Wells Fargo CEO resigns, bank president succeeds
https://www.rt.com/usa/362564-wells-fargo-ceo-john-stumpf-resigns/
Chairman and CEO of Wells Fargo & Co. John Stumpf has retired under pressure amid a scandal involving fraudulent sales tactics. Some two million accounts were created without customers’ permission. President and COO Timothy J. Sloan will replace him.
Stumpf stepped down from both of his leadership posts Wednesday, the Wall Street Journal reported, citing a person close to the situation.
Wells Fargo, which until recently had been the most valuable big bank in the US for years, settled a lawsuit with regulators and a city official last month for $185 million.
To meet sales quotas, the bank created accounts for unwitting customers, some of whom paid fines and fees on them. It is estimated that millions of customers were impacted. More than 5,000 Wells Fargo employees were ultimately fired.
Wells Fargo President and Chief Operating Officer Timothy J. Sloan has already replaced Stumpf as CEO. He was next in line for the top job whenever Stumpf would retire.
The Wall Street Journal also reported through its source that the new board chairman would be the bank’s independent chairman Stephen Sanger and the new vice chairman of the board would be Elizabeth Duke, current board director and former Federal Reserve governor.
READ MORE: Wells Fargo slammed with multiple lawsuits over fake accounts & bogus sales
Equilar, a company that reports total executive compensation packages for publicly traded or non-profit companies, estimates Stumpf will receive $134.1 million for retirement, according to USA Today.
Stumpf has already forfeited $41 million in unvested equity under orders from the Wells Fargo board, but that proved not to be enough as the bank continues to deal with its public embarrassment ordeal.
In congressional hearings last month, several lawmakers opined that Stumpf and other executives ought to be criminally investigated. The fraudulent accounts scandal has come under scrutiny in both federal and state investigations, including the Department of Justice.
‘Criminal enterprise’: Congress grills Wells Fargo CEO, bank fined $20mn over soldiers’ loans
Wells Fargo CEO & Chair John Stumpf appeared before the House Financial Services Committee in what turned into more than four hours of hostile questioning.
Opening the hearing, Stumpf said he was “deeply sorry” for “unethical sales practices” and for failing to fulfill “responsibility to our customers, to our team members, and to the American public.”
“I am fully accountable,” Stumpf said. “I'm fully committed to fixing this issue, strengthening our culture, and taking the necessary steps and actions to restore our customer's trust,” he added.
However, Stumpf’s apology failed to ease tensions on Capitol Hill, where he withstood bipartisan bashing for a second time.
Lawmakers did not hold back their harsh words, and passions ran high in the chamber.
Representative Gregory Meeks (D-New York) equated Wells Fargo to a “criminal enterprise” while dodging any accountability.
“Your bank, you, CEO, Chairman, for me was on top of what's basically been a criminal enterprise because when I look at consistency, time after time after time and time again, you had to get fined,” Meeks said. “That must mean you are making a lot of money because it is easier to pay the fine. Because you know that nothing else is going happen to you. You pay the fine, you get away, you make a lot of money.”
Meeks also accused the Wells Fargo CEO of blackening the entire financial services industry.
“Do you realize that you have not only given will you admit this? ‒ That not only your bank has a black eye, that your bank, Wells Fargo, has given the entire financial service industry a black eye, your responsibility?” the New York congressman said.
Rep. Michael Capuano (D-Massachusetts) said that the San Francisco, California-based bank and its account schemes reminded him of Enron, once a successful energy company that along with Arthur Andersen, an accounting firm, was involved in one of the world’s biggest corporation scandals.
“You know when I heard that before? The guys who ran Enron. The guys who ran Arthur Anderson said the same thing,” Capuano said. “We're not your problem. We can't criminally prosecute you.”
READ MORE: Employees, customers blew whistle over Wells Fargo fraudulent bank accounts years ago – reports https://www.rt.com/usa/359947-wells-fargo-customers-employees-blew-whistle/
Capuano, who still – ironically ‒ praised Stumpf for bringing cross-party unity “for the first time in the last four years,” went on to threaten him with gruesome consequences.
“Your problem is coming. It's not today. You think today's tough. It's coming when the prosecutors get a hold of you, you're going to have a lot of fun,” he said.
The lawmaker also brought up a suspected bank robber, Robert Holmes, asking Stumpf what makes him different from the recently arrested man.
Wells Fargo’s fines pile up as probe against it widens
As Stumpf defended his wrongdoings in Congress, the Office of the Comptroller of the Currency (OCC) issued a statement announcing an additional penalty of $20 million. It would add to $185 million in fines that Wells Fargo already agreed to pay for opening about 2 million accounts without customer authorization.
“The Office of the Comptroller of the Currency (OCC) today assessed a $20 million civil money penalty against Wells Fargo Bank, N.A., and ordered the bank to make restitution to servicemembers who were harmed by the bank’s violations of the Servicemembers Civil Relief Act (SCRA),” the press release reads.
The new fine is stemming from Wells Fargo’s repetitive violations of the act’s three separate provisions between approximately 2006 and 2016.