Chief executive Tim Sloan is stepping down after he spent more than two years failing to convince lawmakers and regulators that the bank is no longer a threat to its customers Wells Fargo announced Thursday.
Sloan’s departure is likely to send panic through Wall Street, which has faced pressure to show that big banks have learned from the mistakes that caused the global financial crisis. Sen. Elizabeth Warren (D-Mass.) and other leading Democrats have pointed to the San Francisco-based bank as example of industry-wide problems.
From opening millions of fraudulent accounts on behalf its customers without their consent to mistakenly foreclosing on hundreds of clients and repossessing the cars of thousands of others. Sloan spent over two years on a countrywide apology tour. Sloan’s pleas often failed to win over frustrated lawmakers.
The bank disclosed earlier this month in a regulatory filing that Sloan received $18.4 million in compensation in 2018, a 5 percent bump from the previous year.
“About damn time. Sloan should have been fired a long time ago,” Warren tweeted Thursday. “By the way, getting fired shouldn’t be the end of the story for Tim Sloan. He shouldn’t get a golden parachute. He should be investigated…And if he’s guilty of any crimes, he should be put in jail like anyone else.”
Sloan has earned more than $150 million in compensation since 2011, according to Equilar, a data firm that measures executive compensation. His retirement package will include outstanding stock worth more than $24 million, the firm said.
Sloan is stepping down as chief executive and president immediately and retiring from the company on June 30. C. Allen Parker, the bank’s general counsel, will take over as interim president and chief executive. The bank said it would begin the search for Sloan’s replacement this week.
The news is another setback for the bank, which was once one of the country’s most respected financial institutions. Less than a month ago, Wells Fargo officials denied reports that it had approached other top financial industry executives about Sloan’s job that it remained confident in his turnaround plans. Sloan, a 31-year veteran of the company, took over as chief executive in 2016 after his predecessor, John Stumpf, stepped down amid growing criticism of the bank.
“It has become apparent to me that our ability to successfully move Wells fargo forward from here will benefit from a new CEO and fresh perspectives,” Sloan said in a statement.
In a conference call with investors after the announcement, Sloan said it was his decision to step down and that he was not pressured by regulators or the company’s board.
Sloan earlier this month spent four hours before a House committee being scolded by lawmakers who said he had not done enough to address the bank’s years of misdeeds. Sloan told the committee that that Wells Fargo had revamped its board, significantly increased its charitable giving and no longer emphasizes sales goals, which were blamed for many of the company’s problems. However, it did little to quiet criticism of the bank.
Wells Fargo has paid billions in fines over the past few years but remains under investigation by the Securities and Exchange Commission as well as the Justice Department. Last year, the Consumer Financial Protection Bureau hit the bank with a $1 billion fine. The Federal Reserve also levied an unprecedented penalty against the bank, blocking its ability to grow larger. The bank has twice pushed back how long it would take it to be released from those restrictions.
The company’s stock price rose more than 2 percent Thursday after the announcement.