Warren Buffett believes Wells Fargo made a “giant mistake” by opening fake accounts. Buffett, who is an investor with the banking giant, has not sold off his shares despite the controversy.
Whenever there is a banking or economic crisis, Buffett is always the go-to person the media contacts for analysis. But the business magnate was surprisingly quiet when news broke the bank had opened more than two million phony banking accounts in September. Buffett called Wells Fargo a “great bank,” but criticized its “eight is great” incentive program. The program in question would push for employees to try to sell eight Wells Fargo products per household. Buffett felt this was a bit counterproductive saying, “it was a dumb incentive system, which when they found out it was dumb, they didn’t do anything about it.”
Wells Fargo felt the damage as it was forced to pay a $185 million fine and CEO John Stumpf retired after receiving a tongue lashing from Senator Elizabeth Warren. While Buffett didn’t think the incentive program was a wise choice, he continues to have faith in the bank as he hasn’t sold a single share of Wells Fargo stock since the scandal occurred. His rationale is that this isn’t the only company in his portfolio that may have done this and that “it’s not my job to run those companies.”