(Bloomberg) -- 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.
Here are more comments from Munger’s appearance at the Daily Journal meeting:
- Munger said he “detested” Bitcoin and thought it was a “noxious poison”
- U.S. government regulators are wrong for not stepping on Bitcoin pretty hard, he said
On rising government debt:
- Munger said he was concerned about the growing U.S. debt levels
- “This is new territory for us and new territory has some danger in it,” he said. “On the other hand, it’s possible that the world will function pretty well.”
- Munger commented about a possible deal for Hershey Co. during the meeting
- He said he could buy Hershey candy, but not the company
- Company would have to be for sale at the right price, he said
- He said the industrial company’s “army” style of rotating executives may be a flawed method
- Still, Munger noted that the investment in General Electric Co. during the financial crisis worked out fine. Berkshire agreed to purchase $3 billion in preferred stock back in late 2008
- Munger said he is deeply skeptical of climate scientists’ wisdom and added that they are probably more alarmed than the facts warrant
- He said it may not work well to buy airline stocks and expect to be able to hold them for 100 years
- Berkshire is a large investor in companies including Delta Air Lines Inc., Southwest Airlines Co., American Airlines Group Inc. and United Continental Holdings Inc.
©2018 Bloomberg L.P.