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Wells Fargo President and CEO Tim Sloan announced his retirement late Thursday afternoon, a move that he said would benefit the company as it attempts to rebuild its reputation after a slew of scandals over the last few years.
Though Sloan does not officially retire until June 30, he is stepping down as CEO immediately, leaving Wells’ general counsel, C. Allen Parker, as interim CEO until the firm decides on a permanent replacement.
Sloan said that he was proud of his accomplishments in the 31 years he has worked at Wells Fargo and pointed to progress that the firm has made in advancing its risk management structure in the wake of a series of scandals. But he said the firm would ultimately benefit from a fresh perspective at the top, and for that reason he was stepping aside.
“We have made progress in many areas and, while there remains more work to be done, I am confident in our leadership team and optimistic about the future of Wells Fargo,” Sloan said. “However, it has become apparent to me that our ability to successfully move Wells Fargo forward from here will benefit from a new CEO and fresh perspectives.”
Sloan took over as Wells Fargo’s president and CEO in October 2016 from John Stumpf, who retired in the wake of a scandal in which employees created thousands of bogus customer accounts.
Since taking over, the bank has been beset by still more scandals, including settling lawsuits alleging that the bank overcharged customers for auto insurance and home loans, overcharging veterans for home loans and false certifications of FHA loans. The Federal Reserve last year took the unusual step of capping the bank’s asset size in a consent decree — a cap that Fed Chairman Jerome Powell indicated would not be removed anytime soon.
The reaction from the bank’s most vocal critics was swift and harsh. Sen. Elizabeth Warren, D-Mass., a noted critic of Wall Street in general and Wells Fargo in particular, said in a tweet in response to the news of Sloan’s ouster that it was “about damn time.”
“Tim Sloan should have been fired a long time ago,” Warren added. “He enabled Wells Fargo’s massive fake accounts scam, got rich off it, [and] then helped cover it up. Now — let’s make sure all the people hurt by Wells Fargo’s scams get the relief they’re owed.”
About damn time. 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. Now—let’s make sure all the people hurt by Wells Fargo’s scams get the relief they’re owed. https://t.co/l7dYmBWRBo
— Elizabeth Warren (@ewarren) March 28, 2019
Sen. Sherrod Brown, D-Ohio, the ranking member on the Senate Banking Committee, said Sloan should have left the company but “should not take a huge payout with him.” Brown added that the problems at the bank go far beyond the top management.
“Wells Fargo’s mismanagement is about more than one CEO — this bank needs a complete culture shift,” Brown said in a statement. “Watchdogs cannot afford to let up on Wells Fargo and whoever is tapped as the new CEO must be ready to clean up the greed that has hurt millions customers and workers.”
Rep. Katie Porter, D-Calif., a freshman member of Congress and vocal critic of the bank, tweeted simply, “thank u, next.”
Betsy Duke, the chair of Wells’ board of directors, praised Sloan for his “tireless” efforts in leading the company and indicated that he chose to retire for the good of the company.
“His decision, and today’s announcement, reflect that commitment and his belief that a new CEO at this time will best position the Company for success,” Duke said.
Not everyone has been so appreciative of Sloan’s leadership at the bank. Earlier this month, Sloan appeared before the House Financial Services Committee and faced harsh questioning from both Democrats and Republicans. Committee chair Maxine Waters, D-Calif., said the bank’s string of scandals suggests that the firm has not demonstrated that it can function effectively at its current size.
“Wells Fargo’s ongoing lawlessness and failure to right the ship suggest the bank, with approximately $1.9 trillion in assets and serving one in three U.S. households, is simply too big to manage,” Waters said.
Brown and Warren sent a letter to the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau to force Wells to remove Sloan and replace him with a “third-party monitor.”
“Given Wells Fargo’s history of unlawful activity and its current leadership’s apparent inability to successfully make things right, I strongly urge the OCC and the CFPB to take additional action,” the lawmakers said.
Parker has served as Wells’ senior executive vice president and general counsel since March 2017. Before joining Wells, he was an associate attorney and later a partner at the law firm Cravath, Swaine & Moore.
Duke said Wells Fargo would conduct a search outside of the company for a permanent replacement for Sloan, saying that it needs an outsider’s perspective.
“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,” Duke said. “Accordingly, we will immediately initiate an external search and have selected Allen to serve as interim CEO.”