Warren Buffett Will Wait to Comment on the Wells Fargo Scandal
As Wells Fargo’s tremendous downward slide, triggered by its phony account scandal and spurred on by its poor handling of the fallout, deepens, its single largest shareholder has remained mum about the company’s woes.
Berkshire Hathaway, helmed by Warren Buffett, holds 10% Wells Fargo’s shares. Despite the bank’s troubles though, Buffett has stayed tight-lipped about Wells Fargo—and he plans to do so for at least another month and a half.
“If I start commenting on that or anything else, it will lead down too many paths, so I will wait until November to speak about it, the election or any other subject,” Buffett told Fox Business late Tuesday.
Wells Fargo has been struggling since regulators first revealed that bank employees had created 2 million phony accounts in a bid to hit sales targets and earn bonuses. Shareholders lashed out, asking for clawbacks on executive pay and even resignations. On Tuesday, CEO John Stumpf testified before a unforgiving Senate hearing, where he repeatedly apologized for the bank’s behavior while critics such as Sen. Elizabeth Warren called him “gutless.”
Now some investors are saying that Wells Fargo might lose not only its title of most valuable bank by market cap to J.P. Morgan Chase, it may also lose the Oracle of Omaha to its fellow financial giant.
Buffett’s silence has also reinforced the notion that Berkshire is stepping away from Wells Fargo in the eyes of some investors.
Buffett, however, is famously a long-term value investor, and often jumps on companies that are being pushed down by the market—”be fearful when others are greedy, be greedy when others are fearful,” he once famously said. Berkshire Hathaway has held a stake in Wells Fargo for 26 years now, and has returned roughly 7,926% since he first initiated a stake in the bank.
Though Buffett has also said “lose money for the firm and I will be very understanding. Lose a shred of reputation for the firm, I will be ruthless.”
Over the past two weeks, Wells Fargo has fulfilled both those requirements.
Shares of Wells Fargo are down 1.8% in midday trading Wednesday, at least in part driven by a—wait for it— J.P. Morgan downgrade.