Elizabeth Warren wants to break up Wells Fargo. Warren Buffett may have dodged a bullet by selling the stock.

• Sen. Elizabeth Warren urged the Federal Reserve this week to dismantle Wells Fargo.
• Warren Buffett's Berkshire Hathaway sold over 99% of its shares in the bank in the year to March.
• The investor soured on Wells Fargo because it ignored its problems after learning about them.

Sen. Elizabeth Warren wants the Federal Reserve to break up Wells Fargo after a slew of scandals at the bank. Warren Buffett may have dodged a bullet, as he virtually eliminated his stake in the lender over the past 18 months.

Warren, the chair of the Senate's banking committee, penned a letter to Federal Reserve Chair Jerome Powell this week. She urged him to revoke Wells Fargo's status as a financial holding company, and to force the lender to spin off or sell its investment bank and other non-banking activities.

The senator pointed to several of Wells Fargo's past fiascos, including its fake-accounts debacle and its slowness to compensate wronged customers. While the bank has paid billions of dollars in settlements and fines, and regulators slapped it with an asset cap in 2018, she argued those measures have done little to address its core failings.

"Wells Fargo is simply ungovernable," she said. "Continuing to allow this giant bank with a broken culture to conduct business in its current form poses substantial risks to consumers and the financial system."

The lender's bosses defended themselves in a statement this week. "We are a different bank today than we were five years ago," they said, highlighting their hiring of new leaders, creation of new teams, and efforts to improve oversight and transparency.

Wells Fargo didn't immediately respond to a request for comment from Insider.

Buffett's Berkshire Hathaway has been a Wells Fargo shareholder for more than three decades, counting the bank among its five biggest positions for most of that time. It owned over 13% of the lender in 1994, and its stake peaked in value at north of $27 billion in 2016.

However, Buffett's company has taken a knife to its investment since then. It slashed its holding from 323 million shares worth over $9 billion at the end of March 2020, to fewer than 700,000 shares worth about $30 million a year later. That vestigial holding was still intact as of June 30 this year.

Based on Buffett's comments in recent years, he soured on Wells Fargo not because it made a mistake and got its incentives wrong, but because it ignored its problems.

Warren's letter indicates she also sees the bank's reluctance to address its issues as a major problem, and views breaking it up as the best solution.

There's no indication that Wells Fargo will be dismantled. However, if Warren ultimately gets her way, Buffett may have cashed out his stock at just the right time.