
31:32you're involved in many of these sectors
31:35um you know what's Well's take on Green
31:39Tech here in California and what are you
31:41seeing worldwide uh in that uh we're the
31:44largest uh investor in or financer of uh
31:48all things wind and solar so we've made
31:51a huge commitment there so we are active
31:53in that clearly in most of those uh the
31:57economics of most of those require uh
32:00some level of tax or government
32:03support but we're we're active there
32:05recognizing that you know that will get
32:08better and better over time in our own
32:11situation I think 30 40% of our building
32:14are lead certified we have solar panels
32:17on roofs we have uh we've taken paper
32:19out of our 6,000 Plus banking locations
32:24uh for the most part so all of those
32:26things are important and they're
32:27important to us because you know we're
32:30not only you know a corporation we're
32:33also people who live here and it's is
32:35important to us and it's important to
32:37our
32:38customers um so now I'm going to turn to
32:40an easy subject uh and you mentioned the
32:42election and so you've got Bernie wants
32:46to break up all the big Banks I presume
32:48that and Wells is in that group that
32:49he's talking about uh you've got Hillary
32:52who wants to deny that she ever talked
32:54to any banks uh you've got Donald who's
32:57probably left every Bank in New York
32:59holding the bag on one of his
33:01projects um and you're looking for an
33:04answer what do you I mean any feeling
33:08for I mean what are we going to see in
33:09terms of of fiscal policy and Regulation
33:12and budgetary policy uh in the financial
33:17sector you know I
33:19don't clearly know who will be elected
33:22and what the policies will be I think
33:24it's important that this audience
33:27know that I believe and most of my
33:32colleagues who run large institutions
33:35believe that there ought to be no
33:37company in any industry too big to fail
33:41that's a bad model uh failure is a
33:44necessary part of a necessary part of
33:49capitalism and there's so much emotion
33:52around what happened in 2008 I mean it
33:56it's it's not well discussed that Wells
33:58Fargo actually used its capital to buy a
34:01institution wacovia that we didn't
34:04require any special support of any kind
34:08from the federal government and that's
34:10the way it should be since that time
34:12there's been a big body of law passed in
34:14Dodd Frank Capital levels have gone way
34:17up we two or three times the capital in
34:19fact we have as much Capital today as
34:21the entire company's assets were when
34:25Wells and Norwest merged our liquidity
34:26is way up so there's been a lot of work
34:29done in capital liquidity resolution
34:31planning Regulatory regimes and the
34:36secret about the success of America is
34:39we need financial services participants
34:41of all sizes and types from small
34:45Community Banks my little Hometown in
34:46Minnesota has a community bank if that
34:49bank left that town would roll up and
34:51blow away we need them we want them they
34:55participate in a very meaningful way
34:57Regional Banks large Banks
35:01non-banks uh soon to be created Banks so
35:04I think they're all important and they
35:06all ought to have the level of capital
35:09and and oversight that makes sure that
35:13the taxpayer is never asked and and not
35:16to revisit 2008 too much but if you look
35:19at the large failures of that time you
35:22go down a long list before you get to
35:24ever get to a Commercial Bank uh you go
35:26go through government support entities
35:29you go through insurance companies you
35:30go through investment Banks and the
35:32commercial banks with deposits for the
35:35most part uh were not the ones that were
35:38failing you know your company has had a
35:42history of being managed conservatively
35:44being focusing on risk um and I think a
35:48lot of the regulation is trying to get
35:50other Banks to have a similar approach
35:54um but do you think that the pendulum is
35:56swung too far and that we're driving
35:58some of these smaller financial
36:00institutions out of business because of
36:02the burden of of all the federal
36:05regulations that are being placed on
36:06them you surely hear that a lot from
36:09smaller institutions and there is there
36:13is clearly truth in that and I'm
36:15actually advocating and
36:18supporting for smaller institutions to
36:20have less regulatory oversight where I
36:23don't think it helps them at all so they
36:25can use those dollars
36:27to invest in things that do matter like
36:29cyber because we're all connected in
36:31that way or in serving their communities
36:35so surely there's a lot going on there
36:38the other unfortunate part
36:41is that some of this regulation not all
36:45but some have made it more difficult for
36:47us to lend money or serve customers who
36:50might be on the margin
36:53unbanked
36:54emerging and that's not helpful nobody
36:58that I know who is successful banks with
37:02the Corner liquor store and their
37:03mattress it ju they bank they they build
37:07up a credit history and and a
37:10relationship with a you know a bank of
37:15of some siiz or type and they grow and
37:17and that we want more people in the
37:20system as opposed to
37:22out so you mentioned cyber and when I
37:25get asked you know what keeps me up at
37:26night cyber is right at the top of my
37:28list uh where does it fit into your
37:31priorities I'm I'm sleeping less than
37:33you are so uh so as I mentioned before
37:36in my prepared
37:39comments the reason people do business
37:42with us or any large financial
37:45institution is based on
37:47trust those digits that you get on a on
37:50a mobile device or if you're like my
37:52parents you still get something in paper
37:54on paper you believe that to be the
37:56truth and you believe that to be
37:58available to you protected not shared
38:02not lost not stolen not
38:05compromised and at the core of trust is
38:10us making sure that we don't have a
38:13cyber
38:14event and cyber crime is the only crime
38:17in the world where the person who gets
38:19mugged is considered the criminal so if
38:22a you think about from a corporation of
38:24large corporations who've had that and
38:26and and you know it's and we've seen
38:29recently
38:30where Financial crime was visited upon
38:33the Federal Reserve Bank where $81
38:37million shows up in a casino in you know
38:41someplace in Manila so um you know this
38:44is real stuff I it's my one of my two
38:48standing meetings every month with our
38:50cyber team and more than that at hoc
38:54depending on what's going on uh you
38:56point to a real issue because I think
38:59cyber is where the business sector and
39:01government have to work together
39:03absolutely and yet up until recently
39:05you're right the the victim was
39:06considered the the criminal although I
39:09will tell you I think the federal
39:10government's attitude changed when the
39:12federal personnel office was hacked uh
39:14and they had to tell me that because I
39:16have a security clearance that that I
39:18was at risk but uh we still need to have
39:20have more partnership there Tony there's
39:22no question in fact I think the
39:24financial services industry has done a
39:25good job to work together
39:26but we need State authorities uh local
39:30state and federal and for those of you
39:33who have a federal government background
39:35I mean it's not easy working what NSA
39:39might know the CIA might not what you so
39:42and working getting them to work
39:43together so they can work with us is
39:46really a a a tall ask so let me bring it
39:50back to the Bay Area to wrap up um I
39:54know you're very proud of the fact that
39:55Wills far Fargo is the most
39:58philanthropic company in the US year in
40:00and year out um and I know you and your
40:02employees take a lot of pride in that um
40:06but you know here in the Bay Area you've
40:07got examples of some of the newer
40:09companies some of them have been very
40:11good at supporting the community but
40:13quite honestly there have been others
40:15that haven't paid attention to I mean
40:17why do you commit so much time effort
40:20and money to your philanthropic
40:21activities and what advice do you have
40:23for some of these newer companies as
40:25they grow yeah in fact we don't use the
40:29word philanthropic that that often when
40:32it comes to that part of our business we
40:35view it as Community
40:37investing and the very simple truth is
40:39we've never seen one of our banks do
40:41well over time where the community does
40:42poorly we're linked in a very direct and
40:46special way most companies get the fact
40:48you need team members whether you call
40:50them Associates or or employees we would
40:53never use that word employee but team
40:55member you know you you have to have
40:56customers you know there's an investor
40:58somebody missed the fourth leg of the
41:01chair which is
41:02community we do best where the
41:05communities are vibrant and diverse and
41:09engaged and and uh you know spirited and
41:14all the things you would want things
41:15that you see here in San Francisco it
41:17it's just it's plain good business the
41:20same way
41:22inclusiveness uh is is plain good
41:25business it's got a huge business act
41:28component to it well John in my four and
41:31a half years here it's been just an
41:32absolute pleasure to get to know you to
41:34get to know your company your team
41:36members um they provide a great model
41:39for the business Community both here in
41:40San Francisco and all over the country
41:43so it's a pleasure to spend some time
41:44with you today thank Youk thank you all
41:47thank
41:50you

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