Billionaire Charles Munger is optimistic about the future of
Wells Fargo & Co. after its fake-account scandal.
“Wells Fargo will end up better off for having made those mistakes,” Munger, 94, said Wednesday in Los Angeles at the annual meeting of Daily Journal Corp., the publisher where he’s chairman. “Of course, Wells Fargo had incentive systems that were too strong in the wrong direction, and of course they were too slow in reacting to bad news when it came. Practically everyone makes those mistakes.”
A wave of controversies has dogged the San Francisco-based lender in recent months and tarnished its reputation. While the bank has made steps to address the problems, the Federal Reserve took the unprecedented step this month of limiting the
company’s growth until it fixed a number of shortcomings in areas including internal oversight.
Munger, who’s known for being Berkshire Hathaway Inc.’s vice chairman, also said Wednesday that it’s time for regulators to
let up on the bank, according to a report from Reuters. He’s defended the lender in the past. After branch workers were found to have created millions of accounts without customer permission to meet aggressive sales targets, a year ago he called the practice a
“glitch” that didn’t mean there was anything fundamentally wrong with the bank’s business model.
Berkshire is Wells Fargo’s largest shareholder. One of Munger’s most successful investments in recent years was plowing some of Daily Journal’s money into the lender’s shares during the depths of the financial crisis. That bet may be one
reason the publisher’s stock has soared roughly fivefold over the past decade.
Still, Munger warned Wednesday that investing in banks can be “dangerous” because of the temptations for executives in that industry to do something wrong.