Buffett assails Wells Fargo, defends 3G at wide-ranging meeting

Berkshire Hathaway Inc Chairman Warren Buffett fumed Saturday that health care costs are eating away at the US economy like "tapeworm" and said the Republican approach to overhaul Obamacare is a tax cut for the rich.

Update: Wells Fargo has issued a statement in response to Buffett's critique, saying: "We agree with Mr. Buffett's comments and value Berkshire Hathaway as a long-term shareholder and customer".

At Wells Fargo there were three very significant mistakes, he says, but the biggest problem was the bank's incentive system.

The legendary investor said costs for healthcare have exploded in the USA and are holding back business growth.

Wells instituted a system in which sales goals "incentivized the wrong type of behavior", Buffet said Saturday at Berkshire's annual meeting in Omaha. At this year's meeting, he again praised the work of his reinsurance lieutenant, Ajit Jain, as well as his stock pickers, Todd Combs and Ted Weschler.

Buffett started the meeting by noting that Berkshire reported far fewer investment gains in the first quarter, which proved a drag on first-quarter results.

"They totally underestimated the impact", Buffett said.

"If I die tonight, I think the stock would go up tomorrow", he said in response to one shareholder's question.

Speaking at an annual conference of his company's shareholders in Omaha, Nebraska, on Saturday, Buffett said that healthcare costs were the biggest problem facing USA businesses, adding that his federal income taxes past year would have gone down 17 percent had the new healthcare law been in effect.

Two shareholder proposals that would have required Berkshire to report on its efforts to reduce methane emissions, and divest stakes in companies involved in fossil fuels, were also voted down overwhelmingly.

"It is no cinch that the industry will have some more pricing sensibility in the next 10 years than they had in the last 100 years, but the conditions have improved", he said.

"So it is a huge tax cut for guys like me", he said, according to Reuters.

He also addressed criticism that Berkshire discloses too little about businesses such as aircraft parts maker Precision Castparts Corp, which it bought a year ago for $32.1 billion.

Buffet said automation, driverless cars could hurt auto insurers.

Regulated utility units, for example, are not likely to enjoy lower tax rates as savings, in Buffett's view, would be passed onto customers.

The investment guru self-deprecatingly admitted that he and Berkshire vice chairman Charlie Munger "miss a lot of things, and we'll keep doing it".

He was joined at the traditional newspaper tossing contest by friends including Microsoft Corp MSFT.O co-founder and Berkshire director Bill Gates and Miami Dolphins defensive tackle Ndamukong Suh. "So they have gained a 5- or 6-point advantage".

  • Anthony Vega