Wrong Brexit response could cause global recession, says former Wells Fargo CEO


This is what should be done by politicians to avoid a global recession after Brexit, former Wells Fargo CEO Dick Kovacevich says.

"If the rhetoric … is one of anger and punishment and retribution, I think people will be so concerned that the actual results will be negative," he said in an interview with CNBC's " Closing Bell ."

"It could cause the market to collapse, if you will, or go down much further than they are today."

Stocks around the world have taken a hit after the U.K. on Thursday voted to leave the European Union. The Dow Jones industrial average closed down more than 250 points Monday , its lowest level since mid-March.

Kovacevich believes there is a way to avoid a recession — if politicians act rationally and "kind of calm down."

"This is about a political risk, not an economic risk."

Therefore, political leaders should work together for an orderly exit of the U.K. from the EU, with different trade relationships being negotiated, not zero, he said. The United States also needs to speak out, and should possibly say the U.K. should be invited to NAFTA and included in the Trans-Pacific Partnership.

If it appears everything will be operating on a rational basis, "the market will calm and will simply reflect the fact that the worldwide economy will slow somewhat, but it will not go into a recession," said Kovacevich.

JefferiesAnd the Best Place to Work in the global financial markets 2016 is...

Register for Financial Markets News Alerts