NEW YORK, March 29 — Wells Fargo chief executive Tim Sloan, who became the target of criticism over the handling of a damaging scandal, is stepping down from his post “effective immediately”, the bank announced yesterday.
Sloan, who was promoted to CEO in October 2016 after Wells Fargo’s fake accounts scandal was uncovered, said he made the hard decision to exit to avoid serving as a “distraction” from the efforts to recover.
The 31-year veteran of the bank also will leave the board immediately, and then retire from the company June 30, Wells Fargo said in a statement.
“This was my decision based on what I thought was best for Wells Fargo because there’s just been too much focus on me and it was affecting our ability to move forward,” Sloan said on a conference call.
Sloan was tapped as CEO to replace John Stumpf just weeks after the fake accounts scandal broke.
Wells Fargo has settled a number of cases over the massive fraud, with penalties of over US$750 million (RM3.05 billion), in addition to a US$2.1 billion fine stemming from the 2008 financial crisis. And the Federal Reserve imposed an unusual and strict growth limit on the bank.
‘About damn time’
Though he was not at the helm while the scam was underway, as the bank’s president he has come under fire from Congress, especially from Democratic Senator and presidential candidate Elizabeth Warren for the bank’s behaviour.
“About damn time,” Warren said on Twitter moments after the announcement yesterday.
“Tim Sloan should have been fired a long time ago. He enabled Wells Fargo’s massive fake accounts scam, got rich off it, & then helped cover it up.”
At a press conference earlier this month, Fed Chair Jerome Powell pointed to a “remarkably widespread series of breakdowns.” The asset cap — an “unprecedented sanction” — would not be lifted “until Wells Fargo gets their arms around this.”
A 110-page investigation of the debacle that the bank released in April 2017, said Sloan’s predecessor Stumpf “was too slow to investigate or critically challenge sales practices,” and failed to “appreciate the seriousness of the problem and the substantial reputational risk to Wells Fargo.”
The report largely exonerated Sloan, who was portrayed as trying to get a grasp on the situation.
Work to do
In the wake of the resignation, Wells Fargo’s board elected General Counsel Allen Parker to serve as interim CEO and president while the bank undertakes an external search for a new chief.
Board Chair Betsy Duke praised Sloan for his “tireless and determined” service to the company, but said he “made his decision on the basis of what he thinks is best for the company.”
“We have a lot more work to do,” Duke said on the conference call. “This is about more than one person.”
A CEO search committee will meet today, but she declined to give a timeframe for picking a new leader, or to say whether the search would be limited to people in finance.
Sloan touted reforms he spearheaded at the nation’s third biggest bank by assets, replacing key executives, scrapping compensation incentives that encouraged selling, and enhancing compliance training.
But he also faced criticism over a pay boost he was awarded despite lingering regulatory problems.
Interim CEO Parker said the bank has “ongoing constructive engagement” with the Fed and other regulators and would rectify the situation.
“We’re committed to completing that work, not only to satisfy the Fed but because we’re convinced it’s going to make us a better company.”
Shares of Wells Fargo rose 1.9 per cent to US$50.00 in after-hours trading. — AFP
