Warren Buffett is warning the scandal-plagued and regulator-beleaguered Wells Fargo against finding CEO Tim Sloan’s replacement on Wall Street, according to news reports.
Buffett, who’s had shares in Wells Fargo since 1989 and is currently its largest shareholder, says the next chief executive should be an outsider with no links to investment banking, according to FA-IQ sister publication the Financial Times. Bringing on a Wall Street veteran would automatically attract more regulatory scrutiny, according to Buffett, the paper writes.
“They just have to come from someplace [outside Wells] and they shouldn’t come from Wall Street. They probably shouldn’t come from JPMorgan or Goldman Sachs,” Buffett, who owns close to 10% of Wells Fargo’s shares, tells the paper. “There are plenty of good people to run it [from the Wall Street banks], but they are automatically going to draw the ire of a significant percentage of the Senate and the U.S. House of Representatives, and that’s just not smart.”
Wells Fargo has been under intense regulatory scrutiny and the subject of numerous lawsuits targeting its various business lines ever since the 2016 revelations that thousands of its retail banking employees opened millions of bogus accounts to keep up with aggressive sales quotas. Wells Fargo named Sloan chief executive following the scandal and stood by him despite calls for his sacking, including from Massachusetts Democratic Senator and presidential hopeful Elizabeth Warren. But Sloan abruptly announced his departure from the CEO position late last month.
Among the top contenders currently being discussed, meanwhile, most are exclusively Wall Street veterans, according to news reports.
Marianne Lake is at JPMorgan, Cathy Bessant is with Bank of America, Jane Fraser is at Citigroup and Matt Zames, former chief operating officer at JPMorgan, is at private equity firm Cerberus Capital Management. Other candidates in the running include Gary Cohn and Harvey Schwartz, both former Goldman Sachs executives, according to the Financial Times. Analysts have also raised the name of Bill Demchak, a former JPMorgan executive who’s now leading the Pittsburgh-based bank PNC Financial, the paper writes.
One executive from outside of financial services that Wells Fargo is reportedly considering is Ruth Porat, currently the chief financial officer of the tech giant Alphabet and its subsidiary Google — but even Porat previously served as CFO of Morgan Stanley.