Wells Fargo & Co. (NYSE: WFC) CEO Tim Sloan is out, following his former boss John Stumpf who left in October 2016. Each was blamed for dysfunctional management that triggered pressure on employees to open accounts that customers didn’t ask for, among other violations of law and corporate ethics. Big Wells Fargo owner Warren Buffett has publicly told the bank’s board not to hire another banker. Based on his holdings and his stature in the global corporate pantheon of great investors, the board better listen.
Buffett told the Financial Times, “They just have to come from someplace [outside Wells] and they shouldn’t come from Wall Street. They probably shouldn’t come from JPMorgan or Goldman Sachs.” He added that the bank probably has not lost a large number of customers because of the scandals. From his comments, he does not see that as the issue. Buffett owns about 10% of the bank’s shares, with a value of $20 billion.
That he made the statement at all in such a public forum is rare for the 88-year-old founder and CEO of massive conglomerate Berkshire Hathaway Inc (NYSE: BRK-B). Aside from owning large companies like railroad Burlington Northern Santa Fe Railway, he has held large holdings in major American corporations. Many of these go back years. In many circles, he is considered the most skilled investor in the world.
Buffett has enough heft that it is likely the Wells Fargo board will take his advice.