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Buffett's Deafening Silence on Wells Fargo

In 1991, after the wheels came off the bus at Salomon Brothers amid a bond-trading scandal, Warren Buffett traveled to Washington to testify before Congress.

Buffett's Berkshire Hathaway had become the biggest shareholder in Salomon four years earlier when the investment bank's chief, John Gutfreund, brought in the Omaha folk hero as an investor to stave off a takeover by Ron Perelman, as Carol J. Loomis detailed in Fortune years later. As the scandal around Salomon's flouting of Treasury auction rules swelled and threatened to bankrupt the company, Buffett had been drawn further into the firm to be its interim chairman.

In his

to a House committee, Buffett gave his philosophy on how to right the culture of the firm:

After they first obey all rules, I then want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper -- to be read by their spouses, children, and friends, with the reporting done by an informed and critical reporter. If they follow this test, they need not fear my other message to them: Lose money for the firm and I will be understanding; lose a shred of reputation for the firm and I will be ruthless.

Almost 25 years to the day, a new scandal started rocking another bank that boasts Berkshire as its main shareholder: Wells Fargo. While the wheels haven't quite come off completely, it's safe to say the lug nuts loosened a bit after the Consumer Financial Protection Bureau announced it was fining the...


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