Wells Fargo’s fake account scandal started last year. Angeli Kakade (@angelikakade) has the story.
Wells Fargo CEO and President Tim Sloan abruptly stepped down Thursday, announcing his retirement amid new criticism of the bank’s efforts to recover from a 2016 scandal over millions of fake accounts and other financial missteps.
The 31-year veteran of one of the nation’s largest banks spoke of the continuing problems facing Wells Fargo during a conference call Thursday shortly after the company issued a statement that said he would retire in June.
“This was my decision based upon what I thought and believe is the best for Wells Fargo because there’s just been too much focus on me and it’s impacting our ability to move forward,” Sloan said in the call. “I just care so much about this company and so much about our team that I could not keep myself in a position where I was becoming a distraction.”
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The San Francisco-based bank announced it has named C. Allen Parker, who served as the company’s general counsel since March 2017, as interim CEO and president.
An external search for the company’s next CEO and president is now underway.
“Although we have many talented executives within the Company, the Board has concluded that seeking someone from the outside is the most effective way to complete the transformation at Wells Fargo,” Wells Fargo Board Chair Betsy Duke said in the statement.
In February 2018, the Federal Reserve restricted Wells Fargo’s growth, citing the embattled bank’s “widespread consumer abuses and compliance breakdowns.”
For years, Wells Fargo outpaced its banking industry rivals by posting consistent earnings growth. Part of that growth came from the bank’s reported success in having customers open multiple accounts and other financial products.
That success turned to scandal in September 2016 when the bank was hit with $185 million in penalties in a settlement with the U.S. Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and Los Angeles legal officials.
Sloan became CEO and president in October 2016 after his predecessor, John Stumpf, resigned under pressure from the scandal.
Wells Fargo didn’t give Sloan a salary hike in 2018, but did give him a $2 million annual incentive award “based on the company’s financial performance, Mr. Sloan’s continuing leadership on the company’s top priority of rebuilding trust, and his performance against his 2018 individual qualitative performance objectives,” the company said in its proxy statement.
Sloan’s resignation comes less than a week after Sens. Elizabeth Warren and Sherrod Brown recounted the bank’s scandals and response to them in a March 22 letter, in which they urged Federal Reserve Chairman Jerome Powell to keep the cap on the bank’s growth until Sloan was replaced.
Warren tweeted Thursday: “By the way, getting fired shouldn’t be the end of the story for Tim Sloan. He shouldn’t get a golden parachute. He should be investigated by the SEC and the DOJ for his role in all the Wells Fargo scams. And if he’s guilty of any crimes, he should be put in jail like anyone else.”
Rep. Patrick McHenry, R-N.C., a ranking member of the House Financial Services Committee, said in a statement that “the bank needs a change agent.”
“The bottom line is that we’ve not seen the type of cultural or institutional change so desperately needed at Wells Fargo,” McHenry said. “I will be watching closely to ensure the next leader of this organization shows commitment to rebuilding trust.”
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Wells Fargo shares were up 2.5 percent at $50.32 in after-hours trading following the announcement of Sloan’s exit.
Contributing: Kevin McCoy
Follow Kelly Tyko on Twitter: @KellyTyko
Read or Share this story: https://www.usatoday.com/story/money/2019/03/28/wells-fargo-ceo-tim-sloan-retiring/3302889002/