In his 35 years at Wells Fargo, John Stumpf has made the unconventional journey from repo man in the company’s loan administration department to chief executive of the world’s largest bank by market capitalization.
Mr. Stumpf, who arose from modest beginnings on a small farm in Minnesota as one of 10 siblings, never in his wildest dreams imagined he would one day become a big-time banker – let alone head of the biggest on the planet. But after a series of lateral promotions took him around the country, he emerged with the necessary perspective to steer the 164-year-old bank through the financial crisis more than just intact.
Now, Mr. Stumpf proudly notes there were only two companies that earned more than $5 billion (€4.5 billion) in the first quarter of this year: Apple, and Wells Fargo. Compare that to Deutsche Bank, Germany’s largest bank, which seems more like a community bank with its earnings of €236 million in the first three months of this year.
In principle, Wells Fargo’s meteoric rise should sound warning bells for politicians that cried “never again” after taxpayers were forced to bail out the world’s largest banks in the aftermath of the 2008 financial crisis.
The words “too-big-to-fail” now send shudders down the spines of many policymakers on both sides of the Atlantic, who have been cracking down on large banks with tough new financial regulations designed not only to make the financial sector less risky, but also to shrink banks down to size.
That drive for smaller banks has worked in Europe, where banking titans ranging from Barclays to Deutsche Bank to Credit Suisse to Unicredit are all being forced to cut employees and gut much of their investment banking operations. The cost: Many of these banks are unprofitable, and desperately searching for sectors where they can still earn money.
Things have gone differently in the United States, where big banks have largely returned to profitability since the financial crisis, leaving their European rivals in the dust.