Kovacevich commits a rare gaffe

Few begrudged him a $7 million bonus when he steered San Franciscobased Wells Fargo to an 11 percent gain in profits in tough 2002.

But like an Old West stagecoach -- the bank’s famous symbol -- Kovacevich, 59, can still get bogged down in mud. Wells was the only bank among 22 -- including J.P. Morgan Chase and Deutsche Bank -- that didn’t sign a $57 million Holocaust-reparations settlement with Belgium’s Jewish community.

Wells insisted that it was not responsible for a $267,000 obligation that had been traced to a Belgian bank Wells inherited at three removes, through its 1996 acquisition of First Interstate Bancorp. But when the Los Angeles Times reported Wells’s stance last month, the bank was flooded with complaints. The head of Wells’s regional lending operation, Paul Nussbaum, called Rabbi Marvin Hier, founder of the Simon Wiesenthal Center, to which Wells donates more than $50,000 every year. Recalls the rabbi, “I said that from a moral point of view, this is absolutely a classic error of the first order and that they should reverse themselves immediately.”

Nussbaum presented that position in conference calls with top Wells executives, including Kovacevich. “They were very surprised at the reaction in the Jewish community, and it was clear we had to reverse,” says Nussbaum. Kovacevich decided to pay Wells’s $267,000 share of the settlement. In a press release -- his only public statement on the matter -- the banker said, “We sincerely apologize to the Jewish community and deeply regret any misunderstanding that our original decision may have caused.”

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