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SAN FRANCISCO — Although he moved into the top income bracket long ago, billionaire Charles Schwab says he still relates to the small investors who helped transform his discount stock brokerage from a quirky upstart with four employees in 1971 to a financial services icon with 19,100 workers today. 

His empathy for Main Street — and desire for its business — is one of the reasons Schwab decided to run a satirical television advertisement skewering Wall Street for the alleged conflicts of interest that led some analysts to publicly tout stocks they privately derided. 

Schwab is also worried about the recent wave of accounting scandals 

The comedown since the market’s height in 2000 has been especially sobering for Schwab’s company. With trading activity down 35 percent from 2000, Schwab has jettisoned 7,200 jobs since the beginning of 2001. Last year, the firm suffered its first quarterly loss since 1987. 

The slump has ravaged Schwab’s stock, trading now in the $9 range, far below its peak of $51.67 reached in 1999. The downturn has wiped out at least $8.5 billion of Schwab’s personal fortune. 

AP: What do you think of market conditions? 

SCHWAB: In my career, it is clearly the worst market decline. This decline will end. They always do. Then we will have equity markets get back to a sort of normal state of affairs. 

AP: It seems like it’s going to be hard to know when we might be hitting a bottom this time. 

SCHWAB: There is so much in the winds right now. There is complete dissatisfaction with corporations and CEOs and politicians and fear of terror. All these things in combination give people just a complete lack of confidence. 

It’s one of those ugly things you have in a free market system. What is going on is ... correcting excesses of the past. And it’s cruel, absolutely cruel. 

But it is the most incredible mechanism that we have in a capitalist society. And if we don’t let it happen, if we legislate against everything, you end up having a socialist system instead of a capitalist system. Consequently, you have got to deal with the reality of the time. 

AP: Your company has been running ads suggesting that a lot of folks on Wall Street can’t be trusted, that the firms give people misleading advice ... 

SCHWAB: Well, it’s true. Many times you see that a commission-based broker is basically masquerading as a fiduciary. You see the same thing in respect to the analysts that reach over and have close relationships with the corporations and sort of sell their soul when they write up those reports that end up going to retail investors. Structure is the problem, frankly. 

AP: So what do you think needs to be done to start addressing these trust issues? Do we need to start throwing some of these guys in jail? 

SCHWAB: Certainly. Anyone who violates the law should pay the penalty, whatever the maximum penalty is. 

AP: Do we need stiffer penalties? It’s been said that white-collar crimes never really draw big penalties. 

SCHWAB: Well, they don’t get prosecuted. Like we all know, the SEC (Securities and Exchange Commission) is badly understaffed. They have been battling for more assistance for years and Congress has refused to give them the resources to do it with. It should be on the footsteps of our good people in Congress. It is absolutely essential to have the maintenance of the integrity of our markets never be in question. 

AP: You are on the audit committees on the boards of both Gap Inc. and Siebel Systems Inc. With all these accounting scandals, has it changed the way you approach your responsibilities on those committees? 

SCHWAB: Well, some of the thinking has probably been amended, given the things that have come to light. 

In each one of them, you have time alone with the accountants and the external auditors. You have time with the internal audit people separately from management. You drill them and you hope the hell they tell you if there is a problem. 

At the end of the conversation, you always say, ’Is there anything we need to know that you haven’t told us?’ You look them straight in the eye and you hope the hell that that’s the moment of truth. That’s what you do. You have got to rely on that kind of thing. 

AP: Do you think this market volatility is driven more by economic concerns, trust issues or a confluence? 

SCHWAB: I think it’s really the economic issues. But the economic issues can be impacted — and that’s what people worry about — by highly restrictive legislation of some kind.