Warren Buffett, who controls the largest stake in Wells Fargo & Co., told Chief Executive Officer John Stumpf that the lender was too slow to realize the seriousness of the problem after settling investigations into the practice of opening accounts without customers’ permission, CNBC reported.
Buffett spoke to Stumpf for about five minutes, telling the banker “that he thought the problem was bigger than Stumpf thought at that point,” CNBC’s Becky Quick said Thursday, citing a discussion that she had with the billionaire chairman of Berkshire Hathaway Inc. The risk to the bank, according to Buffett, was bigger than fines of about $185 million, Quick said.
“That was not a metric to use to determine the public reaction to this,” she added. “He thought the problem was deeper than that.” The conversation between the two executives was about two weeks ago, according to Quick.
Stumpf endured a second day of withering assaults from lawmakers furious over the bank’s fake-account debacle as members of Congress questioned how he can survive in the job and asked whether the board should be replaced. Wells Fargo has declined about 18 percent since Dec. 31, making it the worst performing stock in the KBW Bank Index this year.
Stumpf told lawmakers that the bank was working to help any customers who where hurt by its actions and is “deeply sorry” that Wells Fargo broke clients’ trust. He also told the House Financial Services Committee that he’d had a conversation with Buffett about the matter and had also discussed it with other top investors.
Buffett’s remarks, which were summarized by Quick but not broadcast on air, break his weeks of silence about a bank he has long supported. He commented to CNBC after investor Doug Kass put out a note claiming that Buffett had addressed the Wells Fargo board and urged a transformation of the company’s culture.
“Going to the board would imply that he has gone around Stumpf, the guy who’s under fire, and he says that’s just not the case,” Quick said of Buffett.
Buffett told the Fox Business Network last week that he would wait until November to comment on Wells Fargo. He didn’t respond to a request to elaborate on his latest remarks.
The bank is a delicate topic for Buffett, who has sought to cultivate a reputation for propriety at Berkshire. He is seeking Federal Reserve approval to increase his Wells Fargo holding beyond the 10 percent threshold.