In the wake of a scandal threatening to break up the world’s most valuable bank, Chairman and Chief Executive Officer John Stumpf has decided to resign. Stumpf, 63, is responsible for bringing the bank through the financial crisis and establishing the company during a time where other banks dwindled. However, the retail banking scandal which is still currently being investigated, has tarnished the reputation of the bank, warranting the resignation. Replacing him will be Chief Operating Officer and President, Tim Sloan. The chairman will no longer be CEO, so current lead director Stephen Sanger, will be the new chairman. Wells Fargo shares have been down since the scandal began, but they were up by 2 percent in after-hours trading after the announcement. It will be Sloan’s job to rebuild trust in the company, with potentially a limited time to achieve it.
The company was embroiled in fraudulent activity when low-level employees were found to have opened as many as two million bank accounts, without the knowledge of customers. This was done as a response to internal sales targets. The bank was required to pay $185 million to regulatory authorities and an LA prosecutor. Sloan had long been expected to take over from Stumpf. Though not involved with the retail division, Sloan still bears some responsibility over the scandal, as he had been Chief Operating Officer since November and was previously the Chief Financial Officer for the whole company. Before his resignation, Stumpf had been facing the U.S. Senate, before whom he denied any responsibility and pushed the blame to low-level staff. The head of the retail division, Carrie Tolstedt, was the first senior manager to leave. This wasn’t enough for prosecutors, and neither was Stumpf’s decision to forgo unvested stock awards worth $41 million. Lawmakers have asked that the company fully compensate their clients and revise their company culture to prevent further scandals.