Friday, April 12, 2013

Wells Fargo CEO calls for pause before more regulation

Wells Fargo’s CEO called Friday for a break in the rolling out of any additional government regulations that would affect the country’s largest banks, saying existing policies must first be given “a chance to work.” 

John Stumpf made the remarks during a earnings call in which the San Francisco-based bank reported record profit of $5.2 billion for the first quarter, an increase of 22 percent from the year-ago quarter. The higher earnings came despite the bank’s revenue falling to $21.3 billion, a decline of $300 million from the first quarter of 2012.

Before ceding the call to Wells’ chief financial officer, Stumpf launched into his commentary against more regulation.

“There are ongoing discussions about the need for more regulation and other changes,” Stumpf said. “We do not need additional legislation aimed at big banks. Important and significant regulatory changes have been made since the financial crisis, and we need to give existing regulations a chance to work, especially now when all of our energy should be focused on creating growth and new jobs.”

The day before, Stumpf and other members of the Financial Services Forum met with President Barack Obama at a White House event that was closed off to the media.

The forum, which is based in Washington, D.C., and whose members are CEOs of major U.S. financial institutions, says its mission includes pushing for policies that encourage savings and investment. During the meeting with the bank heads, Obama talked about ways to boost business confidence and the economy, according to Bloomberg News.

A Wells Fargo spokesman confirmed Friday that Stumpf attended the White House meeting.

Following the downturn, the federal government created regulations, including those in the Dodd–Frank Wall Street Reform and Consumer Protection Act, that have become costly for banks to comply with but are meant to prevent another major economic downturn. For example, every year, major banks, such as Wells Fargo and Bank of America, must participate in so-called "stress tests" intended to gauge how they would fare in financial crisis.

Stumpf, during the earnings call, touted the importance of banks to the country.

“Banks fuel and support economic growth, and we need banks of all shapes and sizes to serve the diverse needs of a diverse economy,” he said.

“All banks add value, and big banks have unique resources and capabilities to help the economy, including coast-to-coast convenience, a broad range of products and services and technology innovations serving large and small customers alike.”