From The Washington Post ”
Wells Fargo announced Wednesday that its long-time chief executive and chairman, John G. Stumpf, is stepping down immediately after the mega-bank spent weeks attempting to quiet controversy over its acknowledgement that for at least five years, thousands of low-level employees set up sham accounts to meet sales quotas.
Stumpf’s sudden downfall is likely to send shivers through Wall Street where a well-honed playbook for surviving public scandals appears to have been torn to pieces, upended by the type of populist anger that has fueled the rise of Republican Donald Trump and Sen. Bernie Sanders (D) on this year’s presidential campaign trail.
The San Francisco-based bank has repeatedly apologized and said it had fired 5,300 employees for misconduct and put in place more stringent internal controls. But that has not been enough for lawmakers, particularly Sen. Elizabeth Warren (D-Mass.) whose calls for Stumpf to resign during a Senate hearing last month may have sealed the banker’s fate. Stumpf went as far as pledging to give up $41 million in compensation to account for the scandal, but his overture did little to quiet critics.
“While I have been deeply committed and focused on managing the Company through this period, I have decided it is best for the Company that I step aside,” Stumpf said in a statement.
Tim Sloan, another long-time Wells Fargo executive, will take over Stumpf’s duties as CEO. A board member, Stephen Sanger, will now serve as chairman, effectively dividing power that had previously been consolidating under Stumpf. Sanger is the former chief executive of General Mills.
Stumpf’s downfall began in early September when Wells Fargo was fined $185 million by regulators after it discovered that thousands of employees were setting up unauthorized accounts, including credit cards and checking accounts, customers had not requested. In some cases, the customers were charged various fees for accounts they did not know existed. In others, bank employees would take money from authorized accounts to gain credit for setting up fake ones.
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More at the WashingtonPost:
https://www.washingtonpost.com/news/business/wp/2016/10/12/wells-fargo-ceo-to-retire-in-wake-of-sham-accounts-scandal/
