Friday, October 11, 2013

Wells Fargo CEO calls for end to Washington 'logjam'

Wells Fargo's CEO called on Washington officials Friday to end a government shutdown that had entered its 11th day, calling it "troublesome."

A prolonged shutdown and potential U.S. default are "unnecessary," said John Stumpf, who implored government leaders to "set aside partisan differences" and "break the logjam." The head of the country's fourth-largest bank by assets also warned that the crisis "will likely create new needs" for Wells Fargo's customers.

Stumpf''s comments came during the San Francisco-based bank's third-quarter earnings call. Before the shutdown and uncertainty over a U.S. default, the U.S. economy was experiencing moderate growth, with gains in consumer spending, business investment and employment, Stumpf said.

But lenders say the shutdown is hurting the economy and having an impact on businesses, who were already feeling uncertain about the economy and reluctant to borrow. The shutdown has made them even less likely to take on additional debt or spend cash they've saved during the recent recession, lenders say.

Asked by an analyst on the call whether the shutdown has begun affecting sentiment among the bank's customers, Chief Financial Officer Tim Sloan said it's too soon to tell.

"Surely what happens in Washington is not helpful," Stumpf said.

Here's a look at other highlights from the earnings call:

  • Sloan doesn’t expect any relief from the refinancing slowdown. If mortgage rates remain where they are, he said, the bank will see lower mortgage originations in the fourth quarter.
  • Stumpf said a smaller type of branch the bank is piloting in Washington, D.C., costs 40 percent less to operate than traditional Wells Fargo branches. The new “neighborhood" branches allow Wells to open them in places where it might not have the space for a traditional branch, the bank has said. Stumpf said more of the smaller branches will be opened. "We don't know how many yet."
  • Wells Fargo wants more of its customers to have a credit card with the bank, which is why it's partnered with American Express. Under that deal, announced in August, Wells will be issuing credit cards accepted on the American Express network. Stumpf said about 36 percent of Wells' customers have a card with the bank. That’s up from around 18 percent after the bank bought Wachovia, but Stumpf wants it to be higher.
  • Five years ago this month, Wells Fargo bought Wachovia. Stumpf mentioned the anniversary. "Five years later, we couldn't be more excited about the future," he said.