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Wells Fargo Chief Executive Timothy Sloan Abruptly Steps Down Wells Fargo C.E.O. Timothy Sloan Abruptly Steps Down
(about 1 hour later)
Timothy J. Sloan, the embattled chief executive of Wells Fargo, abruptly stepped down on Thursday as one of the country’s largest banks struggles to recover from a series of self-inflicted scandals.Timothy J. Sloan, the embattled chief executive of Wells Fargo, abruptly stepped down on Thursday as one of the country’s largest banks struggles to recover from a series of self-inflicted scandals.
Mr. Sloan, who has been at the company for 31 years and became chief executive in 2016 after his predecessor resigned under pressure, has been facing intensifying criticism about the bank’s culture and sales practices. The bank said it would look to an external candidate — an apparent acknowledgment that promoting from within had failed to achieve the necessary reforms. Mr. Sloan took over the top job in 2016 with a mandate to clean up the bank after his predecessor was forced to resign. Once regarded as among the nation’s best-run financial institutions, Wells Fargo admitted in 2016 that it had for years opened what may have been millions of fictitious accounts in customers’ names, improperly charged them fees and sold them unwanted products.
Wells Fargo said Mr. Sloan, 58, would be replaced by the bank’s general counsel, C. Allen Parker, on an interim basis as it searches for a permanent chief. But Mr. Sloan, who has been at the company for 31 years, could do little to stem renewed criticism about the bank’s culture and sales practices. In fact, he became a lightning rod for criticism, including from members of Congress who called for his resignation.
Once regarded as among the nation’s best-run financial institutions, Wells Fargo has been reeling since it admitted in 2016 that it had for years opened thousands of fictitious accounts in customers’ names, improperly charged them fees and sold them unwanted products. Last year, the Federal Reserve punished Wells Fargo by barring the bank from expanding until it cleans up its culture and establishes better internal checks and balances. “I could not keep myself in a position where I was becoming a distraction,” he said on a conference call with analysts.
In announcing Mr. Sloan’s departure, the bank said it would look to an external candidate — an acknowledgment that promoting from within had failed to achieve the necessary reforms. Wells Fargo said Mr. Sloan, 58, would be replaced by the bank’s general counsel, C. Allen Parker, on an interim basis as it searches for a permanent chief.
Senator Elizabeth Warren, Democrat of Massachusetts and a presidential hopeful, welcomed the news of Mr. Sloan’s departure. “About damn time,” she wrote on Twitter. She added, “He enabled Wells Fargo’s massive fake accounts scam, got rich off it, & then helped cover it up.”Senator Elizabeth Warren, Democrat of Massachusetts and a presidential hopeful, welcomed the news of Mr. Sloan’s departure. “About damn time,” she wrote on Twitter. She added, “He enabled Wells Fargo’s massive fake accounts scam, got rich off it, & then helped cover it up.”
It wasn’t clear what prompted Mr. Sloan to tender his resignation. He appeared before a congressional committee this month and defended his work repairing the bank’s practices and culture. Lawmakers from both parties attacked his record, citing a report by The New York Times that described how many Wells Fargo employees felt they remained under intense pressure to reach the types of internal sales targets that bank executives had insisted were no longer in force. Mr. Sloan appeared before a congressional committee this month and defended his work repairing the bank’s practices and culture. Lawmakers from both parties attacked his record, citing a report by The New York Times that described how many Wells Fargo employees felt they remained under intense pressure to reach the types of internal sales targets that bank executives had insisted were no longer in force.
For example, Representative Lee Zeldin, Republican of New York, questioned Mr. Sloan about a letter sent to customers of a financial adviser who left the company, but the bank told her clients that she was teaming up with another employee to handle their accounts.For example, Representative Lee Zeldin, Republican of New York, questioned Mr. Sloan about a letter sent to customers of a financial adviser who left the company, but the bank told her clients that she was teaming up with another employee to handle their accounts.
After Mr. Sloan’s testimony, the Office of the Comptroller of the Currency — Wells Fargo’s primary federal regulator — took the unusual step of publicly criticizing the bank. After Mr. Sloan’s testimony, the Office of the Comptroller of the Currency — Wells Fargo’s primary federal regulator — took the unusual step of publicly criticizing the bank. The office, which has criticized Wells Fargo for forcing hundreds of thousands of customers to carry unnecessary car insurance, said it was unhappy with the bank’s “inability to execute effective corporate governance and a successful risk-management program.”
Less than a week ago, Ms. Warren and Senator Sherrod Brown, Democrat of Ohio, sent a letter to the Federal Reserve urging it to keep the growth restrictions on Wells Fargo in place until Mr. Sloan was replaced as chief executive. Wells Fargo had other federal problems. It had been barred from expanding last year by the Federal Reserve, and less than a week ago Ms. Warren and Senator Sherrod Brown, Democrat of Ohio, urged the Fed to keep those restrictions in place until Mr. Sloan was replaced as chief executive.
“Recent reports provide more evidence that Wells Fargo is fundamentally broken, with a record of misconduct that has lasted for years,” they wrote. “There is no evidence whatsoever that Mr. Sloan will fix these problems.” “Recent reports provide more evidence that Wells Fargo is fundamentally broken, with a record of misconduct that has lasted for years,” they said in a letter. “There is no evidence whatsoever that Mr. Sloan will fix these problems.”
Last week, Jerome H. Powell, the Fed chairman, acknowledged that Wells Fargo still had “a lot of work to do” improving its internal controls.
“What happened at Wells Fargo really was a remarkably widespread series of breakdowns,” he said.
The board’s formal discussions about Mr. Sloan’s departure began last week, according to a person with knowledge of the discussions. The board quickly settled on Mr. Parker as the best temporary chief, in part because directors regarded him as having a good relationship with regulators.The board’s formal discussions about Mr. Sloan’s departure began last week, according to a person with knowledge of the discussions. The board quickly settled on Mr. Parker as the best temporary chief, in part because directors regarded him as having a good relationship with regulators.
The board hopes to hire a new chief executive within three months, although the process could drag on considerably longer, the person said.The board hopes to hire a new chief executive within three months, although the process could drag on considerably longer, the person said.
For decades, Wells Fargo was the envy of the banking industry: a financial institution that sold lots of products to customers while dodging the scandals and the losses that hit other banks during the financial crisis. The bank — known for its stagecoach logo, recalling its gold-rush roots in San Francisco — prided itself on having a strong, healthy corporate culture.For decades, Wells Fargo was the envy of the banking industry: a financial institution that sold lots of products to customers while dodging the scandals and the losses that hit other banks during the financial crisis. The bank — known for its stagecoach logo, recalling its gold-rush roots in San Francisco — prided itself on having a strong, healthy corporate culture.
That image was shattered by scandals over fake customer accounts, unwanted products and unwarranted fees. Still, Wells Fargo looked inside for a solution by naming Mr. Sloan, a three-decade veteran of the bank, to replace John G. Stumpf as chief executive.That image was shattered by scandals over fake customer accounts, unwanted products and unwarranted fees. Still, Wells Fargo looked inside for a solution by naming Mr. Sloan, a three-decade veteran of the bank, to replace John G. Stumpf as chief executive.
Now the board is taking a new approach, searching for a leader from outside, suggesting that the bank’s corporate culture was irreparably tainted.Now the board is taking a new approach, searching for a leader from outside, suggesting that the bank’s corporate culture was irreparably tainted.
“The board has concluded that seeking someone from the outside is the most effective way to complete the transformation at Wells Fargo,” Betsy Duke, the chairwoman of the firm’s board, said in a statement.“The board has concluded that seeking someone from the outside is the most effective way to complete the transformation at Wells Fargo,” Betsy Duke, the chairwoman of the firm’s board, said in a statement.
Last September, Ms. Duke said the board fully supported Mr. Sloan as chief executive. Last week, a bank spokesman, Mark Folk, said that still reflected the board’s thinking. She said on the conference call that a board committee seeking his replacement would meet for the first time on Friday.
Mr. Sloan was paid more than $150 million by Wells Fargo over the last eight years, including salary, stock and bonuses, according to calculations by Equilar, an executive compensation firm. Mr. Sloan was paid more than $150 million by Wells Fargo over the last eight years, including salary, stock and bonuses, according to calculations by Equilar, an executive compensation firm. He will receive a standard retirement package and his stock grants — worth about $24 million, according to Equilar — will continue to vest over the next three years, the company said in a regulatory filing.
Mr. Sloan will receive a standard retirement package and his stock grants — worth about $24 million, according to Equilar — will continue to vest over the next three years, the company said in a regulatory filing.
Wells Fargo shares rose by more than 2 percent in after-hours trading. The company’s share price has lagged the broader market this year, rising just 6.5 percent compared with a 12.3 percent increase in the S&P 500.Wells Fargo shares rose by more than 2 percent in after-hours trading. The company’s share price has lagged the broader market this year, rising just 6.5 percent compared with a 12.3 percent increase in the S&P 500.