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Wells Fargo bank accounts' scandal leads to a major reshuffle

Thursday, October 13th 2016 - 14:47 UTC
Full article 4 comments
Wells Fargo said Stumpf, 63, was retiring and would be replaced as chief executive by President and Chief Operating Officer Tim Sloan, 56. (Pic AP) Wells Fargo said Stumpf, 63, was retiring and would be replaced as chief executive by President and Chief Operating Officer Tim Sloan, 56. (Pic AP)

Wells Fargo & Co's veteran chairman and chief executive officer, John Stumpf, abruptly departed on Wednesday bowing to pressure over its sales tactics that has damaged the bank's reputation and put Wall Street under renewed scrutiny. San Francisco-based Wells Fargo said Stumpf, 63, was retiring and would be replaced as chief executive by President and Chief Operating Officer Tim Sloan, 56.

 The bank is splitting the role of chairman and CEO with Stephen Sanger, its lead director, becoming chairman.

Stumpf's exit leaves Sloan with a steep challenge in rebuilding its reputation and overhauling its hard-charging sales culture without gutting profits. The new CEO will also contend with ongoing regulatory investigations and private litigation.

The departure is a stunning reversal of fortune for Stumpf, who successfully navigated Wells through the financial crisis and built it into the world's most valuable bank with a focus on Main Street-style lending that was the envy of Wall Street.

“I have decided it is best for the company that I step aside,” he said in a statement. The bank's shares, which have slumped in the wake of the scandal, rose 2% in after-hours trading after the bank announced Stumpf's exit.

Sloan said his immediate priority was to restore trust in the bank.

Long considered Stumpf's successor, Sloan has spent most of his career at Wells working with corporations and institutional investors not the retail division, where the fraudulent accounts were opened.

But as the former CFO, and president and COO of the company since November, he has been responsible for the entire company, including the retail bank at the heart of the scandal.

Carrie Tolstedt, the woman who ran the retail division when the misconduct occurred, reported to Sloan from November of last year. She left the bank last month.

“They had three goals in replacing Stumpf: speed, integrity, and competence. If you want to move very fast and find someone intimately familiar with the business, you’ve got to hire an insider,” said Peter Conti-Brown, a business ethics and law professor at University of Pennsylvania's Wharton School of Business.

Stumpf's fall from grace started with a US$185 million regulatory settlement between the bank, regulatory authorities and a Los Angeles prosecutor over its staff opening as many as 2 million accounts without customers' knowledge.

The misconduct, carried out by low-level branch staff to meet internal sales targets, shattered the bank's folksy image and a raft of federal and state investigations followed.

Top Comments

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  • Captain Poppy

    The man needs to see some real prison time. Besides the fact that he was the “buck stops here” person in charge during a time a finance company seemingly condoned criminal behavior of those below him all in the name of growth and EPS and market share, he sold 61 million dollars worth of stock just weeks before they were hit with a 182 million fine and shares dropped 15% , yet he made 27 million on the transaction......insider trading.

    It's time the USA stop fining and start jailing the criminal actions of these ultra large greedy corporations. They want the rights of individuals, they can share the burdens of fucking up as well. The stories are endless of the nightmares these people are having regarding the accounts that they never knew they had......until the collectors came knocking.

    Stumpf, next stop, a SEC interview.

    As for Warren, I wonder how “Mr Market” would have fixed this without the CFPB?

    Oct 15th, 2016 - 03:33 pm 0
  • Hepatia

    Amazing! A whole article about Stumpf's forced resignation without mentioning Elizabeth Warren once! It takes real skill to produce journalism this bad. Contratulations Mercopenguin.

    Oct 14th, 2016 - 12:06 am -1
  • ChrisR

    This disgraceful episode highlighted the complete lack of control by very senior management, only some of whom have 'paid the price' and had to leave with tons on money to help them cope. :o)

    Oct 14th, 2016 - 07:51 pm -1
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