John Stumpf, chairman and CEO of Wells Fargo, sat down with American Banker for our 2013 "Banker of the Year" profile. During the hour-long, wide-ranging discussion, Stumpf explained why he thinks new regulations have gone too far, why the movement to break up the banks won't go anywhere, and why bankers should be excited about the digital revolution. These are edited and condensed excerpts from that interview:

Do you think you or other big-bank CEOs can do anything else to change the general perception of the mortgage industry and big banks' roles therein?

Yes; this I think has as much to do with the economy as anyone else. Clearly our industry had a role in the bubble that led to the downturn in 2008. A lot of the companies who are most responsible are no longer here. But since that time we've had a very tepid recovery … We are still not back where we need to be, and as long as we're not back to where we need to be, there's going to be a dialogue, and an attitude, where banks are still going to be in the hot seat.

That being said, it does not mean that we should not and will not continue to step up our game. Our corporation is the largest giver of large corporations … and we've forgiven all this principal to keep people in their homes. A lot of other industry participants are doing the same things. It's just going to take some time. I mean, if you would say, "Do you like big" — put whatever you want behind "big." "Do you like big government?" "Do you like big banks?" "Do you like big this or that?" Most of that wouldn't get a lot of advocacy today. I think that's a reflection more of the overall economy and people's frustration of, "Why isn't this working?"

Do you expect the talk about breaking up the big banks, and the related legislation, to become anything more than rhetoric and debate?

All banks are important to the economy. … I don't see the wisdom in taking some of our assets, from financial services companies of all sizes, and the large ones, and making them less competitive. I don't see how that helps America. I don't see how it helps America to have some of our biggest corporations in America having to deal with foreign banks when they want to do transactions — I just don't think that makes any sense. I don't think that's going to happen.

How much is what's going on with JPMorgan Chase generally and Jamie Dimon reflecting on the rest of the industry? How much is it making your job more difficult?

First of all, Jamie is a very good friend. I have a lot of respect for him, and he's been very transparent and honest about what's gone on, and the strengths and the challenges within the organization. We all have those, and I don't know that any one is bigger than any other one. We all have plenty of work to do.

Since the financial crisis, we've seen most of the other big U.S. banks take turns going through periods of scrutiny over business or regulatory problems. How much do you worry that Wells Fargo's time in the harsh spotlight is going to come?

I don't know that there's necessarily a time for different organizations. We all have challenges. Every organization is different, and the DNA of this company tends to be much more community bank DNA. And we also have a culture here and a vision and a set of values that reflect that more conservative nature of doing business.

Most of our business is in the U.S. It tends to be in what I would call the real economy — we don't arbitrage one tax authority against the other or trade in metals and other things as a dominant part of our business or even a minor part of our business. … So if you talk about risk of litigation and regulatory risk and headlines, we all have issues. Sometimes I think they're unwarranted and unfortunate, sometimes we settle those things to get that behind us. But I worry a lot more about, are we getting up every day and living honestly around our 'Vision and Values'? … I don't worry a lot about what one reporter or one attorney general or one litigator might say about us, because I really can't control those things.

So what is your strategy for dealing with reputational and regulatory issues that do come up, including the New York Attorney General's lawsuit against Wells for allegedly violating the 2012 National Mortgage Settlement?

I think that would be a great example. I think that's very unfortunate. I don't think the facts fit, I don't understand the facts as the AG there understands them. In New York state we've already done 26,000 modifications — for every foreclosure we do there we do six modifications, that's one of the highest ratios we have. And we made a global settlement with 49 state AGs, plus all the federal agencies. There's a monitoring group, another six AGs — and what we're hearing from the state of New York is inconsistent from what we're hearing from them. … I don't know the whole deal, because I didn't read the whole complaint. But in some cases like that, you just say, "No, we didn't do those things, and we'd rather talk with you, and if there's a process you want us to improve, we can work on that." But in other cases, if we believe that there are some issues we could resolve, we'll resolve them. I mean, I'm willing to make a deal, I'm willing to give customers the benefit of the doubt, to settle things. On the other hand, there are certain cases where it's without merit, and on those we're going to stand up.

In terms of the regulatory cycle since the financial crisis — the run-up to new rules, enactment and industry response — where are we?

I think we've gone too far. I know that not everything has been done. I am a big believer in good, effective regulation. I mean, I would hate to drive a car without having traffic laws and rules, and frankly, cops that enforce those rules. I wouldn't get on the roads without those. The same way in our industry, when I look at the past practices that led up to 2008, there was regulator shopping going on, there was a patchwork of regulations and there were a lot of regulators who weren't enforcing what was on the books already. So now we have this plethora of new regulations, and I worry that it's going to be applied with a blunt instrument, to all industry participants. It will be hard to comply [with] for small organizations, who don't have the ability and the team to deal with that, and it will be inconsistent with its application.

What's the best regulation to come out of the financial crisis?

I've not seen all of them yet, but the discussion around making sure that everybody plays by the same rules, if this happens in practice, for nonbanks and for banks. … There is a part of this country that does not bank with a bank, they bank with individual nonbank providers for their liquidity, and I have not yet seen where that industry and those people are held accountable and put on the same level playing field as banks of all sizes. So I think that's the theory. If that ever happens, that will be helpful to everyone, including all the providers held to the same rules.

Do you see the rise of mobile banking as more of an opportunity or a challenge?

I absolutely see it as an opportunity. Any time we can engage with customers and help them learn more about the products and services … it adds to the value stream. When I got into the industry 38 years ago, in 1975, the average retail customer visited us on average eight times a month — 7.5 times on average were in the "store," the branch, between 9 o'clock in the morning and 3 in the afternoon. And half the time on average was with this new machine called the ATM. Today customers are visiting us 50 and 60 times a month, and only on average two times in the stores. Just think about it: you're online, you're on your mobile [phone], and mobile has been the most dramatic distribution change in the last 30 years because your provider, your bank can be with you 7/24. You can sleep with your bank! You can go to the ballpark with your bank. You can be in a movie, and during a boring part you can get information on anything you want.

But will you be able to monetize the digital revolution?

If the singular focus is how do you monetize any particular channel or product or service, you might have too narrow a view. You need to open up the aperture on your camera and see the entire relationship. … We look to deepen relationships, whether it be consumer, small-business, large corporate. If the overall relationship is valuable to a customer, they will return value to us. So as we built more channels of distribution, as we went from store to ATM to phone to online to mobile, people just used them more. I couldn't say any one of those was a tipping point or any one of them was profitable in and of themselves. The overall relationship is profitable, and the more channels they use, the stickier they are.

It's based on your age, your affluence and the [banking] activity you're doing. My parents, God bless them, are still with me. They go to the bank on the day when the cookies are there — they like certain cookies, and they like the personal relationship. My children, on the other hand, rarely go into a bank — they do most of their business online. So age has something to do with it. And sometimes if it's an affluent client, they want a team around them. … So this is why we take the view that stores are still important. And we're not shrinking our store distribution. We might change it — we might not have 5,000-square-foot stores anymore. We're trying a 1,000-square-foot store. But stores are still important to the delivery model. And when customers tell us they're not important, then we won't build them anymore.

You hit the mandatory Wells Fargo retirement age in five years. How do you want this company to look when you give up the CEO role?

I hope that we have even a stronger commitment to our 'Vision and Values.' I think we need to be more diverse in our senior ranks of the company. We have the most diverse board of any corporate board that I know of, and we also have a diverse workforce. [But] we don't have enough diversity at the more senior levels, so I would hope to see that.

I think as the industry changes and customer behaviors change, digitizing the enterprise is going to be an important part. Those are tactical, and they're important things. But the culture, the way we do business, the deepening relationships are going to be sacrosanct, and that's why the company has been successful … now into our 162nd year.

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