Anytime Warren Buffett speaks, it's worth listening. That's especially true for people interested in bank stocks, given that his company, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), has accumulated an enormous portfolio of ownership stakes in some of the nation's leading banks.
Wells Fargo (NYSE: WFC) is one of those banks. Berkshire Hathaway owns 10% of it, making Buffett's company the bank's biggest shareholder.
Over the past year, Buffett has voiced displeasure with a scandal that came to light last September at Wells Fargo, saying the bank made a "terrible mistake." The Consumer Financial Protection Bureau revealed at the time that thousands of Wells Fargo employees had opened up to 2 million unauthorized accounts for customers, oftentimes without the customer's approval or knowledge.
But Buffett has also made it clear that Berkshire Hathaway wouldn't abandon the bank. In a CNN interview last year, Buffett said that Wells Fargo's now-former CEO John Stumpf is a "very decent man" who "made a hell of a mistake" in not dealing with the scandal more aggressively. Buffett went on to say that Wells Fargo is an "incredible institution" and that he wasn't planning on selling a single share of it.
This is a vote of confidence that Wells Fargo needs right now, as the company continues to repair its image in the wake of its sales scandal.
To Quick's point, moreover, things could very well get worse at Wells Fargo before they get better. The bank announced last week that it would soon release the results of a third-party review of its retail practices, which could cause more negative headlines.
But Buffett is taking the long view. He sees these issues as temporary troubles, after which Wells Fargo will be able to get back to doing what it has done for 165 years: focusing on the nuts and bolts of banking.
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