Buffett Says Stumpf ‘Made a Hell of a Mistake’ at Wells Fargoby and
Stumpf a decent man, should have corrected problem, he says
‘Dumb incentive system’ fueled excesses, Buffett tells CNN
Warren Buffett said former Wells Fargo & Co. Chief Executive Officer John Stumpf bears blame for an incentive system that encouraged staff to set up bogus accounts and then made matters worse by not fixing the problem.
Stumpf is a “very decent man” who “made a hell of a mistake,” the billionaire said in an interview posted on CNN’s website Friday. “And he didn’t correct it. That’s the thing.”
Buffett’s comments were his most extensive public remarks on the bank since it agreed in September to pay $185 million to settle allegations that employees set up credit-card and deposit accounts without customers’ permission. Staff have said they were encouraged by cross-selling targets to open as many accounts as possible.
“It was a dumb incentive system,” said Buffett, whose Berkshire Hathaway Inc. is the largest investor in Wells Fargo. “When they found out it was dumb, they didn’t do anything about it.”
Stumpf, 63, stepped down in October and was replaced by Tim Sloan, 56, who was promoted from chief operating officer. Sloan visited Buffett in Omaha after being named CEO and is well prepared for the job, the billionaire said.
Buffett previously said he’d wait until November to comment on Wells Fargo. The bank is a sensitive topic for him because his holding recently climbed to 10 percent, a level that requires Federal Reserve review.
In June, he pledged to the Fed that he would be a passive investor in the bank. Buffett told CNN he didn’t comment on Stumpf sooner because he wanted to honor that commitment.
Stumpf didn’t immediately return messages seeking comment. Mark Folk, a bank spokesman, had no immediate comment.
Buffett, a supporter of Democrat Hillary Clinton, also spoke with CNN about politics, saying he remains confident in the long-term prospects for equities after his candidate was defeated by Republican Donald Trump.
The stock market “will be higher in 10, 20, 30 years from now,” Buffett, 86, said in the interview with Poppy Harlow. “It would have been with Hillary, and it will be with Trump.”