When Warren Buffet talks, people listen, and listen with rapt attention. So when the billionaire investor told CNN that he approved of Wells Fargo & Co’s naming of Tim Sloan as the new CEO of the bank, people took note.
Buffett told CNN’s Poppy Harlow, “I think Tim Sloan’s exactly right.”
This came after the bank’s previous CEO, John Stumpf, left Wells Fargo on October 12 following a scandal about employees opening up nearly two million fake accounts to make sales numbers.
“It was a dumb incentive system,” said Buffett, who also said that Stumpf was a decent man who “made a hell of a mistake.”
Buffett’s interest in Wells Fargo is huge, since he is major stockholder in the bank, with his company Berkshire Hathaway boosting its stake to 10% or 490 million shares. Buffett personally owns two million shares, making him a “passive investor.”
The investor’s encouraging words are part of some good news for the bank, which saw its stock rise 16% last week, after the September scandal, which saw Wells Fargo have to pay $185 million in fines. Wells Fargo is in the midst of a contrition campaign, running advertising intended to salve the wounds the company has endured.
Sloan, who has been with Wells Fargo for 29 years, was criticized as a pick for CEO, with many wanting an outsider to come in afterwards. But Sloan has made rounds, apologizing for the bank’s past behavior and promising to turn things around.
While Buffett wasn’t allowed to tell Stumpf to step down as CEO, he did agree with the move, saying that he didn’t attempt to correct the mistake he made. Buffett has since met with Sloan and gave his approval, though he added that “it takes time to restore trust.”