Betsy Graseck : I did want to just unpack a couple of things around the correspondent exit and also some follow-up questions as it relates to the mortgage business in general there. I think you mentioned that it’s not substantial impact. Maybe you could help us understand revenues, expenses, EPS. I made my own assumptions, but I got a lot of questions from people on what managements say. So, I would like to understand that piece of it. And then could you help us understand how you’re thinking about the mortgage business once you exit correspondent, is there any originate and sell servicing retained left in any panel? Or are you staying with this correspondent exit — your exit that you’ll be moving entirely to portfolioing for yourself, and the MSR will wind down over time? Just give us some color around that. It would be appreciated. Thanks.
Charles Scharf: Yes. So, maybe I’ll start on the second, and then Mike will circle around to the first. So, we are not assuming that we will balance sheet every loan that we underwrite in the future. Again, what we’re just — what we’re trying to do in the path that we’ve laid forward is just to make very clear that we’re not interested in running and having a business which is focused on a stand-alone mortgage product. We very much appreciate the importance of mortgage to the consumer base. And we’re going to continue to stay in the business. But we’re going to view it as part of the importance in the broader relationship. So, that means we’ll be originating both, conforming and nonconforming mortgages. And we’ll continue to make the decision as to what goes on our balance sheet as we have done in the past.
The fact that we’ll be originating a lot less will certainly mean that over time, the MSR and the overall servicing book will come down very naturally based upon that, over a fairly long period of time. But we’ll also look for intelligent and economic ways to reduce the complexity and the size of our servicing book between now and then. And if those present themselves, we’ll certainly be interested in doing that. And I know Mike will talk a little bit about this, but I think one of the things we were just trying to say when we think about the size of the impact of exiting the correspondent business immediately is given the fact that mortgage volumes are so low, and revenues are so low. The revenue impact of exiting the correspondent business in the short term is not meaningful.
It’s a very small number of people. So, that’s not all that meaningful in the short term. The real benefit comes over time as we reduce the size of the servicing business, which, as we’ve tried to make the point is, it’s not just reducing expenses, but it’s not profitable for us today in a whole bunch of these segments where we continue to have the servicing. And so, it becomes a positive over time. And it’s just — but that is not a short-term benefit for us but certainly a medium- to longer-term one.
Mike Santomassimo : Yes. And the only thing I’d add is all you lose initially, Betsy, is the gain on sale on the origination. The servicing is still here. And that in any given quarter over the last couple of years is low tens of millions of dollars. So, it’s a really small impact.
Betsy Graseck : The servicing cost is low tens of millions?
Mike Santomassimo : The only thing you lose today by exiting correspondent is the gain on sale on the origination of mortgage.
Betsy Graseck : The low tens of millions is the gain on sale?
Mike Santomassimo : Correct.
Betsy Graseck : Okay.
Mike Santomassimo : The servicing of the existing portfolio is still here and
Charles Scharf: Part of the broader servicing dialogue.
Betsy Graseck : Because one of the follow-ups I got was it, does it impact the scale? Obviously, it reduces the flow over existing plants. So, does that matter to how you price your reach?
