Pushed. Jumped. Battle-weary, perhaps?
The speculation will surely run rampant for a bit in the wake of the news on Thursday (March 28) that Wells Fargo’s Tim Sloan has stepped down from his roles as CEO president, and from the board of directors. It’s no lingering goodbye, either, as he abdicated the aforementioned positions immediately. He will also retire from the bank completely by the end of the next quarter, on June 30.
The tenure was brief (less than three years), but a rather eventful one. Sloan, in recent weeks certainly became a lightning rod — if not for the ire toward big banks, then certainly for the singular woes that plagued Wells Fargo itself.
Consider the events of earlier this month when Representative Maxine Waters (D-CA), also head of the House Committee on Financial Services, said that Sloan should be “shown the door,” even as Sloan appeared before that same committee and said the bank had made operational improvements in the face of scandals stretching back years.
Such scandals included the sham account openings, where deposit and credit card accounts were created without customers’ knowledge, as well as the controversies over mortgage and auto lending. Not to mention, the outage over a 5 percent pay raise in 2018, where Sloan got $18.4 million that year. During the same year, consumer watchdogs imposed a $1 billion fine on the bank over mortgage loans that included false information.
Waters, for her part, said a bill would be in the offing to break up banks that have not done right by their customers. The Office of the Comptroller of the Currency (OCC) also weighed in, stating that — after Sloan testified — it was “disappointed” over the lack of effective corporate governance and risk management.
Incidentally, in the wake of fines and settlements, the bank has been a bit hobbled, as the Federal Reserve recently said Wells Fargo cannot add to its asset base — at about $1.8 trillion. So, amid a lightning rod of sorts, Sloan is gone, the second CEO to depart amid the scandals.
The pressure on the Hill certainly seemed to mount, as, even more recently, Senator Elizabeth Warren (D-MA), a presidential candidate for the 2020 election, and Senator Sherrod Brown (D-OH) sent a letter to the Federal Reserve, and said the growth restriction mandated by the Fed should be there until Sloan left the firm. It’s far too early to think Thursday’s news should move the needle here — that one man should be a trade for policy that affects more than a trillion dollars’ worth of assets.
Sloan follows the man he replaced: John Stumpf, who left Wells Fargo in October 2016 as those same scandals came to light (and after the company paid $185 million in fines).
Here’s a bit of (what might be) condemnation with not-so-faint praise (and we are being tongue-in-cheek here): Warren Buffett, whose Berkshire Hathaway is the largest Wells Fargo shareholder, stated that Sloan had “100 percent” of his support — minutes before the retirement was announced.
The stock was up 2.2 percent to more than $50 in after-hours trading. Since Sloan took the reins, the stock was up high-single digits, badly lagging peers that were up double digits in roughly the same two-and-a-half-year timespan. Wall Street, as it is said, is both a voting machine and a weighing machine. As it turns out, investors were not giving much weight to what Sloan had been doing, and set out to turn the 165-year-old firm’s fortunes around.
Sloan will be replaced by Wells Fargo’s General Counsel C. Allen Parker, who assumes the mantle on an interim basis. Wells Fargo is now on the hunt for a new CEO.
The Los Angeles Times reported that Sloan’s retirement package is worth $52 million, perhaps showing that all’s well that ends Wells Fargo — for Mr. Sloan, at least.