I hate the word universal, because I don’t know exactly what it means. The question is, does it work for the client? Travelers was a diversified, financial conglomerate that did very well. The businesses had nothing to do with each other.
It might be harder for us to charge a higher interest rate, like they do, so it might not be as profitable for us. But we can either compete or partner, like we’ve announced with On Deck, which does some of the stuff we just spoke about.
We have built a very good company, and we’re proud of it. We also recognize that much of it has been built on the shoulders of the thousands of employees and leaders who have worked here before us.
I don’t like the term “universal bank.” The Chinese government legitimately wants to have a very strong economy. When they talk about SOE reform, they know that’s part of it.
Banks also have to say no to customers. We can’t always give clients what they want; it may not be in the client’s best interest.
If you’re making all your money simply betting on interest rates, that’s not a business. Flow is a business. On the outside, they look the same for a while. But when you dig into them, no, they weren’t exactly the same.
Well, if you were the American public, you saw a catastrophe. In general, you would say, “The biggest institutions of America – Washington, broadly, and Wall Street, broadly – they’re to blame.” And, broadly, they’re right.
People need to understand: Businesses are going to make mistakes. They shouldn’t be shot and hung every time. We should apologize for it. We should make up for it. My shareholders paid for it. No customer was hurt, which is critical to me. But I hurt my shareholders, and I wish I hadn’t.
Finance went from being a small business, effectively, to being a big business. In part, that’s the growth of the world’s wealth. That’s called savings.
But in general, as countries get wealthier, there’s going to be more savings, which means you’re going to have intermediation. So part of it is just the huge growth in wealth, and part of it was globalization – these companies, these clients getting much bigger and much more global.
From my point of view, the American financial system – including banks and investment banks – is far safer because of capital and liquidity requirements. Despite all the turbulence so far this year, I don’t think anyone’s questioning our system. And that, obviously, is a good thing.
I think one could argue that there’s more political input into the regulatory side, and on the regulatory side there seem to be fewer people with financial and banking experience – there are more lawyers, academics, economists, maybe politicians now.
If you were a corporation needing financial services, and I can give you something better, faster, and cheaper across 12 products as opposed to eight, that’s business. I’m doing it because I’m serving you; I’m not doing it because I want to be universal.
The government isn’t going to say, “We’re going to regulate banks, but we’ll leave these other companies alone.” I think the regulators want to make sure that they have some form of regulation on anything systemic. We like our hand. But, you know, honestly, who owns the future?
We use technology to make it cheaper, better, and faster for the client. And then if you have the most flow, you can win. Now, having said that, Silicon Valley wants to take on this business. They think they see an opening.
If you look at the banking business over many years, it’s always been a huge user of technology. This has been going on my whole life, that people have been adding technology, digitizing services.
I think what you’ve seen them do recently in the markets is what most of us learn doesn’t ultimately work. But I think everyone has to figure that on their own.
I don’t think you could have a banker serving in a major role in Washington in the next 10 years. I just don’t think it’s going to happen – it’s just not politically feasible – so I don’t spend much time thinking about it. Do I think I could do a good job? Maybe. It’s possible.
I’ve asked our people, “Why don’t we just put a revolver on top of our basic loan?” Make it easier for the client.
I was a normal human being, but I did like that. I read a lot. I also liked math and science.
One of the issues with some of these lenders is going to be, where will their provider of credit be when there’s a crisis? That’s why some of these smarter services, to support their operations, are courting more permanent capital. They want a source of longer-term funding that can survive a crisis.