Just over two weeks ago, Wells Fargo CEO Tim Sloan was subjected to a four-hour beating at the hands of Congress over the bank’s recent bevy of scandals, but Congress no longer has Sloan to beat up on.
Wells Fargo announced Thursday that the embattled Sloan is relinquishing his post as CEO and president of the megabank and stepping down immediately.
According to the bank, Sloan is retiring as CEO, president, and board member on June 30, 2019, but his retirement is taking immediate effect.
The bank said that C. Allen Parker, who currently serves as the bank’s general counsel, will now take over as interim CEO, president, and member of the board.
Sloan took over as CEO in October 2016 after the company’s previous CEO, John Stumpf, stepped down in the wake the bank’s fake account scandal that set off more than two years of troubles.
Wells Fargo’s troubles began in 2016 when the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles fined the bank $150 million for more than 5,000 of the bank’s former employees opening as many as 2 million fake accounts in order to get sales bonuses.
That issue led the bank to agree to pay $480 million to shareholders to settle class-action suit over the bank’s fake accounts scandal.
The fake accounts issue also led to class-action lawsuit being brought on behalf of the bank’s customers who had fake accounts opened in their names, which the bank eventually settled for $142 million.
In April 2018, the CFPB and the OCC announced a $1 billion fine for the bank over auto insurance and mortgage abuses.
Before that, Wells Fargo revealed that it was preparing to hand out $80 million in remediation for potentially wrongfully force-placing auto insurance on as many as 570,000 customers.
The bank later disclosed that it agreed to pay $108 million to the federal government to settle allegations that the bank overcharged military veterans for refinances.
The bank then reached a $575 million settlement with all 50 state attorneys general and the attorney general for the District of Columbia regarding previously disclosed retail sales practices, auto collateral protection insurance and guaranteed asset/auto protection, and mortgage interest rate lock matters.
Beyond that, last year, the bank revealed that an error in its mortgage underwriting software led to hundreds of improperly denied mortgage modifications for borrowers facing foreclosure over a five-year period.
That came just two days after the bank agreed to pay more than $2 billion for allegedly lying about the quality of subprime and Alt-A mortgages that backed residential mortgage-backed securities in the run-up to the housing crisis.
All that occurred on Sloan’s watch, although not all of the conduct covered by each of those settlements, fines, etc. took place under Sloan.
Nonetheless, Sloan was the target of Congressional ire earlier this month over the bank’s last few years of scandals.
But that didn’t prevent Wells Fargo from giving Sloan a $2 million bonus the day after he received his congressional thrashing.
And now, just a few weeks later, Sloan is out as CEO.
In a statement, Sloan said that is has “become apparent to me” that the company cannot move forward under his leadership.
“I have been very fortunate to work for such a great company, and with so many dedicated team members, for more than 31 years, and I am very proud of what we have accomplished together. In my time as CEO, I have focused on leading a process to address past issues and to rebuild trust for the future,” Sloan said.
“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 added. “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. For this reason, I have decided it is best for the company that I step aside and devote my efforts to supporting an effective transition.”
According to Wells Fargo, the company will look outside the organization for its new leader.
“The board has a continuous succession planning process through which we identify potential successors within the company. 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.
“Accordingly, we will immediately initiate an external search and have selected Allen to serve as interim CEO. During this search period, the board and I will work closely with Allen and the company’s leadership team to continue to move forward on Wells Fargo’s goals and commitments,” Duke continued. “Since joining in early 2017 as our general counsel, Allen has brought thoughtful and independent points of view to business, strategy, and governance matters, and he has earned the respect and full confidence of our board and executive team as he takes on this interim CEO role.”
Parker has served as senior executive vice president and general counsel at Wells Fargo since March 2017. Previously, he was presiding partner at the law firm Cravath, Swaine & Moore from January 2013 through December 2016. In that role, Parker was responsible for development and implementation of firm-wide strategy and day-to-day firm leadership, including financial analysis and reporting, business development, risk management, and public relations.
Parker joined Cravath in 1984 and was a partner from June 1990 until March 2017 when he joined Wells Fargo.
And now, Parker is taking over a job that both of predecessors resigned from amid scandal and pressure from Capitol Hill.
“In my two years at Wells Fargo, I have been deeply impressed with the commitment of our 259,000 team members to move this great company forward and to build an even stronger foundation for the future,” Parker said. “I am fully committed to this role as we continue the important work at hand in support of all our stakeholders, particularly our customers, and prepare for a smooth and effective transition to a permanent CEO.”
As for Sloan, he will work to ensure an “effective transition” to the company’s next permanent CEO.
“Tim Sloan has served this company with pride and dedication for more than 31 years, including in his role as CEO since October 2016,” Duke said. “He has worked tirelessly over this period for all of our stakeholders in the best long-term interest of Wells Fargo. 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.”
