As Vice Chairman of Public Affairs at Wells Fargo, former U.S. Commerce Secretary, and former White House Chief of Staff, Bill Daley has dedicated himself to fighting for the financial stability and security of America through his service in both the public and private sectors. Daley sits down with American Banker Editor-in-Chief, Chana Schoenberger, to discuss the state of the American economy, reflect on the best policy balance between government and banks to protect market resiliency, and as a native Chicagoan, the state and future of the city he holds so dear.
Transcript:
Chana Schoenberger:
Welcome to the Leaders Forum. I'm Chana Schoenberger. I'm the Editor-in-Chief of American Banker, and I have with me here today Bill Daley, who is the Vice Chairman of Public Affairs at Wells Fargo.
Bill Daley:
Thanks for having me, Chana. Appreciate it.
Chana Schoenberger:
Thanks for coming. So you have alternated between banking and public service throughout your career. So some of the cool things you've done. You joined Wells Fargo in 2019. You were the White House chief of staff to President Obama. Before that you were Secretary of Commerce in the Clinton administration and banking wise, you've worked at JPMorgan Chase, BNY Mellon and Amalgamated Bank of Chicago. So that's really back and forth. Which one do you like better?
Bill Daley:
They're very different. I've been lucky to be able to go back and forth. I've had worked with great leaders in the private sector and great leaders in the public sector, and I think there's a strength. I know some people question going in and out of government. I think what people learn in the private sector is really helpful to those who are in government and maybe only in government most of their careers. And I think the reverse is true. I think somebody who's been in government got a sense of how the government works, the private sector, much of the private sector doesn't really appreciate the challenges that they have. So I've been really lucky and fortunate to be in an industry that's great and public service.
Chana Schoenberger:
So you've announced that you're going to retire soon, imminently. What will you do next?
Bill Daley:
Am considering putting together a couple of things. I love to advise companies, I love to advise leaders. That's been a part of the role in each of the jobs that you laid out with a lot of experiences over many years. I think what I want to try to avoid is the sort of full-time being responsible in the role that I'm in right now. So I'm looking at a couple of opportunities and at the same time trying to enjoy life a little more and do some more vacations and travel. That is hard when you're at working at a level I've had the privilege of doing.
Chana Schoenberger:
Would you start your own thing?
Bill Daley:
Probably not. I had a little advising company for a while, a couple of years after I left the White House to be frank with you. And I was on a speaker's tour and that sort of thing. I maybe would do that, but probably I'd be associated with an organization that had the sort of client base that had issues that wanted somebody who's had a lot of experience to weigh in on them.
Chana Schoenberger:
Needed your advice. Yeah. Okay. So what's your view on where the economy is headed? So there's been some data points that point to a soft landing for the economy, which is obviously what the Fed was aiming for. What do you think is going to happen in 2024?
Bill Daley:
Look, anybody says they know what's going to happen, obviously is guessing. They're people much smarter than me. First of all, I think we have a very strong economy, and I know we like to be negative lately, much of America, but we have a very strong economy. Companies are doing very well. Yes, we've had a place, I think the Fed has handled this better than most people thought they would. Everybody second guesses them all the time, and that's the luxury of not being in a responsible position like the governors have. But I would say if you look at all of the predictions of the last year, 18 months that people have made the fed's been pretty consistent. Obviously they maybe came to the table a little late in most people's minds when they were talking about transitory sort of inflation. But once they got their arms around it, I think they managed it pretty well. So I would expect that you're going to have a landing sometime in first half and it'll be softer than surely people thought six months ago or three months ago or a year ago.
Chana Schoenberger:
That's encouraging. I mean, we've seen a number of interesting things recently, but inflation does seem to have gone down a bit.
Bill Daley:
And that is a result of the Fed taking action and other factors. But I'm overall, I am really bullish on the US economy on our future, where we're going. I just think we're in a enviable position when you look at the rest of the world. Yeah, we have our problems. Yes, we have economic challenges and interest has gone up, but those of us who've been around for a few years, these rates are nothing compared to historic numbers. And the problem is we got too used to the zero rates for too long. And that's part of the reason when I always said, it's like you go out and party too hard on a Friday night. When does the effect of that partying end? Is it Saturday noon or Sunday or Monday morning?
Chana Schoenberger:
Are you one of these people who earlier in your career had a ridiculous mortgage rate?
Bill Daley:
Sure, yeah.
Chana Schoenberger:
What was the most you paid?
Bill Daley:
You know what? I'm trying to remember. Back in the late seventies, I don't know. We were all at double digits, some ridiculous amount. And we all survived. You did. And maybe people put off buying a home or doing the repairs. And I remember back in the early two thousands, the people were going crazy by getting mortgages. And I used to think I'm making a lot of money, and this guy just bought a $2 million house. How the heck did he do that? Well, it collapsed
Chana Schoenberger:
And then we had the financial crisis. Fun stuff.
Bill Daley:
We came out of that pretty strong eventually, especially the banking industry.
Chana Schoenberger:
Oh yeah.
Bill Daley:
Okay. And even though it was a crisis that most people blamed on the banking industry, we came out of it and probably stronger. And I was there for the Dodd-Frank fights, and some people were predicting the end of the earth and of banking as we know it and blah, blah, blah. And I think if you look at the run that everybody's had, which has been good for the economy, our banking system is as strong as ever.
Chana Schoenberger:
So what's your outlook for banks? What needs to happen? So the banking crisis that we had in the spring of 2023 isn't repeated.
Bill Daley:
Well, obviously it's about better management, the not followed by those ban a mismatch. Now you could blame the Fed, they raised the rates too caught, but when you go back, it's the management's fault and they bet wrong. I hate to use that analogy. And they got caught. And then there was the run, which social media can fuel today like never before. But again, when you take those couple of examples off the table, again, the industry and with the thousands of institutions we have, and you take three or four examples or two that really either were sold A SVP and Republic, the rest of the industry moved on and lo predicting last spring that, oh, it was just going to be contagion and they'd be dropping every week. Oh, that didn't happen.
Chana Schoenberger:
It did not.
Bill Daley:
think over the summer and this fall, there were two banks that failed, but they were both very small and it seems like they failed for normal reasons.
And out of what, 8,000, 7,000 banks?
Chana Schoenberger:
I think it's about 4,000 banks and another 4000 credit unions. okay. So yeah, the vast majority obviously are not failing. When you look at the bank regulatory environment, which something you do a lot, what changes do you think are likely to happen?
Bill Daley:
Well, obviously with this administration and the leadership that's been put into the regulators, they're much more aggressive on issues like consumer practices and consumer issues. Obviously the basel with the capital requirements are a big change. The CRA changes that are coming are major changes in a Congressional act that was not done for years and the follow up by the regulators. So there's just heighened activity by virtue of a different administration, quite frankly, we all know change in society can only happen when the legislature acts, regulators can change it, the next regulator comes along, the next president comes along and they change that. And so far there hasn't been a lot of success by those who want to see legislation passed to address some big issues. I mentioned when we went through the Dodd-Frank fight, Congress doesn't usually like to revisit things. When they think they've made a big impact and change in the banking system, which happened in 2010, now 13 years ago. They're not coming back to that to try that again for quite a while. Maybe it'll take another crisis at some point.
Chana Schoenberger:
It was hard enough to pass the first time.
Bill Daley:
Exactly. And that's just the history of Congress. They don't deal with big issues that often.
Chana Schoenberger:
But also the cast of characters changes. Every time you have an election, you get different legislators who show up and they need to figure out what's going on and they're representing different people.
Bill Daley:
And so that's therein lies the regulators ability usually to take more actions. And you see that lately. And obviously after a collapse like SVB, the regulators feel the heat from the politicians. Everyone wants to find somebody to blame. There has to be somebody to blame. It didn't just happen. And so everyone needs a scapegoat to try to find. And the regulators often become that for politicians.
Chana Schoenberger:
Yeah, that was a crazy story. We had a really interesting time that month reporting on the banking crisis. It was obviously something that, this is the industry that we cover here at American Banker, so we just basically sort of went wall to wall on that. And it was fascinating, the idea that you could have a bank run in this day and age that's mostly digital, and yet you still have people lining up in front of the padlocked doors to a bank trying to get their money.
Bill Daley:
And the mismatch, which was at the heart of their challenge when the run started, was all out there. Everybody knew it.
Chana Schoenberger:
Right.
Bill Daley:
All you had to do was read their financial statements, listen to their earnings.
Chana Schoenberger:
Yeah, we'd written about it. Everyone had written about it.
Bill Daley:
So it wasn't as though there was some secret sauce being cooked up in the back, nobody knew it. But the speed in which it happened, as I said earlier, is really a result of this social media and the ability to spread. It used to be if a bank got in trouble, somebody had to go in a store or a neighbor told the neighbor that. There's a question about the bank. Now.
Chana Schoenberger:
Right? I mean we have a prohibition against using allusions to "It's a Wonderful Life" in our headlines because there are just so many times that you can use those. But that's what people think of when they think of a bank run. But obviously that's not how it works anymore. No, it's just tap, tap, tap.
Bill Daley:
Right.
Chana Schoenberger:
Okay. So what would be the smartest moves, in your opinion, for bank regulators to take as they reassess how they should supervise banks and set rules?
Bill Daley:
In my position, I sure don't want some regular thinking I'm giving them advice. That may come back to hurt us. Look, I think they've just got to, and I get the pressure having been in both government, they can't respond to the politicians or the moment. And today in society, we want answers immediately. We want to find somebody at fault. And I think the beauty of a regulator and those that are career people, they've got to think long-term, what's best for this industry, for this company, and not so much. And it's hard. It's really hard sort of being at the whim of the moment, either of as a result of SVB, everybody's spun up that we've got to blame somebody or somebody's got to act. There should have been some action taken by the regulators, right?
Chana Schoenberger:
There ought to be a law.
Bill Daley:
There ought to be a law and that'll solve everything. Okay. That worked out so far. We passed a lot. Congress has passed a lot of laws and it don't seem to have made this a perfect society yet.
Chana Schoenberger:
No, no, no. Definitely not. You interact with regulators constantly. So you oversee government affairs at Wells Fargo. What are regulators telling you that they want from the big banks and what are you telling them that you want?
Bill Daley:
Well, every bank has its own unique issues. We obviously at Wells, Fargo, Charlie Scharf, our CEO, Scott Powell, our COO and a whole team are engaged with the regulators on a constant basis. They obviously want certainty, they want to see results. That's what we want. There's no doubt that a bank our size and the importance of our institution as the other GSIBs to the economy to society, we're held to a different standard. Sometimes you like that, sometimes you don't like that. We always think we're being picked on because we're big and we're successful. And in society a lot of people just don't like that. And the truth is the banking industry as a whole, especially the big banks, has not really recovered from the negativity of the '08 crisis. Even though we've all been very successful and we've adapted and we've done all sorts of things with our customers and get more customers.
Chana Schoenberger:
You mean shareholders are negative or customers are negative?
Bill Daley:
I think the political system society, if you poll about big banks, you research on them. They're not exactly the most beloved institutions in society. That's true. Tech companies used to be. Now they're disliked also. But the importance of the banks to the economy is vital as we all know. So I think that negativity from '08 is still there. And some of it's just always going to be there because you're big, you're successful, everybody figures. You pay people way more than maybe they deserve or they think they should deserve. So that's real. And especially today, as the economy has gotten a little more difficult, the sort of negativity about success or bigness grows usually during periods of economic strain. When things are good and everybody's happy and everybody's doing well, then there's less sort of finding a scapegoat where when the economy gets a little tough, everybody wants to find a scapegoat. Maybe the politicians that want to blame, the president's at fault or whatever it is, or the successful companies.
Chana Schoenberger:
Okay. So how do you think banks should think about the interplay between state and federal regulations? There are a lot of states that are taking different stances on banks today. And how do banks deal with that?
Bill Daley:
It's a real challenge because quite frankly, in many ways, because Congress seems to be rather stymied doing anything well
Chana Schoenberger:
On purpose. I mean a lot of the Congressional representatives will tell you that they came to Congress with a mandate from their constituents or they feel they have one to do what they're doing,
Bill Daley:
To do nothing.
Chana Schoenberger:
Well, either nothing or actively stand in the way of something.
Bill Daley:
But if you look at our system was created that you have to have compromise to work. Now this is not a parliamentary system, obviously. So if people come to Congress to say, I just don't want to do anything, then nothing gets done. And these major problems, whether it's immigration, whatever it is, never get dealt with in a serious way. And because nobody wants to compromise, which is ridiculous. But that's the way our politics is right now. Hopefully at some point that begins to change. I must say Congress, at least over the last two and a half years, has acted on a series of big issues. You could argue whether you like it or not, but they have had a lot of success in passing stuff up until now. I think it's pretty hard in the last year of the presidential reelection coming to expect Congress to do anything major on issues other than just keep the doors open and keep the lights on.
Chana Schoenberger:
Well, they're working on that. It's not necessarily going well.
Bill Daley:
No, it's not. And they've kicked the can again now for a two-step dance sometime in early twenty-four.
Chana Schoenberger:
I find that so interesting because I'm a big fan of the series West Wing. I dunno if you watched that and there was a
Bill Daley:
I lived it for a while. It was
Chana Schoenberger:
Exactly, and I've never worked in government, so I only see these things as a civilian and a journalist. But there was a plot point, and this show is 20 years old, twenty-five years old now at least. There was a plot point where there's a government shutdown and it was like an outlandish plot point at the time. You would never shut the government down. And now it's happened
Bill Daley:
Fairly regularly or the threat of that or the threat of it all the time. And there's real consequences when I was there with President Obama in '11, and we were faced with that, there's real consequences that happen. And some people act as though it doesn't matter. Well, you tell some military person somewhere in the world that his spouse back in the U.S., that you may not be getting a check at some point or the risk of that or the other benefits they get may be at risk. That puts an enormous stress on a family and communities where they depend on the government to be part of that community. So again, people like to talk without having the facts about the consequences of these things. And I think it sends a message to the rest of the world at a time where democracies versus authoritarianism is a real debate like we haven't seen in a long time that they can point to disruption, they can point to, oh, see, they can't function, they can't get things done, they can't address their border issues, they can't address many of these issues, and that's what you want to have in our country.
And then the authoritarianism comes in, which is rather dangerous. And I think it's extremely dangerous for the economic interest of private sector. Obviously if you believe in open markets and capitalism, people should be a little more aware of what could happen.
Chana Schoenberger:
Well, that's what banks are all about. Yeah. And the issue is of course, that there are certain states that have said banks are not allowed to be involved in certain issues because if they do, they can't do business with the state. And then other states have said banks must be involved in these issues. And if they're not, then they can't do business with the state. So is this a matter of the banks have to choose which states they want to do business in and then do that thing?
Bill Daley:
Well, for a national bank like ours, that's a big challenge. Unless they're saying, you can't do this sort of business in our state if you don't agree with us on our politics. So it may force a bank to say, okay, I'm not going to do that business.
But it's a real challenge for those of us that are national banks and I get it. And we have employees and customers that are all the way from the far left all the way to the far right. So you're not going to make 'em happy in the positions you take. You just have to understand that. And hopefully the politicians will look at the laws they want to pass to help the economy in their state and not just punish people because they don't agree with them on a certain issue like abortion, on paying for healthcare for your employees. That's something we view as really important as a health issue. Others look at it as a political issue or a weapon to beat up a business that's employing people, adding to the economy. And then the blue states rush to do their thing. And the consequences of that, I believe, will be very detrimental to those states that aren't a little more realistic about the impact that this may have long-term on their citizens and on the economy in those states.
Chana Schoenberger:
The esg issue too.
Bill Daley:
They think it's a freebie to do this because everyone will just dance to our tune. They'll want to do business here, whatever that type of business that they'll try to stop you from doing. And as we all know, money flows pretty easily today to different parts of the world. And there are always forty-nine other states
And a number of other countries around the world.
Chana Schoenberger:
Interesting. Okay, so you also run public policy. How can banks do a better job of serving underserved groups and how do they get their message out there? In this world of social media and everything's on Tiktok and Instagram.
Bill Daley:
It is a challenge. There's no doubt that the banks in our important piece of trying to address a lot of societal problems, the ultimate organization that must address these issues are the public policy, the government. And they've got to set out the guidelines, set out the criteria, and then we can respond to that. And that's what the changes coming in CRA. CRA was created as reaction to redlining, which was everywhere. So that's public policy action that we have to respond to. And I think I would say this about larger institutions for sure. And most banks obviously have a real concern about the needs of those less advantaged than us. And we try to do all that we can. We can only do so much again then it's the ultimate arbitrator of this as should be the government and those who address in policy and requirements should be the government.
But I think as an industry, the banking industry is not only extremely sensitive to the issue of trying to be in the communities and be there to help the challenges of individuals or the community. I think we do an awfully good job of doing that. It's a major issue that we talk about. Charlie Scharf, our CEO, addresses it quite often and we're focused on it, whether it's the commercial bank, the consumer business, each of our business, credit card business, it's a big piece of it. Obviously you have to. And the amount of good we do with our foundation, we give away $300 million at least a year out of our foundation. That's a huge foundation. It's a lot. Can that move the needle in any one town on a core issue like homelessness or that? No, but we can add to the other efforts that are being done or the government is doing and be there in the communities to send a message that we care about the communities. We do business, we want 'em to be stronger. That helps us in the long run too. We're doing business in a community where people are successful, we'll be more successful.
Chana Schoenberger:
We did an interesting story earlier this year. It was in the summer, so right around the time, the
Bill Daley:
I didn't see the article or the series, but I will try to get it. It is a complicated, difficult, obviously issue of how you fundamentally change the economics of a community, the importance of the bank's. But it is really, oftentimes it's about building that infrastructure that's not there that starts with the jobs in that community and the training, whether it's the schooling, job training, very complicated. And we've all been working on these as long as I've been in and around banking and government, which is 40 to 50 years. This has been a topic that continues to challenge us all. And we're all trying to find ways. We'll never solve it, but address it. And we've just got to keep moving forward on it and not make, as Bill Clinton used to say, the perfect, the enemy of the good.
Chana Schoenberger:
Right. Definitely. So last question, because running out of time, an interesting story that we wrote in the last year or so about Wells Fargo, we write about you guys all the time. I know you do good things, bad things. This was an interesting story.
Bill Daley:
Well, obviously digital mobility has added great opportunities, which weren't there. I think it's not abandoning them, and that's easy to say, harder to do, quite frankly, especially as much of rural America has shrunk. And so, and Saul Van Beurden, who runs our consumer business now has visited that branch or is in the process of going to visit that branch. And I think celebrating the fact that this is still very important to us
Chana Schoenberger:
Wear a warm hat.
Bill Daley:
A very warm hat and make sure you go probably between May and September definitely. But highlighting that and celebrating that, knowing that we've got to bring the capabilities for those people that's not going to have a branch with 20 people in it and get them to understand the capacity that we have with digital that they may be able to take advantage of. Everyone's been predicting the end of branches for as long as I've probably alive, but they don't seem to be dying. No, people still like to go in and talk to someone, maybe for a whole bunch of reasons, but they're important. They've changed. You don't have the number of people in a branch and people are used to the kiosks or whatever they're called, but it's being there. And I do really believe, and I do believe the banks, whether they're community banks or global banks or regional, large regional banks, we all get that. And that's a big piece of our mission is to maintain that sort of relationship with communities. We make mistakes. Yes, we do, but I think we learn from our mistakes and we try to correct them and try to move forward. And that's why I've enjoyed being in the industry, being around leaders like Charlie Scharf and Jamie Dimon and others. I think they're well motivated and I think they really get the important role that they play in society, in our economy.
Chana Schoenberger:
Great. Well, thank you so much. I appreciate you coming up here today.
Bill Daley:
Great, Chana, appreciate it. Have a nice day.
Chana Schoenberger:
You too.
