|Wells Fargo CEO John Stumpf.|
MINNEAPOLIS ( TheStreet) -- Wells Fargo ( WFC) CEO John Stumpf issued perhaps his bluntest criticism of new bank regulations in a speech and Q&A session on Tuesday in his native state of Minnesota, saying "government price controls" have put an undue burden on his industry.
Stumpf, who leads the country's fourth-largest bank and second-largest mortgage servicer, also issued grim predictions for the housing market and income inequality if lawmakers don't set better policies going forward. He was particularly critical of new rules related to debit and credit cards that will hinder banks' ability to charge fees, raise interest rates and manage risk. A proposal by the Federal Reserve related to debit-card interchange fees that banks charge merchants will cut it a level of to 12 cents per swipe, down 72% from the typical 44 cent per swipe fee they now charge, according to research firm R.K. Hammer. "We have government price controls
in banking for the first time," Stumpf said during a luncheon at the Economic Club of Minnesota, according to a report in the Minneapolis newspaper Star Tribune. "As I talk to senators, I ask them, 'What is the next product you want to manage and control?' ... Should we regulate the cost of computers?" Stumpf also reiterated support for a government backstop of the mortgage market, a position he has expressed in the past. Congress is now starting to debate the future of housing finance and how to overhaul Fannie Mae ( FNMA.OB), Freddie Mac ( FMCC.OB) and other government-sponsored enterprises that have become enormously costly for taxpayers due to the housing market collapse. Fannie and Freddie provide guarantees on mortgage bonds that give investors peace of mind, while other GSEs provide additional funding for affordable housing. According to a report in a Minnesota business publication, Stumpf said that the banking industry simply doesn't have enough capital to support the nearly $11 trillion U.S. mortgage market on its own. And, without government backstops, investors would be less willing to buy mortgage bonds. "Without that, we'd return to the practice of rationing home mortgages," Stumpf said, according to Finance and Commerce. "We don't want to go back to that."
He also noted that the U.S. job market is out of whack, particularly for the middle class, due to vanishing manufacturing jobs. Since new job creation is going toward low-paying service jobs and top-dollar jobs in areas that require high levels of education and talent, many of the middle-class workers who were laid off will find it difficult to make a living. Stumpf suggested that the only way to increase manufacturing jobs is for the U.S. government to remove regulatory and trade restrictions that other countries don't have, thereby making it more competitive. "We don't really know how to recover in an economy that's service-based," Finance and Commerce quoted Stumpf as saying. -- Written by Lauren Tara LaCapra in New York. >To contact the writer of this article, click here: Lauren Tara LaCapra. >To follow the writer on Twitter, go to http://twitter.com/laurenlacapra. >To submit a news tip, send an email to: firstname.lastname@example.org.