WASHINGTON -- Wells Fargo & Co.'s chief executive, Tim Sloan -- who has struggled to get the giant San Francisco bank past a seemingly endless series of customer-abuse scandals -- is retiring.
Sloan said Thursday that he is stepping down as CEO, president and board member, effective immediately, and his retirement takes effect June 30.
His interim replacement will be Allen Parker, who has served as the company's general counsel.
Sloan, a low-key Wells Fargo veteran of 31 years, took over the top job in 2016 as the bank faced fallout over its acknowledgment that employees had opened millions of checking, savings and credit-card accounts that customers never authorized and more recent revelations that it had mistakenly foreclosed on hundreds of customers and improperly repossessed thousands of cars.
"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 said in a statement. "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."
As a top executive at Wells Fargo when the accounts were being created starting as early as 2002 -- including stints as chief financial officer, chief operating officer and president -- he should have known about the problems long before they became public, critics have argued. For that reason, they said, he was ill-suited to lead the bank out of its mess.
The Los Angeles Times first reported Wells Fargo's high-pressure sales tactics in 2013.
The controversy was the first of several revelations about bank practices that have led it to pay about $4 billion in settlements with regulators, as well as plaintiffs who have filed private lawsuits. The Federal Reserve last year also hit Wells Fargo with an unprecedented cap on its growth until it could prove it had improved its corporate governance.
Sloan was tapped by the bank's board of directors to try to repair Wells Fargo's reputation and restore customer trust.
He replaced John Stumpf, who resigned as the bank's longtime chief executive and board chairman in October 2016 just weeks after he was unable to defuse the anger of lawmakers at incendiary House and Senate hearings examining the fake-accounts scandal.
Sloan, the second Wells Fargo CEO ousted by the scandal, could not stop the tide of troubles for the nation's fourth-largest bank by total assets.
His struggles were highlighted at a contentious House Financial Services Committee hearing on March 12. Democrats and Republicans angrily rejected his message of contrition for the bank's scandals and commitment to better treatment of employees and customers.
Rep. Maxine Waters, D-Calif., the committee chairman, ended the hearing by declaring that "Wells Fargo has failed to clean up its act." She said regulators should consider removing Sloan as chief executive and that she would reintroduce legislation directing regulators to downsize or even shut down banks with a pattern of violating consumer protection laws.
In a rare move, even one of the bank's regulators, the Office of the Comptroller of the Currency, joined in the criticism, with a spokesman saying it was "disappointed with [Wells Fargo's] performance under our consent orders and its inability to execute effective corporate governance and a successful risk management program."
The next day, Wells Fargo said in a securities filing that Sloan's pay increased 4.9 percent last year to $18.4 million.
The first signs of big trouble at Wells Fargo came in late 2013, when a Times investigation found that the bank's relentless pressure on employees to "cross-sell" checking and savings accounts, credit cards, mortgages and other financial products led to ethical breaches, customer complaints and labor lawsuits.
To meet sales quotas, employees opened accounts customers did not need, ordered credit cards without their permission and forged customer signatures on paperwork, according to a review of internal bank documents, court records and interviews with workers at bank branches.
The Times article caught the attention of Los Angeles City Attorney Mike Feuer, who opened his own investigation. Also, in mid-2013, the Consumer Financial Protection Bureau began looking into Wells Fargo's practices after receiving whistleblower tips.
In September 2016, Wells Fargo's problems exploded into public consciousness when the bank agreed to pay $185 million to settle a lawsuit filed by Feuer and investigations by the consumer bureau and the Comptroller of the Currency.
But the problems were just starting.
In the spring of 2017, Wells Fargo agreed to settle several class-action lawsuits over fake accounts for $142 million. That summer, the bank publicly said it might have created as many as 3.5 million unauthorized accounts going back to 2009.
Troubling revelations continued last year. The bank announced that it would pay $80 million in refunds to hundreds of thousands of auto-loan borrowers who were forced to pay for bank-purchased auto insurance policies despite having coverage of their own.
Lawsuits were filed alleging other problems, including improperly changing the terms of mortgage loans for bankrupt borrowers, signing up customers for unauthorized life insurance policies and overcharging small businesses for credit- and debit-card processing services.
Information for this article was contributed by Jim Puzzanghera of the Los Angeles Times and by Renae Merle of The Washington Post.
Business on 03/29/2019
Print Headline: Wells Fargo CEO resigns as bank's struggles persist