By Canadian Press

Wells Fargo CEO Sloan steps down after rocky tenure

Mar 28, 2019 | 5:26 PM

NEW YORK — Wells Fargo’s CEO Tim Sloan stepped down Thursday, after a rocky tenure during which the deeply troubled bank dealt with a seemingly unending wave of scandals.

Sloan said in a statement he will give up his roles as CEO, president and a member of the bank’s board of directors effective immediately. He will retire from the bank completely on June 30.

Sloan led the banking giant for less than three years. A longtime insider, Sloan was chosen to replace outgoing CEO John Stumpf, who resigned in October 2016 after Wells Fargo employees were found to have fraudulently opened millions of bank accounts in order to meet the company’s unrealistic sales goals.

While Sloan sought to bring Wells back from the accounts scandal, new improprieties repeatedly came to light. The bank was found to have tacked unnecessary auto insurance onto the accounts of car loan customers. Tens of thousands of customers were unable to afford the payments and, in many cases, got their cars repossessed. The bank also foreclosed on the homes of hundreds of customers accidentally.

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Those are just two examples in what became a game of scandal “whack-a-mole” at the nation’s second-largest bank.

Wells Fargo’s board of directors said Thursday it chose Allen Parker, who is currently the bank’s general counsel, as interim CEO and president. The bank also said in a statement that it will be looking at external candidates for its next CEO. Sloan was chief financial officer under Stumpf, and was not a popular choice as CEO. While Sloan said he had no knowledge of the bank’s bad practices, many experts felt Wells needed someone from the outside to help clean up its act.

Federal regulators lost patience with Wells Fargo’s continued bad behaviour and inflicted harsh punishments. Wells had to pay a $1 billion fine to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. But more importantly, the Federal Reserve stepped in and handcuffed Wells’ ability to grow its business until the bank could prove that it had gotten its house in order.

“I have focused on leading a process to address past issues and to rebuild trust for the future,” Sloan said in a statement Thursday. “We have made progress in many areas … and there remains more work to be done.”

The bank has also drawn the ire of politicians on both sides of the aisle. Sloan was a favourite target of Senator Elizabeth Warren, who crusaded against Wall Street and the big banks as a Senator from Massachusetts and continues to do so in her campaign for the presidency in 2020.

“About damn time. Tim Sloan should have been fired a long time ago,” Warren said on Twitter.

Due to the harsh political climate facing Wells Fargo, and considering it could get worse as the 2020 election approaches, it was maybe the right time for Sloan to step down, analysts said.

“(Wells Fargo) was going be a punching bag through 2020 if he didn’t step down,” said Kyle Sanders, a bank analyst with Edward Jones who covers Wells Fargo.

Wells Fargo shares rose 2.2 per cent to $50.18 in after-hours trading.

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Ken Sweet covers banks and consumer financial issues for The Associated Press. Follow him on Twitter at @kensweet.

Ken Sweet, The Associated Press