We’ve used the travails at Wells Fargo as an example/scapegoat at various times this semester. Below is a link to an absolutely fascinating interview with Warren Buffett that will provide additional perspective and likely trigger deeper thoughts no matter where you stand on the issues raised. An investment (pardon the pun) of less than fifteen minutes of your time (with the last six to seven minutes being for our purposes where the best stuff is)…
jon
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I think it’s extremely interesting that he doesn’t think mistakes are such a big deal, it’s the fact that CEOs that sit by without trying to fix the error, or without realizing the gravity of the situation at hand. Things will go wrong because humans are involved, but that doesn’t mean it has to keep going wrong. He also places a lot of blame on the CEO of Wells Fargo himself. Buffet really doesn’t buy passing the buck, so to say, on to lower level employees. However, that seems to be used quite regularly as an excuse; it harkens back to “The Corporation” and the “bad apple” saying.
I sometimes wonder about the authenticity of statements that Warren Buffett makes to the media when things like this happen. On the one hand, he could simply be providing his learned perspective on an issue that is troubling many Americans in order to assuage their fears. On the other hand, Mr. Buffett is an unbelievably successful investor who probably has a lot of wealth tied up with how Wells Fargo’s stock reacts. He knows that his words can have a significant effect on the market, so perhaps he’s simply looking out for his own interests by trying to steady the ship. Billionaire pledge be damned, I can’t imagine his actions are entirely altruistic.
I’m going to agree with Piers on this one. Warren Buffet has an extraordinary reputation as a socially conscious and principled investor – but he only has that reputation because he is the worlds most successful investor as well. His words will hold sway, and it’s impossible to think that he, like Tim Cook, would be saying the things he is saying in public without having thought about all ends. This comes across as scandal management 101 – get someone who has the public trust to come out and acknowledge that the mistake was indeed simply a mistake, and not something inherent to the structure/culture of the company. It deflects those deeper criticisms by acknowledging the lighter ones. I have a hard time believing this interview was not heavily calculated and precisely timed maneuver. What a player.
I find the accompanying article as fascinating as the video, the whole discussion of values and reputation. While I agree that reputation is important in business and investing, this whole course has taught me that the best interest of the corporation and earning a profit ought to be the starting point of the values of a prudent business person (director, specifically). Aside from this course I’ve been quite sheltered from the business world, so I must admit all I really know about Warren Buffet is his name. This Wells-Fargo scandal seems to me to be symptomatic of a system that is rife for reform but unwilling to engage in the hard work of reforming. Buffet’s comments around “righting the ship” and restoring trust from the public serve more as band aid solutions than taking a hard look at the culture that allowed this to happen. He is aware that the culture of Wells Fargo played into this scandal and that more safe guards are needed so it will be interesting to see how the aftermath unfolds.