WASHINGTON — The nation’s top bankers came to account for themselves Wednesday to a wary public, displaying a blend of financial might and humility as they pledged to build public trust with greater lending and fewer perks.
“We’re Americans first and bankers second,” John Stumpf, president and chief executive of Wells Fargo, told a House committee.
“As an industry, we clearly made mistakes,” added John Mack, chairman and chief executive of Morgan Stanley.
Eight chief executives sat at a witness table for more than six hours Wednesday assuring lawmakers that an infusion last fall of $165 billion in taxpayer money to their banks was good for consumers.
The money was part of a $700 billion financial rescue approved by Congress in October. Lending has increased, they told the House Financial Services Committee, and CEO bonuses have been eliminated.
And while some lawmakers said they hoped that by their testimony the bankers could gain some credibility, some of their inquisitors weren’t convinced.
“America doesn’t trust you anymore,” declared Rep. Michael Capuano, D-N.J.
Added committee chairman Barney Frank, D-Mass: “There has to be a sense of the American people that you understand their anger.”
To a man — and, yes, all eight CEOs are male — the executives said they would pay back the taxpayer money by 2012 and sooner if they could.
Remarks from Wells Fargo president and CEO John Stumpf
The following are remarks as prepared for delivery Wednesday from Wells Fargo & Co. Chief Executive John Stumpf before the congressional Committee on Financial Services in Washington, D.C., regarding the federal government’s Troubled Asset Relief Program. Wells Fargo is Colorado’s largest bank.
San Francisco-based Wells, which recently acquired Charlotte-based Wachovia Corp., got $25 billion from the bailout package.
Mr. Chairman and members of the Committee, I’m John Stumpf, president and CEO of Wells Fargo & Co.
Our company has been serving customers for going on 158 years. We’re an American company. Virtually all our businesses and team members are in the U.S. We’re in all 50 states.
We are a community bank. We have 281-thousand team members — who earn fair and competitive wages and benefits, including health care. They live and work in thousands of communities across North America — from big cities like Los Angeles and Miami to small towns like Spearfish, South Dakota and Alice, Texas.
I’ve been a community banker with our company for almost three decades. I know what it’s like to be on the teller line and on the banking floor working with our customers. I personally have served customers in cities and towns across Minnesota, Colorado, Texas and now California.
Across the country many of our customers are facing difficult times. Now, as always, we want to do what’s right for them. We’re very proud that Wells Fargo has been open for business for our customers. We never stopped lending. In the last 18 months — when many of our competitors retrenched — Wells Fargo made $540 billion in new loan commitments and mortgage originations. They are as follows:
Last quarter alone, we made $22 billion in new loan commitments and $50 billion in mortgages — a total of $72 billion in new loans. That’s almost three times what the U.S. Treasury invested in Wells Fargo. With the merger, we have reopened lines of credit to some Wachovia customers who previously had been denied credit.
We do business and lend money the old-fashioned way — responsibly and prudently. As a result, we earned a profit last year of almost three billion dollars.
We have not used any of the government investment for dividends, bonuses, or compensation of any kind — nor will we. We have the highest credit ratings currently given to any bank in the country.
We understand the very important responsibility that comes with receiving public funds. We are always careful stewards of our shareholders’ money. The investment by the government is being used in the same prudent way. We have never been wasteful. We spend money to support the business and make a profit for our investors. We are frugal. Last year, our overall corporate expenses actually declined one percent while our revenue rose over seven percent.
We said from the start that we’ll use the government’s investment to help make more loans to credit-worthy customers. We said we would use the funds to find solutions for our mortgage customers who are late on their payments or facing foreclosure — so they can stay in their homes. We also said we would report on our progress. We have done just that.
We recently announced our first dividend payment to the taxpayers for their investment in Wells Fargo preferred stock. Our first dividend payment on their investment was more than a third of a billion dollars. We’re Americans first and bankers second — so we see this taxpayer investment, first and foremost, as an investment in the future economic growth of our country. We’re proud to be an engine for that growth.
Last quarter we made $22 billion in new loan commitments. Our average outstandings — on a linked quarter annualized basis were:
