Wells Fargo, the embattled bank that is potentially dealing with a new scandal, is gearing up for a major overhaul that could result in Stephen Sanger, the bank’s nonexecutive chairman of the board, stepping down.
According to a news report in The Wall Street Journal, citing people familiar with the matter, reported directors at the company will make final decisions about changes to the management at the company by Labor Day, some of the sources told the Wall Street Journal.
Sanger, for his part, is expected to leave the bank ahead of its shareholder meeting in the spring. Vice Chair Elizabeth Duke, who is the former governor at the Federal Reserve, is expected to take on the nonexecutive chairman of the board role. The report noted talks about changing the board have been going on for a few months now.
The changes come at a time when Wells Fargo is facing calls from lawmakers to overhaul its board, after reports surfaced that employees in the auto lending unit sold customers car insurance they didn’t ask for or need. Wells Fargo also disclosed that a deeper dive into the fake account scandal showed there could have been a lot more accounts opened.
In late June, Senator Elizabeth Warren penned a letter to Federal Reserve Chairwoman Janet Yellen, making the case that Wells Fargo should remove the dozen executives sitting on the board of the beleaguered bank. In the letter, Warren said the fake account scandal shed light on “severe problems” with Wells’ risk management. And the Fed, noted the senator, has the power to remove the dozen board members.
“The fake accounts scandal cost Wells Fargo customers millions of dollars in unauthorized fees and damaged many of their credit scores,” the letter stated. “The scandal also revealed severe problems with the bank’s risk management practices — problems that justify the Federal Reserve’s removal of all responsible Board members.”
Further, Warren said the Fed “has done nothing to date” to punish the bank “despite its ample statutory authority.” Warren went on to say, “I urge you to use the tools Congress has given you to remove the responsible board members and protect the continued safety and soundness of one of the country’s largest banks.”