Dick Bove: Taking Wells Fargo Scam to Congress is 'Extreme Reaction'

Wells Fargo (NYSE:WFC) CEO John Stumpf is headed to Capitol Hill this week as his company finds itself in the midst of a scandal in which some of its employees created more than two million unauthorized customer accounts.

However, Dick Bove, banking analyst at Rafferty Capital Markets, said Stumpf’s trip to the Hill is perhaps a step too far.

“That’s not a small deal. What I’m saying, however, is at this point, it’s still a victimless crime. No one was hurt by it. Some people paid $25 they shouldn’t have paid, but they’ll get that money back. To take this thing all the way up to the Senate and House seems to be an extreme reaction,” Bove said.

Bove, who has a sell rating on the stock, told the FOX Business Network’s Ashley Webster on Varney & Co. on Monday he believes the scandal will “blow over,” drawing a comparison between Wells Fargo and Fifth Third (NASDAQ:FITB), a Cincinnati bank that ran into trouble several years ago.

“It actually took two to three years to straighten out the company’s culture, so it became more service oriented as opposed to sales oriented. I think the same thing will happen at Wells Fargo,” he said.

Wells Fargo customers filed a class-action suit in U.S. District Court in Utah on Friday, accusing the bank of invasion of privacy, fraud, negligence, and breach of contract. Since news of the scandal broke, Wells Fargo fired 5,3000 employees due to improper selling, and the bank said it will eliminate product sales goals by January 1.

Bove suggested an outsider like billionaire investor Warren Buffett could take seats on the company’s board in an effort to help turn Wells Fargo’s ship away from the scandal.

“I think there has to be an outside organization that comes in and takes a look at all of the systems in Wells Fargo and I think there has to be some, if you will, gifts to customers, to get them back on track,” he said.

Wells Fargo shares have shed more than 8% since news of the scandal broke on Sept. 9.