Transcription
Actually, the person nominated by the President will be confirmed. Do you think it would be difficult for him to lower interest rates at this point, given where the economy is? Wouldn't you think it might be, uh, hard to do that, given where we are?
Yeah, I think right now there's pretty clear consensus that it would be the wrong thing to do. Um, you know, until the, uh, Iran conflict is, uh, in terms of, you know, it's clear what the end is in sight, there's, there's real risk out there. We don't know, uh, how significant it is. Um, and I think as you hear voting committee members talk about it, there's a high degree of consistency, including, I think, from the Treasury Secretary, in terms of, you know, waiting to see how this all plays out, and that seems like the prudent thing to do.
So, when somebody's the chair of the Fed, Jalow, or his predecessor, uh, Janet Yellen, do they ever call you up and say, "What do you think about interest rates? What do you think about the economy? How do you give input to the Federal Reserve?"
Um, listen, what I would say is that the, um, uh, members of the Federal Reserve at all levels, from governors on down, are very accessible. Uh, they always want to talk about things that we're seeing in our markets, in our business, because it informs what they do, and very often we have the data before they do. Um, I, I've not been part of a conversation where they ask what we would do if we were in their shoes. That, I think, is not the right conversation to have. Um, I'm sure when you look across the different leaders, not just banks, but non-banks you talk to, and people have different varies of degrees that they share. Um, but ultimately, uh, they're going to make the decision based upon all the things that they see, both in the physical data and all these conversations they have with folks like us.
What do you think the impact is on the economy of the war to date, the war in Iran? What do you think it's been to date?
Yeah, I think, um, listen, I think, you know, separate out markets versus the economy. Um, right now, from everything that we see, the economy is still extremely strong. We just, we all just reported our first quarter results in the banking space. Um, uh, loan demand is decent. Delinquencies on the consumer side, uh, are extremely well-controlled. Consumer spend is growing on a year-over-year basis, week over week over week, anywhere between five and 7%. Um, they're spending more money on gas, but making adjustments in some of the other categories, which is what, you know, you would have expected. Um, and so they're kind of, they're getting through it. Uh, businesses have gone into this in strong financial shape. So those are all the good things. But then when you ask them how they feel, everyone's nervous. And so, you know, they're not laying off, but they're not hiring to the extent that they would hire. And so these, so I would describe all these as, you know, um, neutral to just beginning to see some potential for some negative impacts, but it doesn't mean that these negative impacts are going to be really meaningful. The real question is going to be, is how long does oil, do oil and gas prices stay high? I was with a, um, a client of ours who's a big, uh, uh, they make and sell, uh, retail apparel, and they were talking about the price of polyester and nylon going up 25%. Which is a huge driver of their cost, and that doesn't even take into account transportation or the other knock-on effects that you have. People always think about, you know, the gas pump, but it's all these other things that matter. They're fine for a while because they have long-term contracts to buy some of these things, but that will come down the pike. And if the conflict ends, the straits open up, production returns in some reasonable period of time, uh, there will be this impact on consumer spend on some of these other things. But in that kind of environment, it won't be damaging. If this goes on for a longer period of time, it can be more damaging.
So, does the President of the United States, the current President, ever call major bank, uh, CEOs and ask them to come in and give advice about what he should be doing? Have you ever had that experience?
I would say again, I think I'd broaden it to the administration, the White House, very, very accessible. And by the way, totally different than the last administration. Not to get political about it, but the last administration, no interest in engaging other than one or two people in that administration. Um, it was almost like if you were business, you were, you were by definition not good, and if you were bank, you were like the opposite, like, be, you know, just off, off the spectrum, not good. Um, so this administration, we don't agree with everything the, the administration is doing, and they don't like everything about us, but it's a very, very open conversation about policies, about regulation, about things that we see. Um, and I think there's always this open door to conversation.
Recently, the, um, concern has been in the financial committee about something called private credit. So, is that a legitimate concern? Is private credit about to crumble in some way?
No, I don't think private credit's about to crumble. And when you look at private credit, private credit has grown dramatically. So, if you just break it apart into its pieces, first thing people say, you know, is it so big at this point, it's a systemic risk? And it's not today. When you just look at the size of private credit, it's not big enough to be a systemic risk broadly, the way we think about systemic risks that have existed in the past. Um, but it's credit, and there's been a huge amount of money that's flown into these products, both institutional and retail. And we've all seen this in the past when there's just, when there's a lot of money that needs to get invested, because that's the only way that these firms get paid is to actually invest, um, it doesn't always work out well. And, you know, we've got, and we're in an area where we've been in this bull market for a long period of time. We haven't seen any recession, uh, in over a decade. COVID doesn't count for this, you know, if this, because people haven't really lived through a real cycle. And so you will see credit deterioration at some point in time. And I just, and I wouldn't paint the picture of private credit separately from bank credit. I would say that in both instances, uh, there are people that do it really well, that are really conservative in how they do it. They understand their companies, and they're those that have piled in that are just looking for growth, looking to deploy assets, and they'll have problems. But again, they're, you know, some of the big names out there that we all know, they do it really, really well. They're really smart.
All right. Now, '07-'08, we had the great recession, and where were you then?
I was at JP Morgan Chase.
JP Morgan. Were you worried that the entire financial system was going to crumble, or you didn't think that was a concern?
You know, you didn't know. I think you were concerned about what you didn't know what was going to come next. Um, and that, uh, uh, and we'll never know because I think the things that the government did, which in retrospect turned out to be somewhat controversial, whether it's some of the programs they put in place through the Fed, TARP, and all these things, um, that took the question away. But you don't see what would private credit being a problem?
Not even close.
Okay.
Not even close.
Now, another concern, uh, in the financial community lately has been the value of software companies. People think that AI is going to come along and in effect take away the value of the software companies that people have built into very large, their large companies. What is your view on that?
Um, Alex, I think the markets got it right and the markets got it wrong. You know, it's one of these things where, you know, and markets are very funny, right? They get it right over a long period of time, but over a short period of time, sometimes they miss things, then they catch up. Sometimes they overcorrect. I mean, we see it in our own stock, right? Our stock move, you know, one day can move, you know, 8, 9, 10%. We're the same company we were the day before, and then three months later, we're back to where we started. And so you've got these anomalies that exist. And I think the reality is, um, there is risk, uh, to not just software companies, but many other companies in terms of what AI allows, uh, the core users of it to do. And it's like the private credit discussion. Um, everyone's being painted with this broad brush of, you know, their future is in doubt, and that's just not the case. I mean, I think about ourselves, you know, think about, think about the core platforms we use that we use at Wells Fargo. It could be general ledger, HR systems, CRM systems. You know, in the new world, theoretically, could we go out and recreate those platforms, um, by using AI? Absolutely. The risk to do that is extraordinary. And so what we'd rather have is we'd rather have partners who have great foundations to create their own AI models built on top of this, integrate it with ours, and then we can go do other things. So I think those that use AI themselves, and you start to see that, will actually become more valuable, and others who aren't in a position to do that will suffer.
Has AI changed your job very much? You use AI in, in running Wells Fargo?
I personally do. Uh, we've enabled, you know, most of the company with some of the basic AI tools, but we're really, but we're at the very beginning. And, you know, we're kind of going through pieces because we've got to monitor it in a couple of different ways. Number one is how we use the tools ourselves to either become more efficient or deliver differentiated products and services for our customers. Number two is we lend a money, we lend a lot of money to a lot of people, and so understanding how AI is going to impact their businesses matters a lot to us. And then we've got the question of, just like, how, how's AI going to change our business model? And those are the three different buckets that we think about it. We're most advanced in that order. Um, but we're towards the beginning of it, but, but it's incredibly powerful, and we're going to see meaningful benefits.
Now, the other day I interviewed at a different place, uh, the CEO and founder of Revolut. Revolut is a company with now a private market value of $75 billion, headquartered in, in the UK, and it basically is a fintech company that does a lot of what banks do here, but it doesn't have any offices, no bricks and mortar. And now they're trying to get a US banking license. Does that worry you as a potential competitor to Wells Fargo and other banks like yourself, that they could build a whole banking system without any bricks and mortar?
No.
Okay. Don't worry about it. No, I mean, very, I would say, and I don't say that cavalierly, even though I came across cavalierly. We think about it a lot. Um, we think about the competitive advantages that we have, uh, versus who we compete with. And, uh, huge amount of respect for them and the other fintechs that are out there. Uh, and I think, you know, when you kind of step back and look over the last, last 10 or 15 years and say, you know, what have the fintechs done to the banking space? I think first and foremost, it's made it very clear to people who run banks that the moats that have existed that have allowed you to move slowly, um, are no longer going to protect you. In fact, you've got government and regulators that are telling you, you need to do more. So banks have woken up to the fact that, you know, you have to compete not just with regulated institutions, but non-regulated institutions. And we come at this with this great position of strength, which is we have trust, uh, we have the FDIC insurance, uh, we have a huge customer base. And, you know, it really, and, you know, I've, I've lived in other worlds too. When you're at a big company, you sit and look at small companies and say, "Oh my God, look how quick they can move, the great products, they understand the customer." All those things are true. And then when you go to one of those companies, you look at a company like us and say, "They have 70 million customers. Wow. And if they were to get some of these things right, think about how hard it's going to be for us to compete with them." So it puts a huge amount of pressure on us to have to deliver things in different ways, if we didn't have that kind of competition. But we know it's there.
I interviewed somebody here not long ago, Jeremy Aair, who started a company called Circle.
Yep.
And they do stablecoin. Um, is that a concern of you that they can basically do some of the things you do at a less cost?
I think stablecoins are, it's not clear. I think stablecoins across the globe will have a meaningful place. I think when you get outside the US, there are real reasons why stablecoins are very attractive. When you go to places like, you know, high inflationary places, Brazil, Venezuela, the rest of these places where it's historically been very hard to keep and hold dollars, stablecoins, um, solve that problem for them. And so if you had a choice of keeping your money in local currency or US-backed stablecoin, you'd prefer to do that. So the question is, what's the use case in the US? Because we don't have that problem. And so I think, uh, it's clear that cross-border payments are very inefficient today. They take too long. They're expensive. Um, uh, it's just not an easy experience. Stablecoins can make that look very different. So I think that is a real use case here in the US. Beyond that, it's not clear to, to me, that there's a, there's a winning app there or winning edge. By the way, it doesn't mean that we're not going to partake in it. We're building stablecoin solutions both within the US banks and more broadly, in case what I said is wrong, so that we'll have something in place and be able to compete on a, with a very broad network of participants. Uh, but it's just not clear yet.
Now, for banks, uh, generally, if interest rates go up, I guess the theory has been that banks will make more money because they can charge more. Of course, it costs more for deposits. And if interest rates go down, um, it's easier for people to borrow and therefore there might be more activity. Is it better for banks generally if interest rates go up or go down?
You know, there's the short-term impact and then there's the longer-term impact. You know, we, we have a lot of money where we pay zero rates. And so when what we earn falls, then that squeezes our margins because we can't lower zero what we pay customers or 0.5 basis points. So, you know, higher rates, a rising rate environment is certainly helpful for something like that. But what's most important is like, what are the reasons underlying it? Because the amount of money that we'll make in any given quarter from a favorable interest rate curve for us is minuscule compared to what it does to the underlying base of our customers. So, if our, so if the economy is healthy, the economy is growing, inflation's under control, people are growing inventories, people are spending, that's what's going to really drive profitability of banks. And, you know, one of the things that we're, I think it's something that we're very blessed with is we're so focused on the US. 95% of our revenues come from the US. We really live and breathe by the success of the US customer and the US business.
Well, let's talk about Wells Fargo specifically. Um, your symbol is a stagecoach. Remember stagecoach?
I, I do remember it. You see it less than you used to. Still there.
You don't like to use it that much?
No, I think the st, well, let's be honest, right? If you're on the West Coast, the stagecoach is iconic. Everyone on the West Coast knows the stagecoach, uh, because that's where the history of Wells Fargo was. You come to the East Coast, which was the old Wachovia set of banks, they don't know the first thing about what the stagecoach is. And so it's an important part of our heritage. But then the other thing you think about is when you think about like what's going on in the world, the speed of change, the rapid movement, stagecoach, you don't use it that much.
It isn't exactly there. So we still use it. It's kind of in the background a little bit because we don't want to depear to, to disappear from who we are. Um, but there's a right place for it.
Who was Mr. Wells and who was Mr. Fargo? They started Wells Fargo, I presume.
They did. Henry, got, I was getting it wrong. Henry Fargo and William Wells. I think I got it right.
Basically, what was their business?
They started, they started a business that did two things. Um, it, it really was there to support, uh, everything that was going on with gold on the West Coast, and it was both a, um, it was to help with financial needs as well as, um, travel and movement of things across country. And ultimately, uh, those, those businesses, it's a little more complicated than that, but ultimately those businesses split. And when the bank became incorporated in California, that became Wells Fargo, and then the express business became American Express, which then ultimately transformed itself multiple times in the early 1900s.
So today, um, on Wells Fargo, what is your, the market capitalization? The market value today of Wells Fargo is what?
250, 260 billion.
Okay. And how many employees do you have?
200,000.
And today, um, what would you say the, uh, customer base is? How many customers do you have?
70 million.
How many?
70 million.
Wow. It's a lot. And what about credit cards? Do you have a big credit card?
Credit cards, 20-something million cards.
Hey, have you ever used a credit card and had it denied?
You want to know the tr, the, the truth?
Yes, I assume you.
So, I, I get to Wells, and first thing I want to do is get a Wells Fargo credit card. And so I get the new card, and I was out to dinner with some good friends who run some big companies, and I pull out my card, and I got denied.
Is that person in charge of that division still there? We've learned an awful lot. It doesn't get denied anymore.
All right. But hasn't happened since.
Hasn't happened since.
Okay. What about the ATM business? Is that a profitable business for banks?
The ATM business, it, it's marginally profitable. Um, but it's important. It's convenience. And, you know, cash is becoming less important over a period of time. People are able to deposit checks on their phones and not having to go to ATMs anymore. But it's a little like branches. You know, we can debate about, you know, what the future's going to look like in 20 or 30 years, but customers tell you what they want and what they like. And they like convenience. There's still plenty of cash that circulates out there, especially in our customer base. And until they stop using ATMs, we're going to still have them for them. It's, it's, it's, it's part of the value equation.
Now, before you came to, uh, Wells, they had a problem, and Wells, uh, was put under some constraints by the federal government. Yeah. What were those constraints?
Um, well, we had multiple constraints. The biggest one that people, uh, uh, uh, know about is we, there was an asset cap put in place. So, uh, at the time, I think it was 2018. We were told that our assets at the time were $1.952 trillion, and they couldn't go higher than that until the consent order work, um, uh, was done to their satisfaction.
And in addition, by the way, we had, when I got to the company, we had 13 public consent orders.
How do you grow? That was one of them.
How do you grow the company if you can't grow your assets?
It's very, very hard. So there are things you can't do and there are things you can do. Um, you've got to be, first of all, very selective in looking at your balance sheet and saying, "Okay, it's not the worst thing in the world to say we need to become more efficient on our balance sheet. What's less efficient? Where do we make less money? How do we reallocate that balance sheet usage?" You then turn to certain things and say, um, "We're just not going to be active about soliciting loans. We're not going to be active about soliciting deposits." We were very careful not to throttle consumer deposits because you tell a consumer to please bring your deposit elsewhere, and you've lost that relationship. Large corporates understand. They understand we have an asset cap. They understand we want to take their money, but we just can't right now. So we turned away massive amounts of deposits at the time. Um, and we focused a lot on businesses that drove fee-based revenues. So, we've grown our credit card business dramatically, which includes a significant portion of increasing the spend. We've grown our trading capabilities. We've grown our investment banking advisory capabilities. We have our fee-based treasury management businesses. And so, um, you know, that along with our wealth management business, where we get paid on on fees, that's what we focused on. It wasn't the worst thing to do for us as a company because we were too reliant on interest income. Our NI as a percentage of the total revenues of the company was much higher than everyone else. And so we created a little bit more balance in doing this, but it's, you know, it's, it's very, very hard when you're in the marketplace competing with other banks talking to the same shareholders. And we've got two hands tied behind our back because we can say all we want about growing these other businesses. The core thing of what we do is take deposits and make loans, and we couldn't make anymore. Somewhere, by the way, for seven years.
What led to these sanctions? Why did this happen?
Um, it was the basics. You know, it was, quite honestly, there were a series of individual things that the regulators identified. Uh, they were right about them. We can argue about whether the punishment fit the crime, whether an asset cap was the right thing to do for a company like ours. But they weren't wrong about the underlying issues. And what happens is you get to the point where if you're not resolving the issues quickly enough, they say, "Okay, you, we need to get your attention. We're not getting your attention." So the next step is you can't grow. And so that's what they did.
So, uh, why would you want to go to a bank? You were at another bank. Why would you want to go to a bank that can't grow? How did they induce you to leave where you were?
You know, listen, it was, first of all, it was very hard to leave because I was at Bank of New York Mellon, which I went in maybe a year and a half before I started these conversations, and I didn't intend to leave. I intended to stay there for the rest of my career if they would have had me. Um, but I knew someone on the Wells Fargo board from another board that I'm on, and he was on me about, "You should engage, you should engage. You can be in New York. We have a lot more in New York than you think," which was important to me. Um, and then I just, you kind of go through what Wells is, and I competed against them for years, and I believed, and I believe today more than ever, it's an incredibly important, amazing financial institution in this country, um, which lost its way on a series of things. And if you sit there and say, if those things are all fixable, and someone were to hand you the Wells Fargo franchise that had been underperforming, that had been restrained for, for so long, that's like a dream job. So, you know, you got to take the risk that you believe you can get through these problems with the government, by the way, in a difficult environment with the Biden administration. But if you come out on the other side, it's incredibly exciting, and we're lucky enough that that's where we are.
Your constraints have now been lifted. Is that right?
Yes. So now, if you don't grow and do well, you have nobody to blame, right? You can't say it's the federal government, right?
There's no question it's on us.
So let's talk about, for a moment, uh, the fact that there are four gigantic banks in the United States: JP Morgan, uh, Citi, Bank of America, and Wells Fargo. Do you think only having four gigantic banks is the right number? Is it too concentrated, or it works out okay?
Well, I think, first of all, you got to start with, uh, we have 4,000 banks in the country. And when we think about financial services, you really do have to think beyond banks these days, right? You talked about private credit, $1.7 trillion of lending is now done away from banks. You've got all of the different things that are being done, uh, in the private equity space. Um, and so, you know, the definition of, you know, what's done in the banking sphere has changed very dramatically. Um, there's no, in my opinion, I think, I think most of the large banks would say this, we need banks of all sizes, like we do. And so, um, you know, Rob's here from, uh, the, uh, uh, CBA, and when we look at the smaller banks in this country, like they do things that we can't do. We're not going to have branches in every location. We don't have the relationships that they have. The standards that we have to live with when it comes to lending are different than, than small banks do. If you're in a small bank in a local community, I can, I'll make a loan to you based upon what I know about you. I, I knew you as a kid. I knew your parents. I know you're going to pay me back. I know exactly what you're going through. We can't do that. The OCC is going to come in and they're going to say, "Are you crazy? No way. Downgrade it. They're going to give us all these MRAs." I mean, that's, that's what would happen. So, so we need a broad cross-section of banks to serve people locally, but we also, we need big banks. We have big companies in this country, and we need big banks to do things for those companies. I mean, examples more recently, um, we have a, we have a middle-market client. Okay, this is not one of our large corporate clients. We have a middle-market client called Quickrete. They make the, you know, the powder that you go buy if you're doing your own work at your home, where it turns into concrete. Quickrete's been a client of ours for 40 or 50 years. We've been their sole bank. They've wanted to do everything for us. They just went and did the biggest deal they ever did. They only wanted to use us because they trusted us. And it was a $7 billion non-investment grade underwriting commitment, the largest ever done. Like, if you're small, you can't do that. You know, Netflix decides that it wants to enter the bidding fray for Time Warner. And so, you know, they called us in. We were involved in the transaction. We made a $30 billion commitment, uh, to that transaction. Those things have to get done if we're going to continue to see the capital markets activity. And you need big banks to do that. And if, and if it's not us, it's going to be the Europeans, it's going to be the Japanese who are coming back, ultimately the Chinese. And so, you know, our banks do have to scale with the growth in the economy. It doesn't mean that big versus small. Both are necessary. We do different things, and, and we try and support small banks because we know they play an incredibly important role.
So what is the most profitable part of the business for big banks? Is it lending money to corporate customers, lending money to smaller individuals, home mortgages, credit cards, where's the big profit? ATMs?
Um, well, let me go back for a second and say, we have looked at all of the things we do within Wells. We've sold 22 businesses. Um, we did it to eliminate hobbies, to get rid of things that we just weren't interested in investing in. Some are decent businesses, but weren't going to scale enough. So, the things that we're left with, we have four big lines of businesses. We're incredibly excited about all four. All four have really strong returns, have really growth, great growth growth prospects. And it's our consumer deposit lending business. It's our wealth management business, where we have 12,000 some odd advisors across the country. It's our commercial bank, where we've got almost 15% share in a lot of the things that we do. And it's our corporate investment bank. Um, and all of them have very strong returns and strong opportunities to grow. Um, and they fit together inside the Wells Fargo franchise to allow us to have just greater breadth and data and and and greater, uh, depth of what we can do for customers.
Somebody wants to make a big, uh, loan from you, do they call you directly, or you, you don't take loan calls from your big customers? Do you make the decisions?
Senior people call people around the institution and say, "Who, who should you connect me with? Here's what I'm interested in doing."
Let's talk about your background. Um, where were you born?
I was born in Manhattan, raised in New Jersey.
Okay. And what did your parents do?
My dad was, uh, at the time was called a stockbroker. Now we call it a financial advisor. Um, uh, he was a stockbroker my entire, his entire life. He's still alive. He's, uh, 92. I just saw him yesterday. Uh, he worked till he was 77. Loved the markets. Still loves the markets. My mom, when I was growing up, when my brother and I were growing up, was a teacher because she wanted to be able to be there when we came home from school, and then ultimately went to work at AT&T and went into technology.
So, were you a good student, a good athlete when you were in high school?
I was a good student throughout high school. I was a good athlete throughout junior high school.
Okay.
And where did you go to college?
Johns Hopkins.
Because you wanted to be a doctor or something?
I wanted to be a research chemist.
Really?
And it's, I loved science in, in high school. I loved math and I loved science. We, there was always this business thing going on at the kitchen table. Um, my, there's just, that was a lot of the conversation that happened. So business was always there. But my parents were always encouraging of, you know, of, of learning broad things and trying to find what you wanted. And both my brother and I were both very much math and science people. And I go to Hopkins and I, um, first semester I take organic chemistry, where you're in with all the Hopkins premeds, which was probably the worst experience of my life. The most uninteresting people, super competitive, sole goal in life is to like, beat everyone else out so they can get that spot in medical school. And then I took physical chemistry my second year, and you're just like, the last thing I want to do is spend my life in a lab for the rest of my life. I want to do something else.
All right. So you said, "I want to be the head of a bank," or what did you say?
So I actually, at the time, um, no, banking was like, not just, not was not there yet. I said, "I want like a better education. I want a much broader education." I talked to a whole bunch of people about, and I just got convinced in talking to people that college is this great opportunity to learn a broad set of things. I've got nothing against business schools or things like that, but, you know, there's plenty of time to learn accounting. There's plenty of time to learn marketing. And by the way, most of that stuff you learn on the job anyway. Like college is a great example to learn about international relations, political science, psychology, sociology. So, I changed my major to what Hopkins had this wonderful thing called social and behavioral sciences area major, where you were allowed to take a broad set of classes in all those types of things that I just said. Um, and I loved it. I loved the people. I loved the professors. Um, the students. I love the work. Um, and I think I'm a better person for it. And then you get to the end of, uh, that, and you say, "Okay, now what am I going to do with my life?"
So, you graduated in what year?
I graduated college in '87. And did you say, "I want to go be a banker then?" And how would you get a job?
So I thought about doing, um, one of these programs at like Cambridge or something in international studies, and I just kind of circled back to, you know, "I need a job. It's just, that's what I want to do. I want to work." I worked all my life. Like I started, like probably most people did. I started with the paper route, you know, stuffing the papers into the newspapers on the rainy days, and worked as a locker room attendant, um, in junior high and high school to earn money to be able to do some things. The summers I had real jobs. I used to go into New York. I worked at my dad's brokerage firm, but I always had these jobs. So, like work was always, like the idea of just continuing education without like a, a, um, a place to wind up was just not really in the prospects. And my parents were kind of serious too about like, "You gotta, like, like you should do something. Like work is work." So that's when I said, "Okay, it's business." And so I started going through all these interview, uh, uh, programs, you know, the different investment banks up in New York, because I was from the New York area. Um, then something else came along.
So you got a job at a place called Commercial Credit. Was a young guy working there then, Jamie Diamond, I think his name was. So, was he as easy to deal with then as he is now? Always nice and always said, "This is what should happen."
And so, it was, it was a, I mean, it's, I was incredibly lucky. It was, so, just back up. This is a company, um, it was a little crappy consumer finance company owned by Control Data, lost $100 million. It had 3,000 consumer finance branches, you know, what we call subprime lending now. Um, and Sandy Weill had left American Express. Jamie went with him because Jamie was working with at at AMEX, and they convinced Control Data to spin this company out. They took 80% of it public. They kept 20% for a period of time. Sandy brought in this whole management team, former president of Chemical Bank, the guy ran American Express Travel Related Services, the treasurer of Maryland, all these very high-powered people for this little tiny company. So you just, you knew there were big aspirations.
But, uh, Jamie is a pretty talented person. Did you think everybody was that talented? Who was a young person working there?
Well, there were no other young people at the time. All these other people were like much older. Jamie was the young kid. Jamie was 29, 30 years old at the time. Was CFO, played a really important role. Um, but he was one of like six or seven really senior people. And it was really over the next, you know, three, four, five, six years that, you know, Jamie asserted himself in terms of what his capabilities were. So they basically, what happened was, uh, they ultimately, um, can effect bought Travelers.
Well, first that company bought Primica.
Which was Jerry Sci's company, which went from cans and manufacturing into financial services. They bought Smith Barney right before the '87 crash. Bunch of life insurance companies. So Commercial Credit bought Primica, changed its name to Primerica. The key businesses were the consumer finance company, Smith Barney, and the life insurance companies. That company then, uh, bought initially 27% of Travelers when they went through their real estate problems, then bought the rest of Travelers, changed its name to Travelers Group. Smith Barney bought Shearson from American Express, um, then bought Salomon Brothers, and there were a whole bunch of other deals. So, by the time that all happened, by 1998, um, Travelers was the same size as Citi and did a merger of equals with Citi.
So, you were there the whole time?
Yes.
All right. So, one day Sandy Weill calls in Jamie Diamond and says, "You're fired." So, what happened to you?
Um, it was a little surreal. It was, um, everyone's, everyone saw that it wasn't exactly working out. Um, and so they invited us up to, uh, there was a, we had a facility up in Westchester, and you get invited on Sunday at 7 o'clock, show up, and you walk, and I was the last one to walk in for some reason, and it was like a morgue. Everyone's just kind of sitting around the room, and they just, they just tell you, um, "We've decided to reorganize the company. This person's going to do this. This person's going to do this, and Jamie's going to leave the company." And Jamie was sitting there, and Jamie stands up, says a bunch of really nice things, and walks out the door. And then...
Well, you didn't go to him and say, "What about me? Or what happened to me?"
No, you know, I wound up working, um, uh, I stayed. I was at the time the co-CFO of the combined corporate investment bank, like most things after the Citi-Travelers merger, totally dysfunctional. They were, everyone was a co-head or triad. The deal was, you, like, you couldn't have a Travelers person in charge. You had to have a Citi or City person in charge. There had to be co, and so I had a co-head with the City person, which never quite worked out all that well. I wound up staying. You know, I was nervous because I was working for a guy named Mike Carpenter, who I knew, but didn't, he and Jamie didn't have a great relationship. So, I was nervous about it. Turned out to be a great experience for me.
How long did you stay before you?
I stayed another two years. I learned an incredible amount from Mike. It's one of those things in life, you know, you just, one of the things when I talk to younger people all the time, I say, you know, they always ask about, you know, who role models and who do you learn the most from? And like, for me, it's just being able to see, you think you can learn a whole lot from someone who's the most successful. But in reality, you learn bits and pieces from different people and figure out how it works for you. And Jamie was, has, you know, is amazing. He was amazing with me. But I learned different. Mike thought strategically about things differently. He had a different temperament. I worked with a guy named Bob Lipp, who went on to run Travelers Insurance. I, I learned a huge amount from him. Him. I learned a lot from just watching Sandy. Um, and so you put all those things together, and it was, to me, this like experience of, you know, as traumatic as it was, and you thought the world was coming to an end, and how could everything continue. Um, but for you personally, it turns out to be a growing experience. Didn't turn out great for the company.
When did you leave the company?
I left in, I left in May of 2000. Jamie became CEO of Bank One in March of the, at the very end of March of 2000. I joined as the CFO in June of 2000. I moved to Chicago.
And did you think that you were then going to move back to New York with JP Morgan?
There was no, no plan. There was no, uh, view that we were coming back. It was, it was a decent-sized company. Had a bunch of issues. Thought we could do some interesting things with it. Assumed we could buy things over a period of time. Um, and the move to Chicago was like the move to Chicago. So when, uh, ultimately there was the merger, JP Morgan bought, or Bank One merged into JP Morgan, you moved back to New York.
Yes.
And did you, how long were you at JP Morgan before you left?
I was there until 2012. So we, uh, I, so I got to Bank, I got to Bank One in 2000. We, uh, I started out as CFO, wound up running the retail businesses for a couple of years. When we sold Bank One to JP Morgan, I ran the retail businesses, uh, until 2011. Then I had a year in the private equity business, and then I went to run Visa.
Okay. So you left, and what was it like telling Jamie, basically, "Goodbye, I'm going to go work and run a credit card company?"
It was great. It was a non-event.
All right. And did that credit card company ever die?
Can I tell you why? Because I think why it was a non-event.
Why?
Because, and I, and this is also, I think, a lesson in life. Um, I mean, I had known Jamie at that point for what was it, 20 years, 23 years or something. Um, we had very open conversations about what do I want to do, who can do what in the company, and you just kind of came to this conclusion that like, if I had, if I got a great opportunity outside, it's probably the right thing. So when I was being interviewed for Visa, Jamie was like my biggest and most important reference. And again, I was lucky enough with him that he really, and this is, this is not supposed to be about Jamie, but he cares about people. And so again, even just as a leader, you learn that, and that, that, and that does matter. And so he was extremely supportive. He realized what a great opportunity it was for me. And...
Right.
So you went to Visa, but Visa is headquartered in San Francisco, and your family is in New York. So what did you do?
So, for the first three years, I went back and forth every weekend, um, because my daughter had, my older daughter went off to college, and my younger daughter had just started a, um, a new high school, and she was doing great, and we didn't want to, and we gave her the choice, and she didn't want to go. I was traveling all the time. You and I were talking about this earlier. I mean, I was on a plane 400, 500 hours a year, and at Visa, you're out of the country two or three weeks a month, very often for some of those weekends. And so, you know, the idea of forcing them to move out to California when I'm never going to be there, uh, didn't make the most sense. And you get, you get entrenched in what you do. So, it turned out to be okay.
Okay. So you did it for a while, but then Bank of New York came calling.
No. What happened?
No. Um, I got to the point where, uh, in 2016, it became clear to my, so my wife eventually moved out to California. Our kids were on the East Coast.
You say moved out. She moved with you.
She moved.
She didn't move out. She moved out.
She came to join me.
Right. Okay.
With, with the dog.
Okay.
Uh, she brought the dog. And, uh, we were all reunited in San Francisco. And then it just became very clear for personal reasons with one of my kids that we just couldn't be that far away.
Okay. So you moved back to the East Coast.
So I left Visa without a job, um, and moved back to New York. And the DSO is going to figure out what you say about that.