Charles Schwab (slow)
>> welcome back. charles schwab says his company won’t be swept away by the current wave of takeovers in the financial services industry. the chairman of the biggest discount brokerage announced new services for investors aimed at boosting sales and market share. greg miles caught up with him today. schwab also talked about mutual fund reforms.
>> we have a great optimism about our future. we think we have a special niche in the marketplace that nobody serves, similar to ourselves, and so we’re very happy being independent, and clearly that’s my objective is to remain independent.
>> so you would obviously oppose any kind of approach.
>> oh, absolutely.
>> let’s talk about the individual investor, who has come back during the market rally of the past year. do you expect that to continue?
>> oh, absolutely. i think as the economy unfolds and gets better and better, which it will with all the stimulus that’s put into the economy, interest rates being as low as they are, our business will get better and better as the economy unfolds.
>> but if consumer spending pulls back, would that cause the individual investor to pull back as well?
>> well, there will be pauses and expansions, like there’s always been. but i think we’ve put behind us the bear market of 2000. we put behind us a lot of the issues that we’re all familiar about. and as the economy expands, we will expand with it and we’re seeing the signs of that today.
>> as you know, there’s been a rash of mutual fund scandals and investigations on wall street. to what extent are you concerned about those, and were you surprised at all by them, considering your knowledge of the industry?
>> well, i certainly was surprised by some of the disclosures for sure. now, the mutual fund industry, for its large size and involvement, involves so many investors, it was a very teeny, small number of people that were involved in these direct scandal. so i would assure the public that, you know, 99.9% are very clean and straight forward. the people who are the perpetrators of some bad issues will be―they will suffer the consequences.
>> from your point of view, eliot spitzer, the attorney general for new york state, and also the s.e.c., are their punishments severe enough for the practices that we’ve already seen, from your point of view?
>> well, i think whenever you kick somebody out of the business, that’s pretty severe. he’s lost his total livelihood for the rest of his life, and also the penalties and fines that are assessed against these people, that’s pretty―sends a very strong message, in my view.
>> so you think they do the job? what remains to be done? are there more reforms that have to be executed? where do we go from here?
>> there are many suggestions that i made publicly and privately about how it should change, and i suggest that we have a modernization act in the investment company act of the year 2004, that we ought to get together and put together some of the new ideas that we put on the table and codify them into new laws so that this will never happen again.
>> is schwab benefiting from this in terms of the credibility aspect? somebody is concerned about another mutual fund company, and they say, well, i’m going to put my money with charles schwab. are you getting that? are your customers getting those comments when they come in?
>> well, we don’t know for sure about that. we hate to sort of benefit on the backs of people that have suffered in this time period. but clearly we stand for high ethics. we stand for great customer service. we’ve been doing it for years, 30 years now, and so it’s our obligation i think just to maintain that.
