Wells Fargo CEO steps down amid calls for removal

Wells Fargo announced Thursday that CEO and president Timothy Sloan has resigned as the embattled bank struggles to escape from unprecedented penalties and scrutiny from federal regulators.

The bank announced Thursday that Sloan will immediately step down as Wells Fargo’s chief executive, president and a board member, and will retire from the company entirely on June 30.

C. Allen Parker, Wells Fargo’s former general counsel, was elected by the bank’s board to serve as interim chief executive, president and member of the board. {mosads}

Sloan said in a Thursday statement that he will “step aside and devote my efforts to supporting an effective transition” as a growing number of top Democratic lawmakers called for his removal.

“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 in a statement.

“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.”

Betsy Duke, chairman of Wells Fargo’s board of directors, said Thursday that Sloan “has served this Company with pride and dedication. Duke, a former Federal Reserve Board governor, said that Wells Fargo will hire a new chief executive from outside the company.

Wells Fargo has paid more than $1 billion in fines and legal settlements since September 2016 over a series of sales scandals

A 31-year veteran of Wells Fargo, Sloan took over as chief executive in October 2016 and led the bank’s attempts to overhaul its public image and internal management after a series of sales scandals across almost every line of its business.

The Consumer Financial Protection Bureau (CFPB) fined Wells Fargo $100 million in September 2016 over allegations that the bank opened and charged customers fees for millions of accounts opened without their consent.

The Federal Reserve in January 2018 banned Wells Fargo from growing beyond its current $1.87 trillion in assets until the bank could prove and document ways to prevent similar scandals.

Wells also paid $1 billion in April 2018 to settle charges alleged by the CFPB and Office of the Comptroller of the Currency (OCC) that the bank failed to make promised interest rate adjustments on mortgages and auto loans, which led to hundreds of foreclosures and car repossessions.

Sloan told members of the House Financial Services Committee in a March 12 hearing that Wells Fargo has improved its internal oversight, revamped its management and compensated customers harmed by misconduct.

But his efforts have failed to convince Democratic lawmakers and federal bank regulators that Wells Fargo had become a safer, more responsible bank.

Sloan was excoriated by a bipartisan group of Financial Services panel members in both parties during the March hearing, which concluded with the committee’s chairwoman, Rep. Maxine Waters (D-Calif.), calling for federal regulators to fire Sloan.

Democratic Sens. Sherrod Brown (Ohio), the ranking member of the Senate Banking Committee, and Elizabeth Warren (Mass.) also wrote to federal regulators last week to demand Sloan’s removal.

“About damn time,” Warren, a 2020 presidential candidate, tweeted Thursday.

“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.”

Rep. Patrick McHenry (R-N.C.), the Financial Services panel’s ranking Republican, said Thursday that Wells Fargo “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 in a statement. “I will be watching closely to ensure the next leader of this organization shows commitment to rebuilding trust.”

Sloan also faced growing pressure from the leaders of Fed and OCC, which broke their typical silence on disciplinary matters to condemn the bank’s lack of progress.

Fed Chairman Jerome Powell said in a press conference last week that Wells Fargo had “a lot of work to do” before it would be released it from its asset cap—a penalty never before imposed by the central bank.

“What happened at Wells Fargo was really a remarkable widespread series of breakdowns in their risk management apparatus that resulted in significant consumer abuses,” Powell said.

“We will not lift [the asset cap] until Wells Fargo gets their arms around this, comes forward with plans, implements those plans and we’re satisfied with what they’ve done, and that’s not where we are right now.”

And OCC spokesman Bryan Hubbard said after Sloan’s March 12 testimony that “We continue to be disappointed” with Wells Fargo’s “performance under our consent orders,” a rare public reprimand from the regulator.

The mounting pressure on Sloan sparked several rumors that Wells Fargo’s board would soon replace him. Wells Fargo had denied previous reports of Sloan’s impending departure.

Updated at 6:29 p.m