coming up here on cspan 3, the wells fargo ceo on what might be holding back the u.s. housing market. that's followed in an hour by a look at the administration's plan to deal with the ebola outbreak in west africa. then heads of the u.s. financial regulatory agencies give an update on the dodd frank law. later a look at medical advances and the prescription drug outlook for americans. two former members of congress are running for governor in arkansas.

cspan will have live cover ramgs of a debate between democrat mike ross and republican asa hutchinson on friday. here's a look at a couple of the ads voters are seeing up until that debate. >> the democrat gas set said the attacks on mike ross are not true and a sphere on his family business, there was never a justice department investigation and the house ethics commission -- building their small town business into a success? to cover up the fact that he got caught cheating on his taxes and the fact that hutchinson was a d.c. lobbyist who has a report of putting -- >> for our schools, a choice for governor. there's asa hutchinson, he voted to cut college loans. and he opposes mike ross's plan to expand pry k.

education 'focus on career tech training and college opportunities. >> on education, mike has a record i can check. >> asa hutchinson found a mistake in his taxes, reported the mistake himself and paid his dzu %+ñ of us have made mistaken taxes, asa was honest enough to admit it, but that doesn't stop -- they hope it works for mike ross as well, fortunately, arkansas knows better. it's a 16 billi$16 billion and arkansas -- so when some criticize free trade, it only hurts our farmers.

whether it is rice, wheat or poultry, i want to keep arkansas business open to the world. it's the best way to grow our economy and create jobs. i'm asa hutchinson, as governor, we'll hit the ground running and never look back. >> mr. ross served as a u.s. congressman for 12 years in arkansas's fourth district. mr. hutchinson is a former u.s. congressman in arkansas's third district. he's also served as the administrator of the u.s. drug enforcement administration, the dea. the two will debate in little rock, arkansas on friday and you can see live coverage on cspan, starting at 8:00 p.m. eastern. wells fargo ceo now on the u.s. housing market. the company is the nation's top home mortgage lender. he spoke to reporters at the national press club here in washington, d.c. he said student debt and people getting married are impacting the housing market. this is about an hour.

>> good afternoon, and welcome. my name is myron belkheim, i'm an adjunct professor, and the 107th president of the national press club t national press club ask the leading organization for journalists committed to our profession's future through our programming. with events such as this while fostering a free press worldwide. for more information about the national press club, please visit our website at press.org. on behalf of our members worldwide, i would like to welcome our speaker and those of you attending today's event. our head table includes guests of our speaker as well as journalists who are club members, so if you hear applause in our audience, note that the general public are attending so

it's not just a lack of journalistic -- you can follow the action on twitter using the hash tag mpc lunch. after our guest speech concludes, we'll have a question and answer period. i will ask as many questions as time permits. now it's time to introduce our head table guest. i would like each of you to stand briefly as our name is announced from your right at barks, president of barks communications and a member of the national press club board of governors. michael justin lee, university of maryland department of finance. tommy burr, washington correspondent for the salt lake tribune and the treasurer of the national press club on the board of governors, tommy, we thought it would be good if you come today and listen to some advice from our guest speaker. oscar surris, director of the wells fargo corporate

communications. marilyn gewax, senior business analyst and a member of the mpc board of governors. jerry zaremski, buffalo news bureau chief in washington, chairman of the fcc speakers committee, and a past mpc president. skipping over our speaker for a moment, of bloomberg news and the speaker's committee member who organized today's event, thank you so much cassia. anita eloff, director of the wells fargo federal governor's association. emily stevenson, reuters reporter who covers bank relations. andrew schaff a member of our board of governors. keith hill, editor, writer with

bloomberg bna and a former mpc vice president. thank you all. as the chairman, the chief executive officer of san francisco based wells fargo, john stump runs the world's largest bank by market value. it's also the biggest u.s. mortgage lender, it took about 250 deals to arrive at that point and stump has been advised on more than 100 of them. the $1.7 billion future. during the first quarter earnings conference. the wealth management brokerage. these challenges include dealing with an increasing number of lage regulations and regulators

created after the financial crisis, as well as navigating through the rough waters of slow economic expansion and record low interest rates. the largest portfolio, wells fargo is particularly vulnerable to the changes in housing marketses. mr. stumps needs to make sure that the bank remains -- such as russia and iran. and anti-money laundering rules to avoid fines. to these responsibilities also include insuring the credit card data, such as those reported did not happen under his watch. and he also has to satisfy his clients and investors. including the largest one, warren buffett's -- ladies and

gentlemen, please join me in welcome. i would like to use the president's prerogative and ask if you can please share your unique as one of 11 children. ladies and gentlemen. >> what a great introduction. in fact that 3450ig9s be the soaked best one i have ever heard. #. >> those 11 children came in 13 years and no twins. so we're catholic. we'll get that right off the table right now. people will -- i said no, no,

no, just one dad and one mother. but then they get back, and two questions are actually pretty good questions. how many bathrooms did you have in this farmhouse. the answer was we had one. but we actually had 1 1/2, as opposed to a powder, we had an outhouse, but if you used ill after thanksgiving, they didn't find you until mother's day. the second question is always my favorite. how many bedrooms did you have in this house? the answer was for our children we had two. we had a north room where my four sisters slept, and in the south room, i slept with my six other brothers, there was seven of us. and back then you could not divide three beds that we had evenly into seven. or seven into three. one bed had two, the second

bedded a two, and the third bed had three. since i was the oldest boy, i was in the middle, my brother was on my left and my other brother was on my right. i never got a chance too sleep alone until i got married. if you guys are going to be difficult here -- boy, when you're telling me all the things i'm responsible for, i don't have time to give a speech. i got to go check all those things. since now you know me. let me tell you in a few minutes a little bit got our company, i want to talk a little bit about the economy. then my favorite time will be. our birthday was on july 13th and we started -- in fact, there was a wells, and there was a fargo, william fargo. a few years earlier, they

started another iconic american company called american express. in the early year, months of 1852, they decide to start a business, west of the mississippi, and they were the internet of those days. they were going to move people in a stagecoach, at 5 miles an hour, from st. louis, every ten miles you change horses, and you finding yourself in san francisco a couple of days or weeks later. from those humble beginnings starting out, our stagecoach, which you probably know today as our logo, was only in existence for a few decades, because by the late 1860s, the railroads came through, so we had to reinvent ourselves. and i'll tell you one particular story, in 1918, at that time we had 10,000 offices across the country, we connected the country, we were u.p.s., and we were fedex before we ever heard

of them. and somebody sitting in my office, the president at the time, got a call from the secretary of treasury, it was in march of the year 1918, and the government announced through the power of imminent domain, they were going to take all our offices to benefit the government. but here is the punch line, the company has survived through not only survived, thrived through three big wars, the civil wars, others, the great depression, the great recession, almost every economic environment you can imagine, all kinds of technology and changes, and today i want to give you a quick tale of the tape. we have 265,000 team members, 97% of our business is in the u.s. 97% of our people are in the

u.s. we serve 1 in 3 americans one way or another. we're a real economy bank. we don't know, really, anything about cornering the aluminum market, but we know a whole lot about helping small business, consumers, corporate customers, others planning for retirement. in fact, we make more auto loans than anybody else on the planet. we make more home loans, we do business with 1 in 10 of all small business in america. next is just half that share. we make more egg loans. we do more of that. because that's what we do. but it's not the object part of our culture, philanthropy also

plays a very important role. the company's size is measured different ways and we have never been impressed with size, we're the 20th largest re-knew producer in the country. last year we were the third largest earn, we're either the ninth or the 12th largest employer. but on the philanthropy side, in 2012, than wells fargo. last year we were number two. our team members, in their own willingness has been the number one campaign corporately for the last five years. thank you. and people ask me, why is that such an important part of your culture? and the answer is very simple. we live, we work, we recreate, we go to church, we're part of local communities. we have never seen our bank do

well over time where the community does poorly, they're linked in a very special way. and finally we have stock holders. and as the sbro destruction, you heard that, you heard about our largest owner, warren wubuffett who owns more than 90% of our company. if you look at size of institutions, we're not even the top 20 in the world. we're i think number 21 or 22. we're not the largest in the u.s., although we have more locations here, we have more people here than any other bank, but we're not the largest in asset size. but if you take our market capitalization, far and wide, the most valuable bank in the world. so if you hire great people, treat them as family, take care of customers. most of our customers have been here for decades, and we do lots of stuff with them, they're our friends, if you give back and invest in your communities, your

stock holder can get rewarded and will get rewarded. by the way, we have been the largest taxpayer in the u.s. for years. last year our cash tax rate was 32%. let me now move on to the industry, or the economy. and then we'll talk about the industry. recoveries are not pleasant things to watch, if you like steady, continual progress. they're kind of messy. in fact, we are now six years anniversary since the lehman bankruptcy, september 15th and we're five years since the recovery started. and it doesn't feel like a full blown recovery even though the unemployment rate is now down in the low sixes, we have had steady gdp growth, and we have had some unusual things happen this year. in fact in the first quarter, we saw a big drop in gdp growth.

and we had a very strong second quarter, and it would not surprise me if third and fourth quarters both started with a three handle. we have been growing jobs at 220 to 230,000 jobs per month and august comes around, we have 145,000. so there's lots of different mixed messages. right off the bat. the economy feels a bit stronger to me. than some of the recent numbers would show. and we're optimistic about what's happening in america and optimistic about our future, in fact i'm actually bullish about the long-term. let's take a look at the economy for 2000, 2007, the so-called go-go years. and let's for just a minute,

exclude residential real estate. the economy today is better than it was. in 2007. energy is booming. actually it's the% its everybody been. but energy, we might be self sufficient in energy and the largest energy producer in -- we're also making great strides in renewables, brakes, renewables. it will be the best auto month since 2006. and there was just a month or two there. it's really almost the best since 2000. we're going to sell 6 the united states fleet. because of the drought, some of the cattle feeders are having a

more difficult time. but generally speaking good. technology booming, commercial real estate doing really, really well. i think we're doing -- and manufacturing is starting to come bag. i understand the importance of manufacturing, but let's take housing. typically, in a recovery, and it's been this way for everyone since, you know, the end of world war ii. every recovery is led by housing. residential real estate. and not this time. in fact housing is better, it's better everywhere. it's not better for everyone. and it's not as good as it can be. so why the housing not leading? in fact there's lots of discussion here in washington, lots of discussion around the country, but what are the elements? and it's no one thing.

but it's four or five things inning a greg gat create a big thing. first of all households are forming later today than they are in the past. i got married u when i was 21, my wife was 20, and we bought a house the next year. now our children are getting married in their 30s. and that's happening where children are living with parents, that's a big change from what it used to be. secondly, student debt is an influence. 40 million americans have a student loan. in fact student lending has almost doubled in the last six years. and that has an influence. in fact there's more student dead. the biggest debt category for americans the housing. there's 50 million homes in american with a mortgage on them, the average mortgage is

that's ten trillion dollars worth of dealt. the next group of debt, there's no student debt than there is auto debt or home equity debt or credit card debt. so it is, and people are paying those payments, not able to buy houses, so that's a part of it, not all of it. another area is that in some markets, houses are not available, inventory is not available. i have to live in san francisco. and in the bay area, you bid on a house. you come with 27 of your closest friends, and you keep running the price up. because there's just simply no invento inventory. that's not true across the country, but it's true in many of the hot markets, surely the coastal markets. and the one i want to spend a little more time on is one that we actually can do something about, and that's credit's not available for every borrower who wants to buy a house, who can afford a house and wants to make

that decision, commitment. and this is going to get just a bit technical but it's really important. in the united states, since the housing market is so huge, $10 trillion. we need a secondary market to help finance that debt. there's only $10 trillion worth of deposits in the country, and of course deposits are used to make loans for businesses and for the federal government and the consumer, there's a whole bunch of different things, there's like $25 trillion or $27 trillion in debt. so the ways -- the guaranteed mortgages against loss, with that guarantee, originators like us and otherings originate those loans and then sell them off to

investors. and it makes credit available at the prices we have and so forth. what's happened over time is that the mortgage companies, the insurance companies if you will, put loans back to the originators and say this doesn't qualify for your insurance and sometimes they put them back even if they pay for it's years or ten years or seven years. and what banks have done, and originators, in fact there's a whole lot of originators who aren't banks, what they're doing is saying, even though the insurance companies, the fannies and freddies, fha says we will

have this requirement, and oh, by the way, a fico score of downing to 680, we put a credit overlay on it. so there's a certain part of the market that can't get a conforming mortgage. because we know in this group there's going to be more default and we know what happens that they're going to put it back to us. so we're trying to find a way to work with the government agencies, to find a time when does credit and when does risk transfer? if a company, if a -- if an originator originates a loan, they don't verify and don't do things, it should absolutely come back. but if they originate a loan and they do the best job they can and there's a default later, and

the defects is unrelated to income or unrelated to the customer paying it, it should not come back. so here we have a situation where we have the unintended consequences of well intend eed legislators or regulators that are actually hurting the marketplace. in fact we're now -- the committee is joining with us saying how do we open a credit box more? let me now segue and i think we're down to -- how many more minutes? >> eight more minutes. >> eight more minutes, we'll talk about the industry. i could talk for 80 minutes in too big to fail. but i'll talk about that in just a couple of minutes. there's should be no company too big to fail in any industry. surely not financial services. failure is an important part of the free enterprise system.

now where there is a disagreement is, has enough been done to deal with this issue? through dodd frank and other things. and sometimes, one forgets how much has been done. so if i look back to 2008, we now have almost 14,000 pages of new rules written, we have the volker amendment, now it was never a big proprietary doing business for yourself wasn't a big priority for us anyhow, but for some companies it was. the word stress test was in the common vernacular. it gets most of the notoriety because it happens once a year with a capital distribution element to it. there's something called living

wills or your funeral arrangements, there's heightened expectations. there's new regulators,like the cfpb. all of those i would say would qualify more in the qualitative size, all snow there are quantitative parts to that. look at capital requirements. wells fargo went through the most difficult economic environment any of us would have seen in, you know, unless you're my parents' age, who went through the great depression. and today our capital -- and we made profit, operating profit every quarter, we bought a big company using our own money. and today our capital went from $99 billion then to $181 billion today. almost doubled. but you would say just a second now, most of these banks didn't

fail because of capital, they failed because of liquidity, and that would be correct. 20% of our balance sheet is liquid assets. we have run our company for years, one dollar of deposit, one dollar of loan. today we have $11 in deposits, $8 worth of loans, so we have a huge amount there. there's been discussion about adding to this buffer. the leverage ratios have changed. any one of these things talked about, whether it be enhanced requirements, different regulators, you know, living wills, capital liquidity, all

makes sense in the singular, but in the aggregate, it's a large load and my answer to critics would be give this stuff a chance to work. and by the way, there is an economic price the economy does pay if you are going to have overregulation and too much capital and too much liquidity on the sidelines. in fact today what's happening, the regulated box, what happens within the regulated side of the industry is shrinking, the nonbanks are growing, the risk isn't going away, it's just changing to different places. so -- and i would be hopeful also that our regulators look at something other than size and look at the complexity, the interconnectness of organizations.

and just like in the housing area, less credit available at higher prices for fewer people. and so, from an industry perspecti perspective, that's something we're always thinking about. let me end by talking a little bit about how i think our industry generally and how wells fargo will be successful in the future. we're in a long sales cycle business. investments that we made five and ten and 20 years ago are being harvested today and we need to make investments today that will have the company continue newt. -- future. first of all exceptional customer experiences. people ask me many times, which bank are you most impressed with. when you go to bed at night, who do you think about? >> i dream about checking accounts. but i'm actually impressed with companies like apple and google and costco, and amazon, just those aren't banks, well here's how they influence us.

they are teaching consumers what retailing is all about. so we're making lots of investments to help, you know, stay ahead of the curve, and make sure that we're relevant to customers in the future. one of the big debates is, our banking branches, we call them stores, are they still relevant? and we think they're highly relevant. in fact in this market, we have three new prototype stores, all about 1,000 square feet, compared to 5,000 square feet of the traditional. and they happen to be paper free, and one of them happens to fold in at night the walls and becomes an atm vestibule. highly valuable to us and responsive to a community. we're finding that most of our loyal customers, even mi millenials, come into a bank branch once every six months,

they don't believe they do. they would tell you they don't. but they're using all of our challenges, our stores, our atms, our online and our community. in fact some of the great retailers you see, like apple, you know, they wouldn't need to have stores, but they do, and it's part of the magic of the and. so lots of work going on there, and how to be relevant to our customers, how to know them. i have never seen a customer come to me and say you're so large, you're so impersonal, i'm going to join you because i could be 162,723. they say help me, understand me, and reward me. make it very personal about me. another big issue we're working on is all things risk. when i joined the industry, if you got your loan book right, the rest of it was, you know,

insignificant. in fact that was probably the case even as recently as ten years ago. incidentally, during the most difficult time of the downturn, we were losing over 2% of our loans to losses, which actually was not that high compared to a lot of competitors, in the second quarter of last year, of this year, we lost around a third of a percent. almost eight times better. credit has never been better. but today you have things like cyber risk. and you have interest rate risk and reputation risk and litigation risk. foreign e change risk, knowing your customer aml risk. so lots of other things. another thing that we're working on, is digitizing the enterprise. our industry, you know, has been in a second day batch process using paper process and how do our children communicate with each other? instant messaging, so digitizing enterprising using data is

another huge opportunity for our industry. and i think i just have time where i just have to really wrap this up. and let me just make one final comment. our customer base is changing. our advocacy for inclusiveness starts at the top. we have 14 outside directors of our company. five are persons of color, five are women, that so leaves only four others. in fact if i look at my 11 direct reports who report to me as part of the operating committee, the average tenure that team has with our company is 28 years and four are women. so we see a disproportionate part of our new households our new small businesses, our new corporations who come to us and bank with us being either women owned, women led, or from communities of difference.

and we have a strong passion to make sure we have a team that reflects that diversity. so thank you very much for your attention and i will take questions. >> we could go on for a couple of hours, but we're going to -- we could go on for a couple of hours, but the way we do it, i will try topo litely rapid fire ask questions. wells fargo's big home mortgage business makes it highly dependent on interest rates and the broader economy. when do you think the economy will be forming well enough to allow the fed to increase interest rates and how will the housing market and wells fargo be affected when that happens? >> thank you, i should have mentioned that i appreciate all of you being here tonight,

because this isn't the big slow in time. it's the fmoc, and all those comments we're going to hear as soon as we're done here. first of all, wells fargo has about an 18% share in the mortgage business, but about 6 or 7 of those points are agate business. we help small originators, give them money so they can complete or liquefy their mortgage. so our direct mortgage -- there's 7,000 banks in the deposit business, there's only a few hundred in the move began business. so i don't think i'm r we're oversized there, and secondly, unless you're over 40 years old, you think these rates are normal. when i got my first mortgage in 1976 it was 8.5%. and i got my second one in 1980 at 11% and i was darn lucky to get the money. the rates, the affordability index is still very attractive.

there's three things when you buy a house, the cost of the house, what you make, and what the interest rate is on your mortgage. two of those still are in very good shape, especially interest rates. so my suspicion is, we are positioned for higher rates, and i am in favor of having rates reflect the strength of the economy. so -- but i don't know when that's going to happen. i thought it would have happened by now, but i have been wrong all along. but i do think that whatever it is over time, surely there's a bias towards the upside. >> lenders survey released today by fannie mae found that large lenders expect mortgage credit standards are expected to ease over the next few months. does wells fargo plan to ease it's standards? >> this is part of the discussion we talked about where we have credit overlays, we have

done that as a first step to see if we can't help out. but i don't have any plans, if we would, we would surely announce it ahead of time. but i don't want to make plans today. >> as you mentioned, in hot you are urban markets such as washington, young people are being priced out of the homeowner ship market. how do we make sure that young people are able to achieve it just as previous generations did? >> that is a terrific question. in fact in the last two years, wells fargo has given to cities almost $200 million, no strings attached to help with homeowner ship. because we want to test this idea. has america -- have americans lost their interest in owning a home. in fact we did a recent stud yea about how america thinks about homeowner ship and no, there's still a very strong desire, in

fact those moneys were used very quickly as down payment dollars or helped to fix up a home, so people could get into homeowner ship. so, no, it's a very -- it remains for 2/3 of americans still a high priority, is probably the most -- the biggest thing they'll ever do financially. and inventory and affordable inventory in the district and other places is a real issue. >> you spoke about the fact that 34 young people are saddled with student loan debt. do you have any suggestions for how we can make sure that future generations don't face such a heavy loan burden? >> maybe i should do first, is make sure that everybody is on the same wave length. there's about 1.2 trillion drrz to $1.3 trillion of student debt. 92% of that is through the federal government. only 8% is private stuchblt debt. that debt has almost doubled in the last six years.

and so this is -- you know, this is really an issue between the federal government and schools and so forth. incidentally, school tuition has risen 2 1/2 times the rate of inflation over the last ten years, and the perform imagine in the private area, our student loan portfolio is very small. which is less than 2% delinquent. on the federal side, it's eight or times that number. it clearly is an issue. >> as you noted, the current outlook for the u.s. economy is relatively strong. yet there is growing concern.

i should mention that as i'm optimistic about the u.s. economy, there are some geopolitical, it's a more dangerous world today, and as you probably saw china is slowing a built and larger economies there. clearly jobs have not kept up with -- in many sectors, in many situations with the economic growth that we're seeing's been quite uneven and i do worry about the inequities and the differences. and there's different ways to solve for that. but i think the more we can get business engaged and hiring, people want to work, and it's more about -- it's partly paycheck, but it's also partly being part of a solution, the dignity that comes with a job. like i tell people, i don't need

to go to a focus group to find out what's happening in america, i go to a family reunion. i've got family members in every realm of the economic ladder and it's a real issue. >> you've touched on some of this, but what in your opinion could stand in the way of future economic growth in america? >> i think -- first of all, i'm in favor of good regulation. i want good, honorable, competitors doing the right thing, that helps us. but i want to make sure we don't go overboard and that's not only true for our industry, for any industry. secondly, when washington behaves badly, and you can define that any way you want to, it has an impact on the real economy. we saw in the past where debt ceilings were breached and fiscal cliffs were coming and going, that's hard on the economy. but the third thing i think,

it's not only not doing things that hurt, islt's doing things that help. anything that helps jobs here i'm in favor of. and one of the things that surely is on the table is do we have the appropriate tax policy to promote jobs in america? and especially manufacturing jobs. >> a little bit of a segue, the justice department said today, that it is investigating potential illegal conduct by individuals at major financial institutions that undercut the integrity of the markets. the department of justice said it hopes criminal charges will be filed in these cases in the coming months. do you have any comment on the department's increasing focus on wrong doing at major banks, and also the announcement today that bigger rewards will be given to wall street whistle blowers?

>> i have not seen that report, but i, as a fundamental view, i want to live in a law abiding country, and if there are wrongdoers, they ought to be held accountable. and i have -- that's the way we run our company, culture is extremely important in that, and i think that we'll be better as a people when things are done in an appropriate manner. again, i have not seen that report and i don't exactly what's happening there, but i'm in favor of holding people accountable. >> turning abroad for a moment, is wells fargo considering expanding abroad through acquisitions? why or why not? >> 97 first of our revenues and our people are here in america. i mean if i don't play a game called texas hold em. but apparently l there's a time in a game where you believe you have a great hand, you go all

in. we're all in in america. and our 3% international business which we love, is mostly an extension of helping our u.s.-based customers, consumers and businesses do business internationally. in fact i think if you look at the regulatory regiammes around the world, there is lots of interest through what they're doing to bring their banks back home if you will. so i don't see us, i see us doing most of our work here in the u.s., you never say never, but we are largely based here and what we do internationally is pretty much in support of our customers. >> even though most of your business is in america, you might have a comment on the following, as you know, tomorrow the scottish referendum takes place. if scotland votes yes for independence, could it affect global financial markets? >> well, that's out of my pay grade.

i don't -- as much as i know about scott land comes in a bottle of scotch, and i only do that -- i don't mean that in a negative sense, but i do that once a year. but i really -- i don't have a position on that. >> we'll come back domestically, if you had spoken at this podium six years ago today in the midst of the financial crisis, there's no doubt you would have delivered a very different speech. looking back on the crisis, how well do you think the united states government responded and how bad could things have gotten if the government had not responded as it did? >> i think about that from time to time, but i don't dwell on that because there are such hardened views about the need at the time and it's easy to go back and monday morning quarterback, but for those policymakers, you know, on the controls who have the levers and the buttons at the time was a

difficult period to think about, first bear and then the gsc, and then lehman and wamu and wachovia, so there was a lot going on. you know, in our time, you know, we didn't ask for the money, we didn't believe we needed it, we paid it back in a year with lots of interest. so i tend to want to focus forward. and i'll let you know historians in the future look back at this period of time. it was clearly a difficult time. let's see who can make the best of it going forward. >> what would be your prescription for washington, d.c. lenders so that the wells fargo culture can help fix our government to work better. excuse me, let me rephrase that.

what would your prescription for washington, d.c. leaders be so that wells fargo culture can help fix our government to work better? >> well, you know, i am lucky compared to the government. i have a team who loved working at wells, the average tenure has been 28 years in my direct reports. and every eight years they don't have an option to get rid of each other. so it's a bit different. but i would say this. we play us ball at wells fargo. it's part of our culture. not that me's not important. the possessive pronoun. but never at the cost of the plural pronoun. so -- and i don't know how to be successful other than that, in fact when we interview people, we care more about what they care about than what they know. we always have an opportunity to teach them what they know. if we put country first, and

maybe party second, which i know is hard to do. at least in our business, we don't put our business first, we put our customer and our company first. >> we're getting more questions focusing of course on how wells fargo did during the financial crisis. and wells fargo weathered the financial crisis in far better shape unanimous the other kind. it was, as if wells fargo was not part of the wall street culture at the time. why was that? >> you know, first of all, we're not on wall street. not that i -- we do some sophisticated things for top-end clients, but we are very much in the real economy and what you do during boom times is much more important than what you do during the down times.

so, i'll just give you a quick story. back in 2003 or so wells fargo was the largest mortgage company in america. not that we want to be the largest, it's just that we thought we were doing a good job for our customers. then we started to hear about negative amoretizing loans. what those are is you buy a house and let's say you borrow $500,000 and the interest rate is 8% so you owe $40,000 a year of interest which is about $3,500 a month. but the bank says to you, no, no, only pay us $1,000 a month. we'll add it to your principal, so you owe more later than what you started with. and we said, really? how is this customer-friendly? how can this help customers succeed financial lip?

that's what we do every morning. i tell our people, when you get up in the morning and go to work, your most important job is not to make money. buffett knows, all of our investors know that. the most important thing is to serve customers. never put the stagecoach in front of the horses. so what we did is we give up market share. we became number two, then number three, others were doing this stuff. and layered risk on, you know, tell me what you make loans and liars and this sort of thing like that. and when it all blew up, that's when we got big in the business because you make your best loans after a downturn not going into one. so, it's just -- it's a focus on customer. we weren't -- i tell you, i didn't see this bubble coming. i didn't see 2008 coming. i've been in this industry since 1975 because i didn't have an appreciation for all that was going on.

we didn't do everything perfectly. we didn't make every right decision, but when you put customer first and really honor that, stick with your customers, good things generally happen. >> thank you. you mentioned mr. buffett, what influence does mr. buffett have on operating decisions? >> he could have as much as he wanted, but he has none because he doesn't ask for it. first of all, warren is just a terrific human being. i'll tell you just a quick story because i could tell stories all day on warren buffett. so i got to know warren just a little bit before i became coo because i play online bridge and any time i need a good sclaking, i play with him. he's a very accomplished player. sharon osberg is his partner and they're tough at the table. but once i became ceo, we started doing a home in home

dinner or lunch. so, my first time to omaha to have dinner with him, we went to -- i can't remember if it was pick low pizza or garages and warren eats a full meal. let me tell you, he has a the-bone steak medium rare, mash potatoes, side of chicken parmesan, cherry coke. and when the food comes, warren grabs a salt shaker in his left hand and one in his right hand and it's a snowstorm. i know a snowstorm when i see one because i'm from minnesota. i said, warren, what does your doctor say about all your sodium. he looks at me like, doctor, really? no doctor and no directions. i said, warren, seriously, this is not good. i said, is health, you know, a strength in your fam sfli what's your jeanology like? he said, well, really his father i think passed away earlier -- i

can't remember exactly what the time was, but we started talking about kol lon issues and colin cancer. i said, warren, that's really important. you have to get a colin os koe pi, that's an absolute requirement. he said they took a foot out. i'm great now. i went into the hospital with a colon. i came out with a semicolon. he laughs at this. how much of this is true but he had me going the whole time. here is about warren, i remember another story we were at an event last fall where we had 500 of our bankers together and he was kind enough to come, which is a rare occasion. and we were sitting next to one another on the stage. we were doing an hour, hour and a half side by side, if you're old enough, huntly brinkley, we were doing that side by side thing. and one of our team members -- these are all of our team members. somebody from the audience says to him, mr. buffett, how do you

decide what companies to invest in because warren is very disciplined about he has inbakt that says yes, one says no and one says too difficult. he says you only do what you know. and without missing a beat warren -- i'm sitting right next to him and warren says i like to invest in companies that are so simple to run even an idiot can do it, because sooner or later one will. but warren, what's so special about warren, he takes the long view. and he understands culture. he understands risk. he understands the human nature and we are so fortunate to have him as our largest investor and frp us to be one of his largest holding from the best investor the world has ever known. and for those who don't know him, the best person the world has known. he's that good of a person i can't even be objective. >> immigration is one of washington's long-term issues.

from the wells fargo standpoint, what needs to be done? do you think more needs to be done to allow well-educated immigrants to come to the united states? >> well, let me just say, first off, this is an issue that is best dealt with here -- it's an issue that needs to be dealt with. we're a nation of immigrants. my family -- my dad's side of the family came here in the 1850s. since we bank all over the country, we serve many first-generation immigrants and others. we've always won in this country as a team, you know. i'm just hopeful that however it goes that congress will have the will, along with the administration to deal with this issue. >> does wells fargo support the securities and exchange commission advancing a rule that would require brokers to act in the best interests of their

clients when providing retail investment advice? >> you know, i don't know every regulation, every rule, but i think what we're getting at here is going from a suitability standard to a fiduciary standard and i think that any of our 16 or 17,000 wealth advisers want to do that everyday, to do things that are not only appropriate but in the best interest of the client. >> you mentioned the growth in the u.s. energy industry. please could you elaborate on its long-term economic impact. >> in fact, this is one of the most exciting things for this country and without going through a big energy discussion here, let me just tease out a few facts that maybe you know and maybe you don't know.

the value in btus the energy value in a barrel of oil is six times that of an mcf of gas, metric cubic feet, just so we get that on the table. let's say the average price for a barrel of oil in the world is $90. now it's little bit higher if you're talking about this versus texas and there's different terms for that. but that would mean if you divide that by six an mcf of gas should cost $15. if you go to china or southeast asi asia price is about $15. if you go to europe, the price is little bit less. they get gas out of russia, so maybe it's $12 or so. what do you think the price of an mcf of gas in the united states is? it's about $4. what do you mean $4, isn't this a commodity?

no. well, why don't we just ship it every place over the world? well, you need lng plants. you need to liquefy and you have to get approval from the government. and yet we have this gift of gas everywhere. now, there's controversy around that, but think of the advantage we have visa v the rest of the world to develop an industry at a cost advantage vis-a-vis the rest of the world at a factory of maybe two or three times that we could put into the product finished goods to supply the world with things that they want to buy that are american. >> we are almost out of time, but before asking the last question, one more to go, i would like to remind you about two upcoming speakers' events. this friday, september 19th, our guest will be larry merlot, the prest