John Stumpf, Wells Fargo chairman & CEO, shares his thoughts on where the “purchase money business” is likely headed, along with banking, and the housing recovery. See John Stumpf CNBC interview below.
John Stumpf Video and computer transcript below
John Stumpf Mortgages: ‘Don’t Kill the Golden Goose’
squawk box is coming right back. welcome back. donald stumpf wells fargo’s ceo. we haven’t talked about where you think the mortgage market will go as it relates to the treasury market and the economy. well, as rates increase, of course, refinances will renew us. the $64 question is there enoughbuilt-up momentum in the market is up that the purchase money will recapture or capture some of that reduction. i actually think housing is clearly healthier than it’s been. there the a lot of talk of what happens with gse reform. we saw with corker and warner across the aisle have a proposal out there.you like that proposal? i like parts of it. i’m nor interested in thejourney than the destination. first of all, the government hasbeen involved in housing since the ’30s and americans are inlove with the 30-year fixed rate mortgage. so if you take that asprecursor, i’m not sure it should be. should it be? i don’t know.i know this we can’t kill the golden goose, housing is critically important. the optionality is with the customer to pay us off early. then you think i think have to help liquify or sell. when you look at other countries and banking systems. they don’t have a po. correct. what does that do to the banking business? a lot keep them on portfolio. again, this is unique the largest mortgage market on the planet $12 billion. it dwarves our market. we need a secondary market. some say you can do that. you may be, let’s take incremental stems. so we test and learn. we don’t want to do this in one fell swoop, 20% a year. i don’t know what the destination is? that optionality is key,correct? it’s a great loan for a consumer. i can pay you off army.if rates go to 6% next 84, i can’t go to a customer and say, be i the way, i don’t like this deal any more. right. if the rates go to 2% next 84, i don’t like the deal. what do you think will happento housing rates? i think housing prices will continue to drop.this is a bargain, there are three important this ipgs to boy a house, what do you make, what does the house cost? what is the financing costs? housing is black to 10 or 20 years ago levels, financing is at 50-year levels. it’s a bargain. so if you were born after fine 80, you think 4 sponsors a normal rate. it’s not, my first rate was 8%. my second one is 11%. my parents had like 16 or 17%. yes, so these are fabulous rates. real quick. on the famous or infamous issue of too big to fail, it’s too big to ask. you are worried about a hit. a pretenders.diversifying. getting involved. there has been another billproposed in washington around too big to fail banks. your bank would be included around capital pharmas and other things.where is that debate an where do you stand on what needs tohappen still? first of all, my.is the i don’t think any kane if anyindustry especially bafrging should be too big to fail? do you think banks today are too big to fail? it can be unwound in a situation where the economy is falling apart at the same time? i don’t know if are you talking about ten at the same time, let’s talk about the episodic where one company goes off the rails, if the way youing will at the legislation title one, title two paragone, frank, the enkrossed liquidity and capital and debt holders should be at risk. you put it altogether in a pot, you got 30 or 35% coverage. so and that’s the key here. everybody ought to take a haircut. i get it in a one off situation that would work. i wonder if it works in 2008. again, then i don’t know working with 100 banks is better tan working with 10 or 4 or 5. so i’m not saying that, you know, i guess what i’m saying is that if you look at the one off or even two off, the key is, i think there is processes, you know, in place today, legislation and other things that have made that a very unlikely event and an event that i don’t think would impact taxpayers. john stumpf thank you for coming in, a whole hour early. this is mac95 sent. this is like the easiest hour of my day. you guys get paid for this.shocking? it is shocking. we are not having the ploy i don’t see you have. team members. team members. i know, okay.whatever. john, thanks. my pleasure. when we come back, we will
Fed’s Move Will Not Remove All Volatility: Expert
John Stumpf, Wells Fargo chairman & CEO; Gary Stern, former Federal Reserve Bank of Minneapolis president, and Alfred Broaddus, former Richmond Federal Reserve president, provides perspective on how the Fed has dealt with the nation’s economic problems and its impact on Capitol Hill.
it deals with cisco in the future. let’s get back to our fedconversation, we have been talking about tapering. former fred al brottus here and minneapolis gar stern is here and our guest host is wells fargo chairman ceo john stump. leave liesman asked about it, how devastating is it going to be to watch the fed make this transition? and, al, i know you already mentioned a little bit you think there is going to be volatility around this, do you think that is going to be devastating amount of volatility? i don’t think it has to be devastating and i don’t think it has to be ugly inevitably the first step which i think you can argue occurred yesterday was going to get a reaction. but to me, and you may have continued volatility to some extent. i think the key is for the fed to keep the public as fully informed of it can of what it’sthinking, of what its own uncertainties are and where it will go under certain circumstances. i think what the chairman said in the chair conference is a step in the right direction. it’s not going to eliminate all volatility. it can help to moderate and keep it contained. i think al is exactly right on that. this has to happen.we want to get back to normal. it’s not been normal t. fed hasbeen very accommodative and, you know, think of it. we’re four, five years into this. when is this going to start to ppen? it sounds like you think we have began to little too long. well, you know, i’m not a big fan of this much accommodation this late in the game, because i think the benefits from it. the effectiveness is not there. it’s not there, also it helps mask the things that should be happening on the fiscal side. so, but this is going to happen, one of the impacts of qe, it reduce volatility. you expect to see volatility. so people will overreact on the upside and the downside. we said we all know it’s in the future. it’s looming.knowing something is coming is like knowing you will get ashow. we’re all waiting for it. it would be nice to get it out of the way, wouldn’t it? you would think people would position for. you know. i think the fed has worked very hard to try to containvolatility. they won’t succeed for one very obvious reason. the incoming information on the economy and global developmentsand so forth won’t be entirely consistent with what the chairman said yesterday. so there will be positive and negative surprise along the way. market participants will react and guess how does that affect the fed, et cetera, et cetera. that’s the environment we are in. that’s the environment we have been in for quite some time, really. john, let me ask you one morequestion. yesterday, i was listening to bill gross. after the statement had come out but before the chairman had actually moved and started his xramps, he was talking about where he thinks rates will be at the end of the ten year, i think he hopes they will be lower than now, closer to 2%. what do you think? i don’t know i