Wednesday, September 21, 2016

Warren Buffett still mum on Wells Fargo scandal though his company is its biggest shareholder

On Tuesday, pols from both sides of the aisle lit into Wells Fargo chairman John Stumpf (while the cameras were running.) Elizabeth Warren was on fire. Wells Fargo seems unrepentent, as it just showered a golden parachute of $125,000,000 on the retiring head of its consumer banking division. She will also be eligible for an end-of-year bonus.
Via Politico:
     "The only way that Wall Street will change is if executives face jail time when they preside over massive fraud. We need tough new laws to hold corporate executives personally accountable."
     During her line of questioning at the Senate Banking Committee hearing, Warren argued that Stumpf had personally profited from the bankers opening up the fake accounts. She read from quarterly meetings where Stumpf had personally used growth in the number of individual customers accounts to justify the value of the bank.
     "You squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket," Warren said. "And when it all blew up, you kept your job, you kept your multimillion dollar bonuses, and you went on television to blame thousands of $12 an hour employees who were just trying to meet cross sell quotas that made you rich."
     To meet draconian sales quotas in order to keep their jobs, more than 5,000 (now fired) Wells Fargo employees opened unauthorized ghost accounts for at least 2,000,000 customers over at least the last five years, in the process damaging the credit ratings of untold account holders by adding unrequested credit cards to the ones they already had and costing some overdraft fees generated by unauthorized transfers of funds.
     Warren Buffett was asked about the scandal earlier this week by Omaha World-Herald writer Steve Jordan, because Buffett's company, Berkshire Hathaway, owns 10% of Wells Fargo — 500 million shares. Buffett did not respond to Jordan's inquiry, made for his "Warren Watch" column — the foremost ongoing chronicle of the Warren Buffett cult of personality, which runs regularly in the World-Herald, now owned by Berkshire Hathaway, Buffett's company. According to KETV, Buffett also refused to comment on the mess to Fox News, saying he would reserve comment until after the election. (Huh?)
    Jordan's column quoted Omaha money manager Russ Kaplan's speculation that Buffett may even be buying more Wells Fargo shares at current prices, which have dropped this month by 10% and are down more than 20% from last July. Wells Fargo has been paying shareholders a 3% annual dividend, considerably more than the interest it pays depositors on many premium accounts.

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