(Reuters) - Charlie Munger, the longtime business partner of fellow billionaire Warren Buffett, said on Wednesday it is time for regulators to “let up” on Wells Fargo & Co (WFC.N), which will end up “better off” as it corrects a series of mistakes in how it treated banking customers.
Munger spoke at the annual meeting of Daily Journal Corp (DJCO.O), the Los Angeles-based newspaper publisher he chairs, where he also denigrated bitcoin BTC=BTSP as "noxious poison" and urged reforms in the healthcare system.
He spoke less than two weeks after the Federal Reserve took the unprecedented step of curbing the San Francisco-based bank’s asset growth until it fixes its shortcomings.
Daily Journal typically draws little attention from investors, but CNBC broadcast the meeting on its website.
That is because the company’s star attraction is Munger, 94, who has for four decades also been vice chairman at Buffett’s Berkshire Hathaway Inc (BRKa.N), which is Wells Fargo’s largest shareholder.
“Of course, Wells Fargo had incentive systems that were too strong in the wrong direction, and of course they were too slow in reacting properly to bad news,” but “practically everyone” makes those kinds of mistakes, Munger said.
“Wells Fargo will end up better off for having made those mistakes,” he added. “I think it’s time for regulators to let up on Wells Fargo. They’ve learned.”
The San Francisco-based bank has been beset by scandals for deceiving customers, such as by opening unauthorized accounts and forcing them to take out auto insurance they did not need.
Wells Fargo shares gained 2.7 percent to $59.55 on Wednesday.
Though Wells Fargo may be learning its lessons, Munger said the banking industry remains a “dangerous” place to invest because of the temptation for chief executives to take unwise long-term risks to boost short-term results.
Buffett has credited Munger with broadening his investment horizon, and to seek out great companies at fair prices rather than emphasizing fair companies that can be bought cheaply.
For Munger, that leaves no room for bitcoin, saying the recent “craze” in the cryptocurrency is “totally asinine” and a means for people to make a quick buck. He urged the government to help wring out its excesses.
“Bitcoin is noxious poison,” Munger said. “The more popular it got the more I hated it.”
Munger also endorsed the plan announced by Berkshire, Amazon.com Inc (AMZN.O) and JPMorgan Chase & Co (JPM.N) to set up a healthcare company for their employees to combat spiraling costs that Buffett has called a “tapeworm” on the economy.
The current system “runs out of control on the cost side,” causing behavior that is “regrettable” and “evil,” Munger said.
“It’s not right to bleed so much money out of our dying people,” Munger said. “I’m all for somebody trying to figure it out.”
Munger also expressed concern about rising U.S. government debt levels, calling it “new territory for us,” though he expressed no alarm about the current economy.
He said higher inflation may follow, and that long-term U.S. Treasuries, whose prices can fall quickly as yields rise, remain a losing bet over the long haul.
Munger fielded questions for two hours. He and Buffett, 87, are expected to field shareholder questions for an even longer period, five hours, at Berkshire’s annual meeting on May 5.
Given their ages, that meeting is likely to be among their last, and Berkshire is preparing for their succession.
Last month, it promoted executives Greg Abel and Ajit Jain to vice chairmen, overseeing non-insurance and insurance businesses, respectively. They are widely considered the frontrunners to succeed Buffett as chief executive officer.
Alluding to his age, Munger on Wednesday said he was “very surprised to be here,” and drew laughter by referring to a woman who said on her own 94th birthday: “I’m very pleased to be here. In fact I’m very pleased to be anywhere.”
Reporting by Jonathan Stempel and Jennifer Ablan in New York; Editing by Nick Zieminski