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Buffett: Wells Fargo Is Cleaning up Its Act After Scandal

Buffett: Wells Fargo Is Cleaning up Its Act After Scandal
(Mohamed Ahmed Soliman | Dreamstime)

Saturday, 05 May 2018 12:03 PM

Billionaire Warren Buffett says Wells Fargo is cleaning up its act after the misconduct at the bank in recent years.

Wells Fargo had been trying to repair its reputation after admitting in 2016 that employees opened as many as 2 million accounts without getting customers' permission to meet aggressive sales targets.

Berkshire Hathaway owns roughly 10 percent of Wells Fargo's stock, and Buffett said Saturday that he has no plans to sell it.

Buffett says Wells Fargo clearly made a big mistake and had the wrong incentives in place for employees, but now they making strides. He says he sees "no reason to think that Wells Fargo, going forward, will be anything other than a large, well-run bank."

“Wells Fargo is a company that proved the efficacy of incentives, and it’s just that they just had the wrong incentives," he said.

"The fact that you are going to have problems at some large institutions is not unique ... 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.

"We have a large unrealized gain (in the stock). I like it as an investment. (The CEO) is correcting mistakes made by other people.”

Berkshire Vice Chairman Charlie Munger was more blunt, as he often is: "It was clearly an error. They are acutely aware of it and don't want it to happen again."

Meanwhile, Buffett says that promoting two executives to oversee most of the companies businesses hasn't really changed his routine much.

Buffett promoted Greg Abel and Ajit Jain to vice chairmen this year and expanded their responsibilities. Both men now oversee about half of Berkshire's operating companies.

Buffett and Vice Chairman Charlie Munger both said little has changed with this year's promotion of Abel and Jain because Berkshire's businesses largely run themselves day-to-day. Buffett said he still spends most of his time reading about businesses, thinking and fielding the occasional phone call. "Part of the Berkshire secret is that when there is nothing to do, Warren is very good at doing nothing," Munger said

Buffett will spend the day fielding questions at Berkshire Hathaway's annual meeting before a crowd of tens of thousands of people.

Berkshire shareholders can celebrate the fact that most of the companies 90-odd businesses are performing well as the economy continues growing, but the conglomerate's future is always in the back of their minds because Buffett is 87.

Kirk Meyer of Nashville, one of the thousands at the annual shareholders meeting in Omaha, Nebraska, on Saturday, says he always hopes Buffett will address the "taboo subject of succession."

Buffett doesn't plan to retire, but he likely invited more discussion of his eventual replacement earlier this year when he promoted Greg Abel and Ajit Jain to vice chairmen and expanded their responsibilities. Both men now oversee about half of Berkshire's operating companies.

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Billionaire Warren Buffett says Wells Fargo is cleaning up its act after the misconduct at the bank in recent years.
buffett, wells, fargo, berkshire
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2018-03-05
Saturday, 05 May 2018 12:03 PM
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