Then you need to reinforce you've made fundamental changes within the company so that any of the mistakes we made are less likely to return again. For example, in our retail banking business, we had an incentive compensation plan that unfortunately encouraged the wrong behavior. We've ended that. We've changed our practices in retail banking; we've changed our management.
Then you need to reinforce to customers that it's our focus to provide them with the best customer services and advice.
We want to be the best in the financial services industry. How do you that? You make sure you've got the best people; that's why team member engagement (is a high priority). Then you need to be sure customers appreciate you and you continue to invest in the business and that's why we continue to innovate.
Q: The banking sector played a significant role in creating The Great Recession. Is the U.S. still vulnerable to that kind of crisis, or has the country created enough safeguards to prevent a repeat?
A: When you turn the clock back, I would submit most of the excess of the Great Recession were caused by firms that don't exist any more. Some were investment banks, some were savings-and-loans that went out of business or were merged into other firms.
That's not to say that banks didn't play a part in it, not at all. But I think what happened is post-Great Recession that those that were still standing, fairly or unfairly, got most of the blame.
When you look at what the excesses were that drove some of the issues in the Great Recession, you had encouragement in home ownership both from the public sector in Washington and the private sector that was unsustainable. The mortgage industry made too many loans to folks that really shouldn't have qualified for loans. (Since then), housing policy has fundamentally changed. Underwriting today in the mortgage market is as good as I've ever seen in my 30-year career. That's a real positive.
The other driver was leverage across the market in almost every sector. As I see investing and providing credit today, the quality of what we're doing today is among the best in my career. You can see that in the industry in the (small) amount of the credit losses across the entire lending sector. At Wells Fargo, last year our loan losses were 31 basis points (.31 percent). That's the lowest we've had in history.
While we don't agree with all of the regulations (that followed the recession), some of it has been very good. Making sure the banking industry has very strong liquidity policies, we completely agree with that. We've been doing that for years. Having sufficient capital policies ... we've been doing that for decades. That's why we survived the Great Recession.
Q: In Miami, economic disparity is a tangible issue. What is the role of banks in providing access to lending?