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Warren Buffett, the chairman of Berkshire Hathaway Inc., Saturday faulted Wells Fargo & Co for failing to stop employees from signing up customers for bogus accounts even after learning it was happening.

Wells Fargo, whose largest shareholder is Berkshire, with a 10 percent stake worth roughly $27 billion, gave employees too much autonomy to engage in “cross-selling” multiple products to meet sales goals, Buffett said.

This “incentivized the wrong type of behavior,” and former Chief Executive John Stumpf, who lost his job over the scandal, was too slow to fix the problem, Buffett said.

Wells Fargo was among many topics discussed at Berkshire’s annual meeting in Omaha, where Buffett, 86, and Vice Chairman Charlie Munger, 93, fielded dozens of questions from shareholders, journalists and analysts.

“If there’s a major problem, the CEO will get wind of it. At that moment, that’s the key to everything. The CEO has to act,” Buffett said. “The main problem was they didn’t act when they learned about it.”

Still, Buffett’s support of current management and board was key to ensuring the re-election of the entire board last month.

Wells Fargo spokesman Mark Folk said “we agree” with Buffett’s comments, and have taken “decisive actions” to fix the problems and “make things right for customers.”

Asked whether Berkshire’s decentralized structure could lead to a similar scandal, Buffett said “as we sit here, somebody is doing something wrong at Berkshire,” whose units employ 367,000 people. But he said Berkshire has an internal hotline to flag possible misbehavior, which gets 4,000 calls a year.

Succession and dividends

The meeting also included discussions about Berkshire’s succession plans, its controversial partnership with Brazilian firm 3G Capital, and whether it will start paying dividends or make an acquisition.

Buffett has said Berkshire could have a new chief executive within 24 hours if he died or could not continue, and that nothing had changed just because he praised fewer managers than usual in his February shareholder letter.

He said it may have been harder to single people out because “we have never had more good managers.”

But he also said it would be a “terrible mistake” if capital allocation were not the “main talent” of his successor.

Buffett did lavish much praise on top insurance executive Ajit Jain, who some investors believe could be that successor, saying “nobody could possibly replace Ajit. You can’t come close.”

On 3G, with which Berkshire controls Kraft Heinz Co and tried to merge it with Unilever NV, Buffett acknowledged a dislike for the cost-cutting for which the Brazilian firm is known.

But, he said, “it is absolutely essential to America that we become more productive,” and 3G was “very good at making a business productive with fewer people.”

Buffett also raised the possibility Berkshire could pay its first dividend since 1967, if “reasonably soon, even while I’m around,” the company had too much cash it could not reasonably deploy.

“It could be repurchases, it could be dividends,” he said.

Berkshire ended March with more than $96 billion of cash and cashlike instruments, and Munger said it could do a “$150 billion” acquisition now if it wanted.

Airlines and IBM

Buffett defended Berkshire’s foray into airlines, where it is a top investor in American Airlines Group Inc., Delta Air Lines Inc., Southwest Airlines Co. and United Continental Holdings Inc.

He had long disdained the industry, which had gone through many bankruptcies, but said he is confident it will not resort to “suicidally competitive” pricing strategies that could spell doom.

Munger added: “You’ve got to remember railroads were a terrible business for decades and decades and decades, and then they got good.” Berkshire bought the BNSF railroad in 2010.

Buffett also admitted he was wrong to think International Business Machines Corp. “would do better” when he started amassing 81 million shares six years ago.

Berkshire recently sold about one-third of those shares even as it built a huge stake in Apple Inc., which Buffett said is more as a “consumer” company that a technology company.

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

“We want you to understand what you own,” he said, and “there are just a million things that are of minor importance” at Berkshire, whose market value is about $411 billion.

Buffett also noted that Berkshire reported far fewer investment gains in the first quarter, which dragged on results, but said the company now has a slight preference for taking tax losses, which could lose value if Washington lawmakers reduce the 35 percent corporate tax rate.

The annual meeting, expected to draw more than last year’s estimated 37,000 shareholders, is the main event of a weekend of events that Buffett calls “Woodstock for Capitalists.”

Buffett and Munger took questions after the traditional shareholder movie, and after Buffett had roamed a nearby exhibit hall featuring products from Berkshire companies.

He was joined at the traditional newspaper tossing contest by friends including Microsoft Corp co-founder and Berkshire director Bill Gates, and Miami Dolphins defensive tackle Ndamukong Suh.

Hundreds of shareholders lined up early outside downtown Omaha’s CenturyLink Center for the meeting. Several said they got there nearly five hours before doors opened around 6:45 a.m.

“Every year it seems I have to come earlier,” said Chris Tesari, a retired businessman from Pacific Palisades, California who said he arrived at 3:20 a.m. for his 21st meeting. “It’s a pilgrimage.”
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Berkshire Hathaway Inc Chairman Warren Buffett fumed Saturday that health care costs are eating away at the U.S. economy like “tapeworm” and said the Republican approach to overhaul Obamacare is a tax cut for the rich.

The U.S. House of Representatives on Thursday narrowly approved a bill to repeal and replace Obamacare, a victory for Republican President Donald Trump who has called the 2010 law a “disaster.”

Speaking at Berkshire’s annual shareholders’ meeting in Omaha, Buffett said his federal income taxes last year would have gone down 17 percent had the new law been in effect.

“So it is a huge tax cut for guys like me,” he said. “And when there’s a tax cut, either the deficit goes up or they get the taxes from somebody else.”

The Republican bill would repeal most of the taxes that paid for the law formally known as the Affordable Care Act. The party’s leadership has promised that the new American Health Care Act, which faces a likely overhaul and uncertain passage in the Senate, would address growing health care costs.

Buffett said rising health care costs are crippling the competitiveness of U.S. companies abroad.

Unlike in many other countries where much of health care spending is publicly financed, employers provide health insurance coverage for nearly half of Americans and often face skyrocketing rates.

Buffett said health care costs have risen much faster in the United States than in the rest of the world and “will go up a lot more.”

“Medical costs are the tapeworm of American economic competitiveness,” he said. “That is a problem this society is having trouble with and is going to have more trouble with.”

Buffett is a Democrat who vocally supported Hillary Clinton’s unsuccessful bid for the presidency against Trump. The fourth richest man in the world with a net worth totaling $74.3 billion, according to Forbes magazine, Buffett has vowed to donate nearly his entire fortune to charity.

Berkshire Vice Chairman Charlie Munger added that he thinks neither political party “can think rationally” about health care because they “hate each other so much.”
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President Daniel Ortega downplayed the possible impact of a U.S. bill that would condition international lending to Nicaragua on a range of democracy and rights issues, saying it’s more of a political than an economic threat to his country.

 

“The world is not going to disappear, the economy is not going to disintegrate” if the so-called Nica Act passes, Ortega said late Thursday after meeting with representatives of the International Monetary Fund during a visit to the Central American nation.

 

The bill before the House and Senate calls for the U.S. to oppose most loans to Nicaragua’s government through organizations such as the IMF, the World Bank and the Inter-American Development Bank, with the exception of funds for humanitarian purposes or to promote democracy.

 

That would be the official U.S. position unless the secretary of state certifies that Nicaragua is taking steps to hold fair and competitive elections, safeguard political rights, strengthen the rule of law and fight corruption, among other conditions.

Similar legislation last year failed to advance in Congress.
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More Americans age 65 and over are still punching the clock. In fact, the last time the percentage was this high was when John F. Kennedy was in the White House.

Last month, 19 percent of Americans age 65 and over were still working, according to government data released Friday. That’s the highest rate since 1962, and the trend has been upward since the figure bottomed out at 10 percent in 1985.

As America grows older and as life expectancy gets longer, some workers keep heading to the office because they like it and still feel engaged. But many others are continuing to work for a simpler, darker reason: They can’t afford not to.

More than a quarter of workers age 55 or older say they have less than $10,000 in savings and investments, according to the latest retirement confidence survey by the Employee Benefit Research Institute. Perhaps because of small nest eggs, nearly a third of workers in that age group say they expect to work until at least 70, if they retire at all.

Older workers still heading for jobs may also be the lucky ones. Many older Americans would like to work but say they can’t find a job, whether because they lack the skills or because employers are looking for someone younger. The unemployment rate for workers age 65 and over was 3.7 percent last month. That’s a tick higher than its median over the last 30 years, though it’s down from earlier this year.

The numbers may rise higher, critics say.

Congress this past week voted to overturn a federal rule designed to help states give more workers access to retirement savings plans.

Several states have been pushing to create their own plans to get more workers into plans like a 401(k) that automatically deduct savings from each paycheck. Low-income workers tend to have much less access to savings plans through their jobs.

Republicans and players in the investment industry, though, argue that the state-run plans could end up being much more expensive than imagined and would water down safeguards in place to protect investors.
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In Venezuela, plagued with chronic food shortages and a devastated economy, Carmen Elena Perez describes her refrigerator as merely “an ornament in my kitchen, because filling it costs me too much money.”

Dulce Maria Garcia Leon, in the western state of Trujillo, says she has corn masa and “a little bit of cottage cheese” and eggs, though her fridge often holds “only cold.”

Vane Vargas jokes that her refrigerator, with its top-mount freezer, “is like the North Pole: ice above, water below.”

Bitter humor remains among the few things in plentiful supply in this once-wealthy South American country, where many of its 31 million people struggle to find enough to eat.

So VOA’s Spanish Service invited Facebook and Twitter users there to dish about the contents of their refrigerators and cupboards. The informal, unscientific survey drew more than 60 responses – 54 on Facebook, nine on Twitter – offering a glimpse into daily lives.

Now, few people mark their days with three full meals. Instead, many count the hours spent standing in line for bread, oil and other basics.

“We eat what we can get,” says Elvis Mercado of El Tigre, a city about 340 kilometers southeast of the capital. Usually it’s a meal of arepas, the Venezuelan pan-fried staple made from corn flour, “because the salary is not enough to buy food for a fortnight.”

A raise, but little respite

Seeking to counter widespread protests, socialist President Nicolas Maduro this week ordered a 60 percent raise in the minimum wage, including food subsidies and pension increases. That translates to roughly 200,000 bolivares a month – or $278 at the official currency exchange rate on May 5.

But, given a scarcity of dollars as well as consumer goods, that amount has the buying power of just $39 on the black market – the one in which everyone does business. The International Monetary Fund predicts Venezuela’s inflation rate – already one of the world’s highest – could reach 720 percent this year.

With increases in both wages and prices, “we are practically in the same” spot, Jhonaiker Daniel Rodriguez says.

“Thank you very much, but what is needed is to keep prices stable,” Nancy Haydee Roa says.

Rsan Leuqim writes that a carton of eggs is 11,000 bolivares ($2.15) – roughly 5 percent of a minimum-wage worker’s monthly total.

If you can find eggs. Many survey respondents complained of shortages of consumer goods, most of which are imported.

“We go to a store and there is nothing! If there is, it is very expensive,” Dexcy Ramirez says via Facebook. Near her home in Barinas, in west-central Venezuela, “a kilo of [powdered] milk costs 20,000bv” or $3.91.

Adreina Chauran Pineda frets about imports: “A soda is worth three days’ salary, a little vegetable soup is worth 1,500bv (29 cents). … A kilo of meat is worth 10,000” – or $1.96.

Changing diets

Rising costs have altered Paula Pena’s diet. “I buy grains,” she writes on Facebook, saying it’s what she and her family now primarily rely on for nutrition. She purchases meat, including chicken, “when we can. We cannot buy fruits or vegetables.”

Yamile Corona of Valencia, Venezuela’s third-largest city, writes of being “blessed with the mango tree.”

Scarcity generally is more pervasive outside of Caracas.

Shortages of food and medicine last year sparked dozens of riots and spasms of looting in parts of the country. Desperation has driven some people to forage for wild roots, occasionally with dire consequences. A young man in the eastern city of Maturin died on his 16th birthday last July after eating bitter yuca, a toxic plant, The New York Times reported in chronicling the case.

Luzdary Mussa Uribe writes that she once was well fed but has involuntarily lost weight: “What we are is yellow and thin.”

Government-subsidized food delivery

Last year, the government created a program called Local Supply and Production Committees (CLAPs) to manage distribution and combat hoarding. Community leaders deliver bags or boxes of foodstuffs to the homes of people who’ve registered.

“Only rice, milk, grains and flour are in the bags that the government sells,” Ruperta@vidayarte2012 tells VOA via Twitter. “I have never received one. … And the corn meal that is really our daily bread, you just do not get it.”

Liliana Vasqez, who lives in Rio Chico in Miranda state, says she recently paid 10,500bv ($2.06) for a CLAP box containing a liter of oil, six cans of tuna, four bags of rice, small jars of mayonnaise and catsup, some pasta and a kilo of flour. Vasquez – whose son relayed her information to VOA – says it was the second time that a CLAP delivery was made in her neighborhood since the program began.

Nelly Mendez, a survey respondent from an unknown location in Venezuela, says she’s gotten deliveries “every 3 months of a case of CLAP” and the contents last just for two days.

The CLAP program has been criticized for inconsistency and for allegedly favoring supporters of the ruling United Socialist Party of Venezuela (PSUV). 

“Sadly, both scarcity and hunger” mark the “disastrous reality” for Venezuelans, Raul Ernesto Gonzalez Salazar tells VOA.

For now, humor makes the situation almost palatable.

“The refrigerators are on vacation,” Nery Acevdo echoes, adding that soon hungry Venezuelans “will eat whatever we see.”
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The United States office that handles highway safety announced it would investigate complaints that brakes can malfunction on Nissan’s popular Murano SUV.

According to documents released Friday by the National Highway Traffic Safety Administration, nearly 60 people have complained that the brakes on their cars lose pressure when trying to stop on a low-friction surface.

Some drivers reported increased stopping distances after pushing the pedal all the way to the floor. The investigation will cover upwards of 100,000 Muranos from the 2009 model year.

In a statement, Nissan said it is cooperating with the probe and encouraged any drivers experiencing brake problems to visit their local Nissan dealership.

Some drivers cited in the complaint said they replaced the anti-lock brake hydraulic control unit in their SUVs and that apparently fixed the problem.

The investigation will determine if Nissan needs to issue a recall on the vehicles. The NHTSA said the problem generally involves older, higher mileage vehicles.
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After yet another viral video has surfaced of people being kicked off an overbooked plane. Delta Air Lines has apologized.

In a statement, the company said it was “sorry for the unfortunate experience.”

The video, posted by Brian and Brittany Schear, showed them and their two toddlers being told to exit the flight or be arrested after a dispute over a seat the Schears bought for their teenage son.

The couple posted the video on YouTube and showed Brian Schear arguing with someone aboard Delta flight 2222 before take-off from Maui to Los Angeles.

The dispute started over whether Brian Schear could use the seat he had bought for his teenage son for his toddler and if the toddler was required to use a car seat or could sit in an adult’s lap.

“You will hear them lie to me numerous times to get my son out of the seat. The end result was we were all kicked off the flight,” Schear wrote in a blurb about the incident.

“They oversold the flight. When will this all stop?”

The Schears ended up leaving the flight and stayed at a hotel before leaving the following day.

“Delta’s goal is to always work with customers in an attempt to find solutions to their travel issues. That did not happen in this case and we apologize,” Delta’s apology stated, adding it would refund their travel expenses and provide additional compensation.

The incident came about a month after another incident was captured on video showing a man who was injured when forcibly removed from a United flight. The airline announced an undisclosed settlement with that man last month.
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Small-business owners are applauding President Donald Trump’s plan to overhaul the tax system, saying lower taxes for everyone means more buying power for consumers and more money for businesses to hire workers. But can the White House plan simplify the nation’s cumbersome tax code fairly? And how would lower- and middle-income Americans fare? Mil Arcega spoke to tax analysts to find out.
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Finance leaders of Japan, China and South Korea agreed to resist all forms of protectionism in a trilateral meeting on Friday, taking a stronger stand than G20 major economies against the protectionist policies advocated by U.S. President Donald Trump.

“We agree that trade is one of the most important engines of economic growth and development, which contribute to productivity improvements and job creations,” the finance ministers and central bank governors of the three nations said in a communique issued after their meeting.

“We will resist all forms of protectionism,” the communique said, keeping a line that was removed – under pressure from Washington – from a G20 communique in March when the group’s finance leaders met in Germany.

China has positioned itself as a supporter of free trade in the wake of Trump’s calls to put America’s interest first and pull out of multilateral trade agreements.

The trilateral meetings’ communique said Asian economies were expected to maintain relatively robust growth thanks to a long-awaited cyclical recovery in manufacturing and trade.

But it warned that downside risks remained and called for policymakers to use “all necessary policy tools” to achieve strong, sustainable, balanced and inclusive growth.

“We will continue a high degree of communication and coordination among China, Japan and Korea to cope with possible financial instability in the context of increased uncertainty of the global economy and geopolitical tensions,” the communique said.

It also said the three countries agreed to enhance cooperation under the G20 framework and work towards a successful summit of the group in Hamburg in July.

The trilateral meeting was held on the sidelines of the Asian Development Bank’s annual meeting in Yokohama, eastern Japan.
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Last week, the White House unveiled what it called “the largest tax reform in U.S. history.”  Gary Cohn, who heads the President’s National Economic Council said, “We’re going to cut taxes for businesses to make them competitive and we’re going to cut taxes for the American people, especially low- and middle-income families.”

But analysts say to call the one page proposal a plan, may be a bit of a stretch. 

Policy documents from the White House usually provide pages of detail says Scott Greenberg, a tax analyst at the conservative leaning Tax Foundation.  He says it’ s more of a wish list.

“That being said, it opens a window onto what the administration’s main priorities are,” he said.

Aside from simplifying the nation’s notoriously complicated tax forms, the plan includes doubling the current standard deductions. For individual tax filers, that means zero taxes on the first $12,000 of income, and for couples filing jointly, no taxes on the first $24,000.  

According to Greenberg, “We estimated that the average household making between the 40th and 60th income percentile, so households right in the middle would be about 1.3 percent richer as a direct result of the various tax cuts.”

But the Tax Foundation’s estimates show wealthier Americans would enjoy much larger gains, up to 16 percent more of their after tax income. 

William Gale, a senior fellow in Economic Studies at the Brookings Institution says, “It’s basically a massive tax cut for the very highest income households.”

While Trump’s tax plan eliminates some loopholes used by wealthy Americans, the Tax Foundation says the proposal aims to level the playing field for high income earners who have traditionally shouldered the country’s tax burden.

 

But given the widening income gap, Gale says it makes no sense to reward wealthier Americans with more tax breaks. 

“They’ve done enormously well over the last two, three, four decades, their average tax rates is actually lower now than it was in the past,” he said.

Without corresponding cuts to government programs, analysts say the Trump tax cuts are likely to “blow a hole in the deficit” (expand the deficit shortfall). 

New estimates show the revenue lost to tax cuts would add between $5 to $7 trillion to the U.S. debt over 10 years.  But U.S. Treasury Secretary Steven Mnuchin says tax reforms combined with sensible trade policies would, over time “help the economy grow at a sustained rate of three to four percent”, a claim many economists say is unrealistic.  

“What I like about this plan is that it is bold in attempting to lower the business tax burden in the United States and to create a more competitive economic climate.  In that I think perhaps the heart of the plan is in the right place,” says Greenberg.

Small business owners like Rick McVey who runs the Dilly Lily Flower Shop says the tax cuts would help his business grow. 

“I think with the decrease in the tax rate, I may be able to re-invest the money to buy some capital equipment,” he said.

And Donna Seabusch, the owner of Cookie Creations in Atlanta, says tax cuts will help businesses still trying to recover from the downturn. 

“The economy was so bad several years ago, it hurt everyone.  And I think this is going to give people a jump start.  When your taxes are lowered – from your income tax, corporate taxes – it gives more people more money to spend,” she said.

The administration says slashing the the U.S. corporate tax rate from 35 percent to 15 percent could also potentially bring back trillions of dollars from companies that have moved capital and investments offshore in search of lower tax rates.  But William Gale, who is also co-director at the Tax Policy Center, says it’s a mistake to think other countries will not respond. 

“If we cut our rate to 15 percent other countries are going to cut theirs, and we’ll end up in a sort of race to the bottom on the corporate rate,” he said.  

Analysts who spoke with VOA believe there is little chance the president’s tax reform proposal will become law in its current form.  But at a recent panel discussion hosted by the Conference Board on the president’s first 100 days, William Hoagland at the Bipartisan Policy Center added yet another political wrinkle. 

Hoagland told the audience, “I think its going to be very difficult for Congress and Democrats to provide that 60 votes for tax reform unless the president of the United States releases his tax forms.”
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