There's reason to believe that Wells Fargo's (NYSE:WFC) biggest shareholder, Warren Buffett, isn't pleased with the bank after learning that thousands of its employees opened as many as 2 million fraudulent accounts for consumers without the approval to do so between 2011 and 2015.
No, the 86-year-old chairman and CEO of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) hasn't said anything publicly to this effect. There's also no evidence to suggest that he's selling Berkshire's stake in the nation's third biggest bank by assets -- though, of course, he certainly could be.
But what we do know is that one of Buffett's lieutenants, Todd Combs, agreed on Tuesday, the same day Wells Fargo CEO John Stumpf was grilled by members of the Senate, to join the board of JPMorgan Chase (NYSE:JPM).
Slap in the face?
This probably goes without saying, but JPMorgan Chase is one of Wells Fargo's biggest competitors. On top of that, as Rafferty Capital Markets' Dick Bove pointed out to me, Combs' addition to the board of JPMorgan Chase eliminates any possibility that Berkshire will seek formal representation on Wells Fargo's board.
By law, banks are prohibited from having interlocking directorships. This dates back a century ago to the days of the so-called money trust, when John Pierpont Morgan, the Rockefeller family, and a collection of their associates controlled many of the major banks in the country.
It's worth pointing out, too, that while Buffett has claimed in the past to personally own JPMorgan Chase stock, he has never added it to Berkshire Hathaway's portfolio.
Or is it something else?
There are, of course, alternative rationales for the Berkshire's decision to allow Combs to join JPMorgan's board. It's long been known, for instance, that Buffett respects the bank's Chairman and CEO Jamie Dimon. They teamed up earlier this year to discuss, of all things, corporate governance. And Buffett has said in the past that he reads Dimon's annual shareholder letter as soon as it's published.
It's also possible that Buffett wanted a lieutenant to sit on the board of a major, well-respected bank that Berkshire doesn't have a stake in. Perhaps this reduces liability. Maybe it's about optics. Or maybe it's a signal that Berkshire recently took a position in JPMorgan Chase, but just not reported it yet. Though, to be clear, this doesn't seem likely given Buffett's preference for quietly accumulating positions.
Either way, to Bove's point, it's hard to imagine that the timing of the announcement, coinciding with Wells Fargo's public lambasting on Capital Hill, was a coincidence. That seems far-fetched.