Wells Fargo has already admitted to creating nearly 2 million fake accounts, a huge systemic deceit perpetrated by one of the world’s largest financial institutions. Now there is news that when employees tried to expose the fraud, Wells Fargo executives retaliated against them. This comes by the bank’s own admission, as CNN reports: “Wells Fargo says it has found evidence that at least some of these whistleblower retaliation claims published by CNNMoney and elsewhere may have merit.”
Yet despite the scandal, which brought former CEO John Stumpf in front of the Senate Banking Committee last fall, famed investor Warren Buffett said in November that Wells Fargo was a “great bank that made a terrible mistake.” Buffett, who is famous for straight-shooting and valuing honesty and high character in business, is the largest shareholder in Wells Fargo. In an interview, Buffett blamed a “dumb incentive system” for the mistake, instead of blaming the people who perpetrated the deceptive practices to meet those incentives. The new revelations that Wells Fargo punished those who tried to expose the “dumb incentive system” reinforce the fact that the fault lay not in the system, but rather with the Wells Fargo employees who abused the system. Buffet said in November that the big problem was Wells Fargo discovered its system was bad and then “they didn’t do something about it.” The new revelations show that they did do something about it — they fired and threatened the employees who wanted to fix it. Given this, can Wells Fargo still be a “great bank that made a terrible mistake?” Buffett hasn’t yet said, but it would seem Wells Fargo clearly violated precisely the business tenets Buffett holds dear.