Updated Monday, December 10, 2012 at 12:07 PM
John Stumpf, the CEO of Wells Fargo, is the son of a farmer, second-oldest in a family of 11 children. He paid his way through state college by playing bass guitar in a band.
“I never set out to be the CEO of this company,” Stumpf, who started in banking as a repo agent, said in a recent interview with The Associated Press. “Life just happened.”
Stumpf was raised in rural Minnesota, growing up in a packed house where he slept in a bed between two of his brothers. “In fact, I never got to sleep alone until I got married,” he likes to joke.
Of the 11 kids, he’s the only one who went into banking. The others are in carpentry, baking, farming, academia and other fields.
“I’ve got siblings on every rung of the economic ladder, involved in all kinds of phases of life and situations,” he says. “I don’t need to take a survey about how people feel about the economy. I just need to go to a family reunion.”
These days, John Stumpf is a survivor.
He’s a CEO who kept his job as peers fell after the 2008 financial crisis, a strategist who expanded his company while others shrank theirs, a personable banker at a time of great anger toward his industry.
Stumpf runs the nation’s fourth-largest bank by assets — and one of the few that emerged from the financial crisis with a reputation for responsible banking.
The bank likes to say its vanilla business model of making loans and taking deposits has kept it above the fray while exotic derivatives and other risky practices have bludgeoned rivals. Today, Wells controls a third of the U.S. mortgage market, giving it by far the biggest share of any bank.
The mortgage strategy has its own problems, though, including lawsuits over questionable lending. In October, for example, the Justice Department sued Wells, accusing it of misrepresenting the quality of thousands of mortgage loans the Federal Housing Administration insured and that later defaulted.
San Francisco-based Wells was one of the largest banks in the country but relatively unknown outside the Western U.S. before 2008, when it scooped up teetering Wachovia in the depths of the financial crisis.
The bank has turned a profit every quarter since 2009, when the purchase was complete. Earnings have expanded while revenue has stayed steady.
Like other big banks, Wells Fargo’s stock has had an impressive year, gaining about 20 percent. But unlike the others, it’s close to its pre-crisis heights.
In an interview with The Associated Press, Stumpf, 59, talked about why he’s fighting the government’s lawsuit, why he’s less than enthusiastic on the economy and when it’s OK to ditch the suit and tie.
Questions and answers have been condensed and edited for clarity and length.
Q: What’s your prediction for the economy? Could we move into a reasonably strong economy in the next couple of years just naturally, because we’ve been in a downturn for so long?
A: I don’t know that I subscribe to that. It takes more planning and more leadership. We’ve got $16 trillion of federal debt, we have deficits as far as the eye can see, 10,000 people retire every day in this country and are getting (extremely low interest rates) on their savings. Left to its own, it will look very much like what it’s looked like so far.
Q: So what do we do?
A: There’s still too much uncertainty — tax policy, health care, entitlements, a whole bunch of other things. I would like to see the public sector and private sector get on the same page. Take something like housing. We have states that are passing new laws around housing that sometimes are in conflict with the national standards. What will happen to the mortgage-interest deduction? We don’t know these things. And when it’s uncertain, the private sector feels it in a big way. We just published our quarterly Gallup/Wells Fargo small-business survey, and we saw more pessimism than we’ve seen (in years), because what happens in Washington affects Main Street.
Q: The Justice Department recently accused your bank of mortgage fraud. What’s your response?
A: We think they got that wrong. Our FHA lending activity and servicing, we’ve done it in good faith, we have met the requirements that were laid out. The proof was really in the results — our portfolio performs better than others. We have a number of defenses. This is one we’re going to take on.
Q: People hate bank fees. Bank of America just decided to postpone new fees on its checking accounts. Where do you see this going?
A: We try to be transparent in what we do. I think what really irritates customers is where they believe they got something at this price and find out there’s some other language in there and they really paid this price.
What we want to provide for customers is a good, fair deal. We have 6,000 (branches), 12,218 ATM machines, 24/7 bankers, online, and all this stuff costs money. We give people access if they do enough business with us. If they choose not to do business with us but for one thing, we charge them ($7) a month for the access to that nationwide distribution. That’s a bargain. Our customers understand that. We’ve had minimal issues in that area. Our customers have higher loyalty scores with us than we’ve ever had.
Q: You started in the business as a repo guy, so you had to show up at people’s houses and take back their cars, their washing machines or whatever else they could no longer make payments on. What did you learn from that?
A: When you make a bad loan, a lot of people suffer. Your shareholder suffers, customers suffer. People go into a loan wanting to make it work, and they want to pay their debts.
Q: Any good stories?
A: One time I was repo-ing a chain saw out on a farm north of the Twin Cities. I heard the chain saw, so I walked around the house and some guy was cutting wood. He said, ‘What do you want?’ and I said, ‘I’m here for the chain saw,’ and he picked up the chain saw in one hand and then a shotgun in the other, and he said, ‘Here, come and get it.’ And I said, ‘Maybe I don’t need that chain saw right now.’
Q: You were outspoken against the idea of a stand-alone Consumer Financial Protection Bureau when it was proposed. What do you think of the job it has done so far?
A: These are good people, and they’ve been asked to do an impossible job. I hope they get it right.
Q: What do you think about their putting the complaints against your bank and others on the Internet?
A: You know, we talk to our customers every day. If that’s the best way for them to make that information available, that’s up to them.
Q: Warren Buffett is your biggest shareholder. Tell us about that.
A: He reads everything. One time I talked to him on a Monday, we’d put out our 10-Q (a quarterly financial report) on a Friday, and he said he spent all day Saturday reading it cover to cover. I said, ‘Warren, you do that often?’ He said, ‘Oh, I love Q’s.’ He was asking me about some esoteric asset — I was blown away.
Q: You’ve got almost 270,000 employees, and you’ve said you try to talk to one, unannounced, every day. How do you do that?
A: I see somebody in the elevator, I call somebody on their birthday, I see a sales report or I see a great save or I hear a story about one person who is handing out bottles of water after Hurricane Sandy, and I call them up and say, ‘Thank you,’ and ‘What are you hearing?’, ‘What are you thinking?’ Or I might walk into one of our stores when I’m traveling and shake their hands.
CEO of Wells Fargo, fourth-largest bank in the nation
HOMETOWN: Pierz, Minn.
FAMILY: Married with two adult children.
EDUCATION: Finance degree from St. Cloud State University in St. Cloud, Minn. MBA from the University of Minnesota.
CAREER START: Stumpf’s first job out of college, in 1976, was as a repo agent for a regional bank in Minnesota. A few years later, he joined Minneapolis-based Norwest Corp., which later bought Wells Fargo and adopted its name and San Francisco headquarters.
Mark Lenihan / The Associated Press
John Stumpf, CEO of Wells Fargo, expanded his company while others shrank theirs.