Scandal-plagued Wells Fargo still has friend in Berkshire's Buffett
Warren Buffett’s Berkshire Hathaway isn’t ready to give up on scandal-ridden Wells Fargo anytime soon.
Despite a string of controversies over the past year tied to employee actions, the Oracle of Omaha insists his confidence in the bank -- of which he is the largest shareholder with a 9% stake at 452 million shares -- stands.
“They had the wrong incentives initially,” Buffett said during an interview on Thursday with FOX Business’ Liz Claman. “[But] I will guarantee you that everything Berkshire is doing today, the 370,000 employees, we’ve got at least six things done wrong. I hope we catch them fast, and I know if we do catch them, we’ll do something about it. But you do not have a town with 370,000 people and leave your doors unlocked.”
The same day Buffett sat with FOX Business, another controversy was reportedly disclosed, with Wells Fargo firing or suspending at least a dozen employees over allegations that these individuals doctored after-hours dinner receipts and charged it to the company, according to The Wall Street Journal. The bank is investigating dozens more.
These employees allegedly ordered dinner through online delivery services on a regular basis -- a direct violation of the company’s policy, which only allows for dinner orders for employees who stay at work past a certain hour.
|WFC||WELLS FARGO & CO.||42.36||+0.29||+0.69%|
The most-recent allegations dwarf some of the others. In April, the Consumer Financial Protection Bureau slapped the bank with a record $1 billion fine for misbehavior in its auto and mortgage businesses, like charging customers for auto insurance they didn’t need, or pushing some to default on their loans and lose their cars through repossession.
That followed a 2016 enforcement action by the CFPB, which dinged Wells Fargo with a $100 million fine for opening 2 million phony accounts.Buffett, however, has previously said that he believes Wells Fargo can recover from its scandals, particularly with CEO Tim Sloan at the helm.
“I see no reason why Wells Fargo as a company...going forward is in any way inferior to the other big banks with which it competes,” he said during annual shareholders meeting in May. “We have a large unrealized gain [in the stock]. I like it as an investment."
Buffett was less forgiving with former CEO John Stumpf, whom he criticized publically for the handling of the phony account problem.
Stumpf was also publically skewered during an appearance on Capitol Hill while addressing the fake accounts.