CFO of Wells Fargo, Mike Santomassimo, who arrived at the bank and has overseen a lot of the transformative changes that have fueled a significant difference in how the market values the firm. So thank you for joining us, Mike.
Thank you.
So I just said the word transformation. Obviously, I have to start with the big announcement that we saw a few weeks ago, that the OCC terminated the consent order that I like to say started it all, the 2016 sales practices consent order. If you could give us just a little bit of insight, I know you have eight consent orders left, if that's right. What does this mean, and what can investors take away in terms of this consent order being terminated as it relates to your progress in remediation?
Yeah, well, first, thanks for having us again. It is nice to be in warmth once again. It's always a good time to come down here. I think when you look at the sales practices consent order, you first have to stop and really thank the thousands of people that worked on this over a long period of time. And it really was their effort that really got us to where we are. And I think it's just another data point on this journey that we've been on to show you that we are making the progress that we've said we're going to make. We had 12 outstanding a few years ago. We've closed some of them. We still have more left. And it continues to be the topic and the effort that we all spend the most amount of time on.
It's going to stay our top priority until we're finished with the work. But it is a good sign that we're able to make the adjustments, make the investments, and then it gets recognized when all the work's done and it's working well. So we were very happy to see that get taken care of.
So you get a lot of questions about regulatory remediation, the Asset Cap, balance sheet positioning in this rate environment. But I thought I would start in terms of how your lines of businesses are doing, because I feel like there's been a lot of work that's obviously been done. And I think that you probably talk less about those opportunities than you would maybe like. So let's start off in consumer banking and lending. Could you tell us what your deposit balance and spend data is telling you about the sustainability of U.S. consumer health?
Yeah, I feel like we say the same thing over and over the last number of quarters. But the consumer continues to be very resilient through a time where I think we all would have thought there would have been more weakness at this point. Coming into this environment, consumers had a lot of liquidity. Those average balances, median balances, are down off of the peaks, in most cases still pretty, depending on the cohort, still higher than it was pre-COVID. And that's what's fueling some of the strength and the spend that we see. We were saying before the conference, you go out to dinner, restaurants are packed. You travel. The plane I was coming down here last night, packed, not a seat on the plane. And so you see the signs that are out there that it's still very, very active.
I think that's what you see in the underlying spend data. Now, having said that, we still expect that deposit balances are going to come down as people spend. We expect that you're going to see some deterioration in credit as time goes by. I think we can't get lost, although the averages and the aggregate all look really good, there are still a bunch of cohorts of clients and consumers that are more stressed, right? Folks that are on the lower end of the wealth or income spectrums, they're definitely feeling stress more than others. Now, wage gains have helped offset some of the inflation that we've seen, but it's still pretty tight for a number of consumers out there.
So you talked about pressure on deposit balances. What inning are we in in terms of consumer deposit mix shift? And CDs continue to be a low percentage of industry deposit balances relative to history. How do you expect that to develop this year?
Yeah, although I'm a big baseball fan, it is hard to say exactly what inning you're in, even though I did see my first spring training game on TV yesterday. I think when you look at what's happening, it's just this gradual spend down of consumer deposits is what you're seeing. The biggest driver is still the spend. There is still some rate-seeking behavior that happens, people buying CDs or other treasuries or other money market funds and other ideas like that. But the biggest driver really is the spend. And at some point, that's going to moderate and stabilize. And I think we expect to see that at some point. But as we come into this year, as we said in January, we do expect that you're going to continue to see some pressure down. CDs are a good alternative for many people that are seeking rates.
I think we've seen some pretty good, consistent interest in CDs over the last few quarters.
Speaking of that, how do you expect consumer deposit pricing trends to develop as we are in this prolonged Fed pause?
Yeah, I think as you come to where rates start to peak, we came into this environment knowing that you were going to see continued upward movement of pricing or overall interest expense, really, after the Fed stopped hiking rates. And that's kind of what you're seeing, I think, across most banks. I think we're not seeing a significant amount of pressure to raise standard rates. And we have plenty of options for people, like CDs or other promotional rates, where people are seeking higher balances. And so I don't expect overall standard pricing to change significantly as we look forward. But I think you'll see people take advantage of CDs and other alternatives they have, which puts a little bit of pressure on upward pressure on interest expense.
So switching gears to card, where you've seen significant momentum, it's clearly a big topic for investors. You did say, Mike, during the earnings call that profitability should improve as accounts mature. In the cohort where you've been focusing on, how long is that investment cycle before inflection? And you also mentioned introducing two new products this year. Clearly, we have behemoths in terms of issuer, and one new potential behemoth. How hard is it to reach that inflection point when you're competing with folks with really high returns on a consolidated basis?
Yeah, I think a little context is helpful here. And I'll make sure I cover all parts of that. But you go back three or four years ago when kind of the new management team started, we had a decent-sized card business. But I think we would all say internally that the product set wasn't as competitive as it should be. The service wasn't where it should be. The operational aspects of it needed to be improved. And so we set out an effort back in the fourth quarter of 2019 to do that. And think of this as almost a complete refresh of the product set and a lot of how we manage it internally. We launched the first new product about 2.5 years ago, maybe a little less than that at this point. And we're five product launches into this journey.
We've got a couple more at least coming this year. And I think there's probably a little bit more left after this year. And so when you look at the natural seasoning of these accounts, it takes two or three years for an account to season. And so you start launching it two or three years ago. And now you've got to start to see different vintages come in and mature. And so we still have a bit to go before you start to see the aggregate impact of that mature and season. But I'd say overall, the product set has been very well received. You start with just really good, simple value propositions for clients. And people like that. And I think we've seen a very good selection of our products. The credit profile is very good.
We're seeing both Wells Fargo clients and new-to-Wells Fargo clients purchasing the product or applying for the product. And I think we're very happy with the progress that we've seen as we've gone through this. And I think as we go over the next few years, it'll start to all mature and come together. And we very much feel like we can compete as long as we continue to focus on the product and the value proposition for clients.
Before I move away from the consumer, the consumer has been a source of savings as you've remade distribution and operations here. Is there any material opportunity to find gross cost savings in the consumer franchise?
Well, I think as you've seen over the last few years, we've saved about $10 billion on a gross basis across all the work that we started back in the end of 2020, early 2021. And I think some of that was in the consumer business, for sure. And I think we continue to believe we've got efficiency still across the whole company. And the consumer space, it's things like clients continue to want to interact with us digitally more and more. And so you'll start to see more types of transactions in a much deeper way move to, whether it's even ATMs or online in different channels. And so that, over time, creates more efficiency as well. And so I think each of our businesses still have a tremendous amount of efficiency that we can get out over time.
Some of that will be us investing in the underlying platforms. And some of that's just meeting customers where they want to meet us and interact with us.
Switching to commercial banking, what's the mood of your corporate and SME clients as they think about the business climate in 2024? And we've heard a lot about soft loan demand. What are really the primary concerns that your clients have that's underpinning the lower demand for financing?
I think people are just being cautious and prudent as they sort of look at their borrowing. And it feels like that kind of makes sense if you think about what could be still a potentially more difficult environment. Even though the consensus appears to be very much aligned around this soft landing concept, it could be a little bit more problematic depending on how things play out. And I think people are just being very prudent. If you go back and look at what's happened over the last three, four, five years almost now, time flies, I think people have realized that they don't need to build as much inventory as they used to pre-COVID. So they can run with less inventory. Clients are okay with that and are able to sort of wait for product if they get to that point.
I think labor is still a little tight in some cases, depending on who you talk to. I think you see lots of headlines around what's happening in the labor market. But in reality, it's still very tight, I think, for a lot of companies out there. And so I think they're just looking at what could be a little bit more of a difficult environment and saying, well, maybe I should just be a little prudent about the investments and the inventory I build, which I think is obviously constructive from a credit point of view and I think smart from a business point of view. At some point, that will start to pick up. But it hasn't started to move yet. And you can see that in the underlying Fed data, the H.8 data, already. I think that's pretty consistent now across the industry.
I know we came into the year, particularly in the first half of the year, thinking that wasn't going to change much. So far, that's been the case. I think people are just being smart about what could be a more difficult environment coming.
Outside of macro, maybe I should ask this question. Where are you investing the most in this business?
In the commercial bank.
In the commercial bank, yeah.
Yeah, look, I think there's a whole series of things that we've been investing in the commercial bank. It starts with our people, making sure we've got the right kinds of people, the right number of people in all of the geographies where we think there's opportunity. I think we have a really good market share in a lot of places around the country. But it's not consistent everywhere. And so we're adding bankers and product people in those places. We are investing in our underlying technology that we deliver to commercial clients. We call the front end of it Vantage, Wells Fargo Vantage. And we rolled out the new portal last year. And we're going to continue to make those investments. And it's a bit of a different interaction model than the consumer side. But it still is very important for many of our commercial bank clients there.
Then I think as we look at the investment banking opportunity that we have to help support our mid-corporate commercial bank and broader middle-market commercial bank clients, we've been adding people there as well to continue to make sure that we've got the right coverage model for many of those clients. So we're very optimistic about the commercial bank over the long run. We'll continue to make those investments.
I definitely want to ask you more in a little bit about the CIB. But before we move away from that, I suspect this is going to be a big topic at this conference, given the corporate attendee list, but private credit. There's been so much discussion about private credit taking middle-market share away from the banking industry. In your seat, how much of this is truth versus conjecture? And maybe also, if you could give us a little bit more detail about your partnership with Centerbridge.
Yeah, so I mean, you can't wake up anymore and not pick up the paper and see some story, including today, about private credit and different flavors of it, for sure. I think where you see most of the activity, at least in a more significant way, has been in the LBO space. You can see those deals happening all the time. In a lot of cases, not all cases, but in a lot of cases, those deals are things that we probably wouldn't have put on our balance sheet anyway. It could be higher leverage points or other structural components of the deal that make it a little less sort of aligned to what a bank might put in their underwriting book or on their balance sheet.
And so you've certainly seen some stretching of sort of the guidelines and the structural pieces of these, I think, as you look at some of the private credit stuff. That's okay. We're not going to do those deals. We need to all be sort of thoughtful about how those deals evolve over time. You've seen a little bit less on sort of the core middle market so far. We've been working on this now for the better part of a year and a half or so. We did establish a partnership, maybe the wrong word, but an arrangement with Centerbridge where we've created what we call Overland Advisors.
What that does is give us an opportunity to still be relevant for clients where it's not something we're going to put on our balance sheet, but we can offer them a solution that sort of meets their needs. It's generally going to be companies that are in the $50 million-$125 million EBITDA, maybe looking for $50 million-$200 million of financing. It's a creative way for us to still be very relevant for customers and give them an option that we wouldn't have been able to do if we didn't have the arrangement. It's just operational earlier this year. Hopefully, we'll continue to advance it. We'll see the results of it as we go.
But it's a good way for us to, again, still just be relevant with clients and give them a solution that we wouldn't have been able to do before. And we'll see where it goes. I think you've seen a lot of press about potentially other people thinking about other ideas. And we'll see how it evolves. And there could be other opportunities to do interesting things like that in the future.
This is a good segue for the corporate and investment bank update. Your trading revenues have stepped up materially in 2023. The environment was on your side. Clearly, the data is showing you're taking market share. What are you doing differently?
Well, I think this is, again, something we've been working on for a number of years now to continue to invest in both technology, e-trading, other things like that, as well as some people where we've brought in different kinds of people or different quality of people in different parts of our markets business. We are just being very, very methodical about making sure that we've got the capabilities we need to support our core clients. We're not out there trying to be everything to everybody globally in the markets business. We're very focused on doing the things that fit who we are as a bank. I think you've seen the results come through. We're happy that we've had a few good quarters, three or four good quarters. I think we need to see sustained performance over a much longer time period. But we're happy so far.
If you look at the types of things we're doing, it's continuing to invest in our foreign exchange business. If you go back five or six years ago, that wasn't a focus. It wasn't actually in our markets business. It was actually sitting in our commercial bank. It was only focused on payment flow coming out of our corporate clients. We build some basic capabilities to add institutional clients. You start to see the benefits of that. It makes us better at supporting our corporate clients. You can look at the rates business and so forth. Each of those categories, we've been able to continue to invest in a very small way to sort of get more capabilities.
But when you sort of broaden it out a little bit there, we've also been spending a lot of time across the corporate investment bank to get the businesses to be more integrated. The commercial real estate business, it's a great business that we've been in for a very long period of time. We're quite good at it. But there wasn't enough engagement with the markets and investment banking side of the business to drive fees off of the exposures that we've got. Same thing in our fund finance business. Same thing in banking and markets to really sort of get that ecosystem to generate more. And I think when you look at the results we've seen, we've been able to up-tier the fees without adding a lot of balance sheet or a lot of risk-weighted assets.
And so that's the type of business we want to continue to see, kind of getting more out of the exposure that we've already got across a whole range of clients. And I think as we build the capabilities and become relevant, customers are very, very, very, very open to doing more with us and kind of want alternatives to some of the other players out there. And I think we're pretty happy with what we've seen. But we have to deliver over a much longer time period in the markets business.
So if I'm asking you this question five years from now, excuse me, what does your CIB look like? I mean, like you said, you have so much exposure. You have one of the largest balance sheets and largest corporate client Rolodex already out there. What does it look like in five years?
Yeah, well, I think when you look at what we have been in the past, we do have a lot of exposure to corporate clients. We do have a big commercial real estate business. We have a decent-sized markets business. But we weren't getting the benefits out of having it all together. You look at our investment banking business, where you look at just fees in general relative to the exposure we have in the CIB, we were underperforming relative to many of our peers. And so we need to continue to find ways to monetize the relationships that we already have. And that starts with having really good capabilities, really good people, and beginning to execute in a different way. The investment banking business is a great example of that. We've been in the investment banking business for a very long time.
We just started talking about it more a few years ago. But we've been there for a long time. So there, we brought a new leader in. It'll be two years and a couple months. They have been methodically sort of working through making sure we've got the right leadership. We've got the right people covering clients in each of the different sectors. We've got the right capabilities and the products. And you're starting to see some of the results there. And so that's about being much more relevant for customers in a much different way than we would have been historically. And I think while it's still very early, many of the folks we've hired in the investment banking business have only been here a short amount of time.
We're starting to see some green shoots, a bunch of deals that we wouldn't have been part of in the past, some activity levels increasing quite a bit. And so ultimately, you'll see that through the market share results or wallet share in that business, which are very public. And I think we've been pleased so far with some of that. And then it's really just continuing to do more with the different components that we've got. And I think we're very excited that there's a lot of opportunity there. Again, not trying to be everything to everybody across that business. But I think for our clients, which is principally in the U.S., being much more relevant for them across the capabilities that we've got across those businesses. And I think that'll serve us well.
And finally, before we take it back to the top of the house, everyone of us in this room understands that when balance sheet's tight, the CIB business, especially markets, tends to get allocation pulled back. I think you mentioned on the earnings call that there'd be opportunities to ramp up businesses within the CIB once the Asset Cap is lifted. And maybe just elaborate on those opportunities.
Yeah, well, first, our focus is really to solve the risk and regulatory work first. That's the key focus. We can't lose sight of that. I think every week, every day that we come in, we put the effort in to sort of make sure that we do that. I think when you look at the markets business in particular, that definitely was a business that was impacted by the Asset Cap. We've had to reduce that balance sheet as we went through COVID in particular. So there'll be some opportunity, we think, to increase the activity there. Some of it could be financing-type trades. Some of it's inventory that you hold in certain businesses. But all within sort of the risk appetite that we've got.
I would just caution it, when it does happen, it's not this kind of light switch kind of moment where today it's on and today it's off. All of a sudden, you start to see this growth. The opportunity will be a function of the environment we're in. It will take some time to build up over time. But we do believe that there'll be some opportunity there. I think we're positioning ourselves to be relevant for clients.
So I'm about to ask about net interest income. Don't worry. But I thought it would be a good time to remind everybody that through the UBS conference app and the QR code, if you want to ask Mike a question, I'll get it on this iPad right here. And I will ask him. But we also do have old school analog. We will have mics in the room also. So putting this all together, I do want to revisit your 2024 guidance for a 7%-9% decline in net interest income in 2024, which was anchored off of a curve that had six cuts in it. And you noted that given your modestly asset-sensitive profile, the impact to each rate cut or lack thereof was linear in that you assume your balance sheet is flat. We've clearly pushed rate cuts out later.
Could you tell us a little bit more about how we should think about the proportionate recovery to NII or the proportionate impact to NII?
Yeah, well, I would just make sure you keep in mind the sensitivity we give you in the Q or the K is really a 12-month number. And so when you look at the curve, many of the rate cuts were in the latter part of the year. And so while the curve's higher than expectations are higher than they were, it's not like it started yesterday because a lot of the rate cuts were later in the year. When you look at rates in isolation, higher rates, modestly asset-sensitive business is a positive. However, you've got to look at, that's one factor that you sort of have to look at across the whole balance sheet. And I think it's early in the year. And we'll see how things play out.
I think how deposit levels and mix play out is going to be an important factor, what ultimately happens to loan growth throughout the year. And so I think there'll be a whole number of factors. And I think that the only thing the last few years have taught us is that it's going to change. And I think you've seen this huge amount of volatility in rate expectations over the last, frankly, last like three years. I feel like every time in this conference, every year in this conference over time, there was like, rates are doing this or rates are doing that. And then like four days later, they change. Or two weeks later, they change quite significantly. And so I would sort of, yes, as of today, rates are a little bit higher than what we assume. But that is only one factor that goes into it.
At this point, we're still very comfortable with our guidance.
So putting together something you said earlier during this conversation with this particular question, you did also mention during the earnings call that you'd replace declines in consumer deposits in 2024 with market funding. And the latter grew something like $70 billion last year. With your LCR at 125% in 4Q 2023, you have $237 billion in cash. Why do you need to keep that much cash liquidity on hand funded by market funding?
Well, I think we'll see how that goes throughout the year. And obviously, we want to be there for clients first. And so we want to make sure that we're always positioned to be there as clients sort of need us. And then I think as we go, we continue to look for opportunities to prepare for lower rates. So that's adding securities in the portfolio. And so you'll see some modest deployment as we go throughout the year. And I think as we go and we get a better sense of where all the demands are going to be from clients, you may see that number move a bit.
On the fee side, Mike, putting everything that we discussed together, it does seem like your biggest opportunity for near-term fee growth is taking market share in the CIB. But maybe we'll revisit wealth here. You've talked about the attrition being stemmed. But is there a point where Wells can potentially grow more than the market? And are you now at the point where you're not just trying to retain but attract advisors to the platform? So tell us a little bit more about the transformation here.
Yeah, no, I mean, and if you go back again four or five years ago, wealth was definitely one of the places, when you think about the advisor force that we have there, was impacted by the sales practice issues that we had. And I think part of what we've been focused on for the last few years is really continuing to stabilize that, which check we have. I think Barry Sommers and the team have done a really good job. And part of that's just basic management, listening to advisors, making sure we're improving the experience, adding advisors, adding capabilities, improving product sets, particularly in alternatives and other offerings that we've got. And so we feel really good that we're in a very different spot than we were a few years ago. And if you look at the capabilities we have, we feel really good about the product set.
We feel really good about the way the business is being managed. We're starting to see more and more advisors come onto the platform. So I do think there'll be an opportunity to grow that as we look forward. I think what's a little unique about our capabilities is that we have not only the traditional advisor network. We also have opportunities for independents to leverage the platform, leverage the balance sheet where appropriate. As you've seen this macro trend happen over the last number of years, you're seeing more and more people move into this independent route or independent channel. I think we've got an opportunity to grow that channel as well over time, which could see some significant growth in advisors, which is a bit unique for us.
And then lastly, I think we have an opportunity to do a much, much better job at helping the affluent customers we have in the consumer bank handle their wealth management needs. And I think that's still in a very early stage for us in terms of executing on that initiative. And we feel like there's a lot of opportunity to do a lot there. So we're actually quite. We really like our wealth business. We're quite optimistic about growth over time. But it's not something, again, it takes time to sort of build that. And it is one of our biggest fee lines. And so at this point, the market's been helpful as we've looked over the last few quarters. And then I think as the team continues to execute, we'll see some organic growth there.
Moving on to expenses, a two-part question. Where would you say Wells Fargo is in terms of modernizing the infrastructure of the bank, technology, real estate, org simplification? And second, can you identify costs that are above and beyond new BAU for risk and compliance that could leave the bank once regulatory remediation is completed? And I don't even know what completed would mean.
Yeah, I knew this is Erika's favorite question on expenses per quarter that are going to come out once regulatory stuff's solved.
By the penny.
Yeah, by the penny. No, look, I think when you look at first on the risk and reg side, and really the only data point I'll reinforce is, and Charlie mentioned this in a shareholder letter last year, we've added 10,000 people and a lot of spend relative to sort of dealing with the risk and regulatory work. And we haven't started to try to optimize that stuff because we're not done. And so I think we need to complete that. We need to see it sustainable. And then at some point down the road, there'll be some opportunity to optimize it. But we're really focused on continuing to make sure we execute on all the remediation side. When you look more broadly across the company, we still have a lot of opportunity, we think, to create more efficiency. Some of this just takes time.
We still have too much real estate. It takes time to work your way through that in a methodical way. Could we do it faster and take some big charges? Maybe. But it's just not sensible. So we also want to maximize sort of value as we sort of go through some of that work. And so there's still opportunities there. I think when you look at the underlying processes that we have, we find opportunities as we sort of peel back the onion every year to find more opportunity to automate, which, by the way, is not just about saving money. It's actually generally going to improve an experience with a customer as well. And so most of it ends up starting there. And then you find a way to save money as you do it. So I think there's a lot of opportunity.
We've rolled out a lot of new technology over the last couple of years, a brand new consumer app, which gets better and better every quarter, a new portal for our commercial customers, a digital assistant Fargo that we rolled out last year through the consumer app. And so I think technology is going to be we're going to continue to invest there. And I think our clients will see better and better capabilities over time. And we feel really good about the momentum we've got on there.
So you mentioned upfront about continuing to see credit migrate. I do have to ask about commercial real estate. It's reemerged as a topic. You said on an earnings call that we're at the opening credits of the commercial real estate movie. Maybe elaborate on that. And should we continue to expect you to refill your reserve as you take charge-offs? And at what point should that reserve fully absorb your CRE net charge-offs?
Yeah, I think I said we were a little past the opening credits. But it was a long movie, the playout.
That's all right. Okay.
And so we're not in the beginning. But we still have a long way to go to really see the ultimate resolution of a lot of this. And again, it just takes time to work through. Whether you're dealing with a certain property, you've got tenant renewals that come up at some point. You've got maturities. You've got extensions. You've got a whole bunch of events that sort of just make it require some time to sort of play out to get some resolution. But I think when you're talking about commercial real estate, most of it actually is quite good. Our portfolio looks pretty good in most cases. Multifamily is fine. And you go through the underlying asset classes, they all look; they're all performing quite well at this point. So you're really talking about office; it's the place where you see the most pressure.
Now, that's not to say, by the way, in the other subsectors, you're not going to see an individual property that has issues. But we're not seeing a lot of systematic issues in the portfolio. So it really comes back to office. And given the secular changes that we're seeing and the issues that we've got across the country, it just takes time. I think we will eventually use the reserve, not replenish the reserve as we go through this. I think you saw last quarter was the first quarter where we had any kind of significant charge-offs. And so given it was still pretty early in the process, we went through our process and kept the allowance roughly flat on a coverage basis to the portfolio. And I think we'll see how that goes over time.
But eventually, we'll start to use that allowance. And it'll come down.
Just maybe some final questions on capital. You, of course, said on the call you'll buy back more stock in 2024 than the $12 billion that you purchased in 2023 or repurchased in 2023. Assuming part of the answer is macro and DFAST, what are the key signposts that you're looking at near term when you're sizing that buyback? And how valuation-sensitive are you?
Well, this is going to sound like a boring answer. But it's the same process every quarter. What are the opportunities we have from the support clients? What kind of risks are we seeing out there? What's happening with rates? And you look at a whole bunch of different ideas. And yeah, obviously, we're in the middle of CCAR at the moment as well. But you can't just think about CCAR now. You really need to be thinking about that as a potential driver one way or the other as you go throughout the whole year. You've got Basel III coming at some point, the finalization of it. And so we go through the same process every single quarter and say, how do we feel? And what do we feel comfortable with doing?
I think as we said, in aggregate, we expect to do more than the $12 billion we did last year. Then the pacing is a little bit of a quarter-by-quarter decision.
In general, do you feel like the DFAST parameters are somewhat in line with last year's?
Yeah, they're not that different. There's always pluses and minuses. But it's not that different.
Maybe just lastly on Basel III Endgame, as you mentioned, we've heard a lot of chatter about the softening of Basel III Endgame. What do you think the opportunities are? Or where do you think the regulators will agree in terms of trying to be more aligned with international standards versus gold plating?
Yeah, I think what changes get made to the proposal is really it's hard to handicap exactly. But when you start to look at certain components of it, whether it's operational risk or some of the risk weightings in mortgage or non-public investment-grade clients, and you can keep going renewable tax equity and the renewables. So there's a whole bunch of things where you look at on the surface and say, it just doesn't feel appropriate to the risk that's there. And so we're hopeful. We put our comment letter in. I think there were I forget the number. But there were hundreds and hundreds of comment letters that went in. And we've tried to focus on the areas where we think the proposal just wasn't aligned to the underlying real risk of the activity.
At this point, I think we're hopeful there'll be some changes based on what you hear from the different speeches and Federal Reserve officials in particular. It's hard to know exactly what it's going to look like until we see a new proposal. We're hopeful at this point that it'll get moderated some.
Got it. So just a reminder for the audience that if you wanted to ask a question electronically, please do so through your UBS Conference app. And actually, we have maybe a minute for a question or two. If anybody has questions in the room, we also have a mic that we can pass around. Any questions from the audience? You're so detailed and articulate. Not a lot of follow-up.
I don't know.
Mike, thank you so much for your time. We appreciate you coming to the conference. Have a good rest of your day.
Yeah, good luck with the rest.
Yeah, thank you.