Our rich uncle in Omaha is one of the most beloved businessmen in American history. By maintaining a doggedly middle-class lifestyle despite his tens of billions and speaking plain about money with that "aw shucks" manner of his, Warren Buffett has come to personify the good angel of money in our collective psyche.
Buffett famously doesn't like being drawn into controversy, and at 86 he is more than likely quite disinterested in the stress that comes along with bona fide scandals. So he's probably less than thrilled to be seeing all this news about Wells Fargo. In fact, The Oracle has a 10% stake in the bank, which is large enough to have attracted government attention back in August. It also exposes him to enough downside risk that he lost $1.4 billion yesterday when WFC stock tanked hard, dropping its market cap below JPMorgan's and rendering it America's second largest bank.
But Buffett has lost absurd amounts of money before, what really must piss him off this time are the farcical optics through which Wells CEO John Stumpf and his team are allowing this super dumb and incredibly bad scandal to be viewed.
As Bloomberg's Michael Regan reminded us yesterday, Buffett took a major stake in Salomon Brothers back in 1991 when the firm was known to be taking Treasury regulations as mere suggestions. In an attempt to reassure Congress that a new sheriff was coming to town at Salomon, Buffett went to Congress and said this:
"After they first obey all rules, I then want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper -- to be read by their spouses, children, and friends, with the reporting done by an informed and critical reporter. If they follow this test, they need not fear my other message to them: Lose money for the firm and I will be understanding; lose a shred of reputation for the firm and I will be ruthless."
So it stands to reason that there are more than a handful of "What the heck!"s and "Gee willikers!" being yelled at a polite volume in the big office at Berkshire Hathaway. The guy who promised to ride herd on Salomon just watched Wells Fargo get caught creating more than 2 million fraudulent consumer accounts, admit that they've fired 5,300 people because of it over a five year period, and lose him about one-and-a-half billion dollars in the process.
What are the odds that he's happy with how Stumpf is handling the fallout?
Well, you tell us.
Since Thursday, Stumpf has made headlines by giving the executive who oversaw the nightmare a $125 million retirement payout, announcing that he'll put an end to aggressive sales goals next year, and then said this to a living, breathing WSJ reporter about whether or not the endemic fraud was endemic:
Rather, Mr. Stumpf said that some employees didn’t honor the bank’s culture. “I wish it would be zero, but if they’re not going to do the thing that we ask them to do—put customers first, honor our vision and values—I don’t want them here,” he said. “I really don’t.”
Another person we assume that would prefer zero Wells Fargo employees acted with criminal impunity for about half a decade is Warren Buffett.
Stumpf has always been the most anonymous leader of the Big Four banks (which is super impressive considering that he's competing with the human vanilla flavor that is Michael Corbat), and perhaps we now know why. The way that Stumpf has handled the biggest major banking fuck-up since 2008 is comical and it is not too difficult to imagine a near-future in which Wells Fargo is led by different CEO. What is harder to imagine is a reality in which Buffett would be eager to get Stumpf's blood on his hands should WFC shareholders wrench the head man from power.
After all, bloody hands are a bad look for a beloved old billionaire ordering dessert at a Nebraaka Dairy Queen.