Warren Buffett continued to take aim at Wells Fargo during his answers to shareholders’ questions at Berkshire Hathaway’s annual meeting.
He noted that Wells Fargo “incentivized the wrong type of behavior,” and felt that its CEO John Stumpf, was slow in responding to the scandal.
Berkshire Hathaway is Wells Fargo’s largest shareholder at just under ten percent of the company.
The stock has been one of Berkshire’s long term core holdings, and so far it has shown no sign of selling its position.
Still, Buffett emphasized that he was not pleased with the actions Stumpf took.
“If there’s a major problem, the CEO will get wind of it. At that moment, that’s the key to everything. The CEO has to act,” Buffett said. “The main problem was they didn’t act when they learned about it.”
Some 5,300 employees were eventually fired for creating over 2 million phony accounts tied to existing customers in order to meet sales goals, and Stumpf ended up resigning.
“An ounce of prevention is worth a pound of cure” Buffett said, noting the old adage. “A pound of cure is worth a ton of cure delayed,” he added.
© 2017 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.