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 is the boss of Wells Fargo (WFC), 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 that 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. The stock was around $35 when Stumpf took over in the summer of 2007. At $33 on Thursday morning, it was about 7 percent off that price.
Most of the other megabanks are trading at small fractions of where they were in that period. Wells Fargo is also the only one trading above its book value, essentially the underlying value of all its parts.
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.
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?
Stumpf: 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.
So what do we do?
Stumpf: 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.
Washington is fighting over tax policy and government spending. Should taxes go up for the wealthiest people?
Stumpf: I'll speak as an individual. Whatever is asked of me as a taxpayer, I'm willing to do. I'm the luckiest guy on the planet, so I'm all about growing our way out of this situation.
The Justice Department recently accused your bank of mortgage fraud. What's your response?
Stumpf: 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.
Some people on your board have what seem like close ties to your bank. Two have immediate relatives who work there, and not as tellers but as people who make nearly $300,000 or $800,000 a year. A board is supposed to be independent. How do you defend that? (Phil Quigley, a board member and the former lead director, has a son who works at Wells Fargo Securities. Cynthia Milligan, another board member, has a brother who works at the bank as a wealth management adviser.)
Stumpf: We have wonderful ethnic, geographic, gender and experiential diversity on our board. Five of our board members are persons of color, five are women, and they come to us with different disciplines and different geographies. In the case of Phil Quigley, he has reached his retirement age and he will not stand for re-election. His son works in one of our groups in southern California and he didn't even know his son had applied for a job until he got it. And I don't recall if Cynthia Milligan's brother is now retired or not, but those are the only two (board) members that I know that have family members (at the bank) and both of them enjoy very high re-election numbers. If you look at the SEC and New York Stock Exchange independence rules, they pass all of those. I never even hear it as an issue.
People hate bank fees. Bank of America just decided to postpone new fees on its checking accounts. Where do you see this going?