When: Today, Friday, February 17th
Where: CNBC’s “Squawk Box”
Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Wells Fargo Chairman & CEO John Stumpf today on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET).
All references must be sourced to CNBC.
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STUMPF ON LOANS:
JOHN STUMPF: TODAY WE HAVE ABOUT 925 BILLION IN DEPOSITS IN OUR COMPANY AND 770 BILLION OF LOANS. WE TYPICALLY ARE 100% LOAN TO DEPOSIT. I WOULD LOVE TO MAKE 150 BILLION OF LOANS. THAT WOULD BE TERRIFIC. I HAVE MONEY SITTING ON THE SIDELINE. AND TODAY IT TAKES ONE PERSON TO SAY YES AND TWO PEOPLE TO SAY NO.
STUMPF ON PRIME CREDIT:
STUMPF: HALF OF MORTGAGE ORIGINATORS TODAY DO NOT MAKE LOANS TO ANYBODY OTHER THAN A PRIME CREDIT.
BECKY QUICK: WHY IS THAT?
STUMPF: BECAUSE THEY ARE CONCERNED ABOUT REPURCHASE. ABOUT THE BUYER OF THE MORTGAGE PUTTING IT BACK ON THEM. PUTTING IT BACK FOR TWO REASONS. DEFECT. THERE'S A DEFECT IN THE DOCUMENTATION, OR A DEFAULT. IF YOU'RE NOT SURE YOU CAN DO THINGS RIGHT AND CROSS EVERY T AND DOT EVERY I, THE BEST WAY TO PROTECT THAT IS JUST ONLY TO DO PRIME CREDIT.
STUMPF ON FIXING FANNIE AND FREDDIE:
STUMPF: I STILL THINK THE GOVERNMENT NEEDS TO BE INVOLVED IN SOME WAY BECAUSE THERE'S $10 TRILLION OF MORTGAGES IN THIS COUNTRY. ADD THAT TO CREDIT CARD DEBT, AUTO DEBT, COMMERCIAL DEBT, THERE'S NOT ENOUGH LIQUIDITY. SO YOU NEED A SECONDARY MARKET. AND I THINK THERE IS WHERE THE GOVERNMENT CAN PLAY A ROLE. IT SHOULD BE EXPLICIT. THEY SHOULD GET PAID WELL FOR THEIR RISK AND IT SHOULD BE A CATASTROPHE KIND OF RISK SUPPORT. SUCH THAT ENOUGH PRIVATE CAPITAL WOULD STAND IN FRONT OF ALMOST ANY SITUATION.
STUMPF ON WELLS FARGO NOT BEING TOO BIG TO FAIL:
STUMPF: IF I SCREW UP OR OUR COMPANY OR OUR TEAM SCREWS UP, OUR COMPANY, WE SHOULD FAIL. FAILURE IS AN IMPORTANT PART OF CAPITALISM. AND SIMPLY HAVE TO JUST LOOK AT THE CAPITAL STACK, FIRST WIPE OUT YOUR COMMON STOCK HOLDERS, THEN YOUR PREFERRED STOCK HOLDERS, THEN YOUR UNSECURED CREDITORS, THEN SECURED CREDITORS. THERE IS PLENTY OF MONEY THERE TO COVER ANY SCENARIO. SO WE ARE NOT TOO BIG TO FAIL.
STUMPF ON US BANKS GOING STRONG:
STUMPF: OUR INDUSTRY HAS MORE—IN FACT, WELLS FARGO HAS MORE CAPITAL THAN I THINK WE'VE HAD EVER IN OUR HISTORY. THE INDUSTRY HAS MUCH MORE CAPITAL. THAT'S ONE OF THE STRENGTHS OF THE UNITED STATES. OUR BANKS ARE EITHER IN VERY GOOD SHAPE OR RELATIVELY GOOD SHAPE. THESE FEED THE REST OF THE WORLD.
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