Wells Fargo CEO John Stumpf spoke with FOX Business Network’s (FBN) Maria Bartiromo about the banking sector and The Federal Reserve. When asked about the upcoming decision on interest rates, Stumpf said, “I do expect” the Federal Reserve to raise rates on December 16th” and that “it will likely be a quarter point.”

Wells Fargo CEO Talks Wall Street Regulation, Fed, Energy

Excerpts from the interview are below.

Wells Fargo CEO on whether he expects the Federal Reserve to raise rates on December 16th:

“I do expect it.  It will likely be a quarter point from close to nothing.”

Wells Fargo CEO on whether a quarter of a point would do anything:

“The debate is bigger than the rate.  But even if there are — that increase happens and some other increases next year, I think it’ll — those are short rates.  It will have a balancing to the curve or a flattening to the curve. And I don’t think it’s going to in any way dampen demand for credit…I mean, there’s obviously this belief that somehow you’re going to kill the mortgage market.  My first mortgage was at 8.5 percent. My second one was 11 percent.  And I was lucky to get the money. I mean, if you’re under age 40, you think 3 percent is normal.  It’s not.  But even if it’s — even if mortgage rates go up 100 basis points, that’s not going to kill the mortgage.”

Wells Fargo CEO on Hillary Clinton’s op-ed this morning on the regulatory environment:

“Well, first of all, we’re a real economy bank.  So we deal on Main Street, on the back 40 with ranchers, farmers, small business men and women and large companies.   And the policy statements, you know, it’s always the devil’s in the details.  I’m in favor of anything that helps grow the U.S. economy, makes it easier for us to lend more money to more consumers, helping them succeed financially.   So, you know, again, it’s just an op-ed kind of thing.   The one thing that’s interesting, though, is taxes.  We are the second highest taxpayer in the U.S. as a corporation.  Last year we spent — we paid over 31 percent of our earnings in taxes, over $7 billion.  So — and that’s not unique for us.  Our industry pays a lot in taxes in the U.S.”

Wells Fargo CEO on growth in 2016:

“You know, actually, I think the economy will be slightly better than what people are thinking or slightly better than what the numbers have been showing now.  You think about it.  We’re in a 5 percent unemployment rate.  Next year we’re going to get into the 4 percents.  That hasn’t happened but once or twice in my 40 years in the industry… The gas tax, so-called, or the gas benefit from, you know, the price is down, has not yet been all spent.  Balance sheets for consumers are being cleaned up.  Autos, we have had three months in a row where the annualized sales of used, new vehicles is over $18 million annualized sales.   So there are a lot of things to be excited about.  Clearly there are risks, you know, the geopolitical risks, the risks around the world but — so I’m a bit more optimistic than others are.”

Wells Fargo CEO on loan growth:

“In fact, we’re, today, America’s largest lender.  We love helping customers, we love lending money, so autos are booming.  Commercial real estate is doing very well.  We had a pretty good housing season.  Not perfect; we need to get more but more purchase money business there.   And the middle market, we’re doing quite a bit of business there.  So last year our core loans grew almost 9 percent, which is a very good number.”

Wells Fargo CEO on the energy business:

“Right, about 2 percent of our loans…And then, you know, obviously, that means that’s the whole gamut, from E&P to midstream to the services business.  The services business will get hurt the most because, you know, that’s our whole business of service a well.   If wells are being shut in or not being developed, they’re going to get hurt first but we’re providing for that.”

Wells Fargo CEO on whether he is done in terms of cutting back:

“Yes.  I think that’s right.  We have 265,000 team members.  We’ve been pretty steady at that number.  We’re always watching our expenses.  For example, this year, we’re down 27 percent on nonessential travel and entertainment.   So we’re always watching that but we’re reinvesting in new distribution, more convenience, more products, surely in compliance and all things risk.”