Billionaire Munger Urges Warren: "Let Up" On Wells Fargo, "Practically Everyone" Was Doing It

Elizabeth Warren is having a very productive #Galentine's Day...

 

 

Not only did she invite undue embarrassment by clumsily "addressing" her questionable claims to Native American heritage, using Trump's fondness for the nickname "Pocahontas" to talk about "the real-life Pocahontas", she once again took aim at her favorite pinata, Wells Fargo, whose former CEO was famously sacked after she told him during a Congressional hearing that he "should resign."

Warren

As the Wall Street Journal reports, Warren posed almost a dozen questions about the bank’s questionable customer-remediation programs as it tries to make amends with the millions of American consumers who will, presumably, never consider depositing their  money with the San Francisco-based bank again after it opened fake accounts in their names, burdened them with auto insurance they didn't need and overcharged them for their mortgages.

And, if that wasn't bad enough, the bank is also under investigation for overcharging its corporate clients, too.

After challenging Sloan to answer the questions by Feb. 28, and to make good on his pledge to take care of the bank’s customers in the wake of widespread abuses. She also suggested - for the second time - that Sloan maybe isn't the best person to be running Wells Fargo (late last year, she called Sloan "incompetent" and said he "should be fired," during a Congressional hearing).

Wells Fargo’s efforts to compensate its customers have been “utterly inept,” the letter said. The bank "has caused thousands of people to spend valuable time and money trying to deal with a problem Wells Fargo created."

She also questioned what the bank would do for wronged customers who don't opt in by returning the mailers sent by the bank. She questioned by the bank chose the opt-in method instead of handing over the money it felt each wronged customer was due...

“What do you intend to do for the victims that do not ‘opt in’ to receive a refund?” Ms. Warren asked.

Having got all that offer her chest, 372?-year-old Charlie Munger had a few words for Ms. Warren and her regulatory cronies...

The Berkshire Hathaway billionaire declared that, despite all the indignities that Wells Fargo has foisted on its customers - after all, tens of thousands of auto-loan customers had their cars wrongfully repossessed - the bank's customers would still be "better off" in the long run for the bank finally having dealt with that pesky incentives system that it has blamed for all of its faults.

Munger

He added that regulators should "let up" on Wells Fargo - presumably referring to Warren's letter and the Fed's move to limit the size of the bank's balance sheet, depriving it of badly needed growth.

Though even that Fed announcement came with a caveat: Analysts - and the bank's CEO - said the Fed's sanctions "won't stop loan growth". In fact, analyst Dick Bove said the sanctions were "purely political".

"If you look at its balance sheet over the past couple of quarters, you will see that it hasn't grown," Bove told CNBC.

Munger spoke at the annual meeting of Daily Journal, the Los Angeles-based newspaper publisher he chairs:

“Of course, Wells Fargo had incentive systems that were too strong in the wrong direction, and of course they were too slow in reacting properly to bad news,” but “practically everyone” makes those kinds of mistakes, Munger said.

“Wells Fargo will end up better off for having made those mistakes,” he added. “I think it’s time for regulators to let up on Wells Fargo. They’ve learned.”

Of course, Munger's 94-year-old mutterings may just have something to do with the fact that Berkshire Hathaway is Wells Fargo's largest shareholder.