Warren Buffett Finally Speaks Out on Wells Fargo & Co Scandal (WFC)
Berkshire Hathaway (ticker: BRK.A, BRK.B) kingpin Warren Buffett was keeping mum on the Wells Fargo & Co ( WFC) -- until now, given recent speculation on his opinion of the company. In fact, he went as far as to lambast a report that he is seeking a "radical transformation."
"It's dead wrong to imply I've spoken to the board directly. Going to the board implies I've gone around [Wells Fargo CEO John] Stumpf, the guy who is under fire," Buffett said to CNBC. "I've talked to no one else on the board."
Buffett, who is arguably the best investor of all time, holds 320 million shares of WFC stock, or more than 6 percent of the company. So the man known as the Oracle of Omaha has a keen interest -- and significant influnce -- in Wells Fargo in light of a scandal that has forced Wells Fargo to pay $185 million in settlement fees and an additional $5 million in customer remediation.
Wells Fargo agreed to a settlement this month after it was disclosed that its employees created 2 million phony credit card and bank accounts for customers without their consent to boost sales figures and make more money. The bank fired 5,300 employees, but some members of Congress say Stumpf should also lose his job or face criminal charges.
Douglas Kass of Seabreeeze Partners Management wrote for The Street that Buffett called for "a radical transformation of the bank's ethics, in no uncertain terms."
But Buffett says he never went to the board.
Further, Buffett's office confirmed to Reuters that he talked with Stumpf just once after the scandal came to light. According to Buffett, the talk lasted only five minutes, where Buffett said Stumpf might be facing a larger problem than anticipated, and let him know that the fines levied against Wells Fargo were "not a metric to use in determining public reaction."
Buffett previously had said that he wouldn't make any comments on the Wells Fargo situation until November.
Stumpf did not give details, but said that he and Buffett talked about the scandal once when speaking Thursday at a House Financial Services Committee hearing. Stumpf also faced an onslaught from lawmakers at the hearing.
"Mr. Stumpf, I regrettably have a mortgage with your bank. I wish I didn't," Rep. Jeb Hensarling, R-Texas, said at the hearing. "If I was in a position to pay it off, I would, because you have broken my trust, and you have broken the trust of millions of others."
WFC stock is down 18.38 percent on the year. The company has lost more than $20 billion in market value since the scandal broke.
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