Wells Fargo CEO Stumpf steps down after fake accounts scandal

Yahoo – AFP, October 13, 2016

John Stumpf, Chairman and CEO of the Wells Fargo & Company, testifies
before the House Financial Services Committee September 29, 2016 in
Washington, DC (AFP Photo/Mark Wilson)

New York (AFP) - Embattled Wells Fargo chairman and CEO John Stump has retired with immediate effect following a sham accounts scandal, the San Francisco bank announced Wednesday.

Stump’s departure from the US commercial and retail banking giant capped mounting public outrage after the bank admitted last month that employees had opened millions of deposit and credit card accounts in customers' names without their knowledge in order to meet sales quotas.

Lawmakers in Washington had called for Stumpf's resignation, repeatedly castigating him in public hearings for stealing from customers and pressuring low-level employees to meet unrealistic sales targets, all while touting the results to investors.

Wells Fargo settled with US regulators

 and the City of Los Angeles last month for
about $190 million in fines and restitution

(AFP Photo/Frederic J Brown)

"While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside," Stumpf said in a statement.

Stumpf had said publicly in mid-September that he would not resign.

The bank last month settled with US regulators and the City of Los Angeles for about $190 million in fines and restitution, a sum that did not reflect the magnitude of the scandal's effect on the bank, which has seen officials in Illinois and California suspend ties with it.

Wells Fargo announced last month that Stumpf would forfeit $41 million in compensation and receive no bonus for the year.

The bank told AFP on Wednesday that Stumpf would also not receive any severance payment.

Stumpf will be succeeded as CEO by president and chief operating officer Tim Sloan, a 29 year veteran of the company.

"My immediate and highest priority is to restore trust in Wells Fargo," Sloan said in a statement.

"We will work tirelessly to build a stronger and better Wells Fargo for generations to come."

Stephen Sanger, Wells Fargo's lead director, will serve as the board's non-executive chairman.

Wells Fargo shares rose 2.1 percent in after hours trade following the announcement.

The activist organization Public Citizen noted Wednesday that, while the bank had fired more than 5,000 employees accused of wrongdoing, Stumpf was allowed to retire.

"Those fired employees didn't receive golden parachutes and CEO John Stumpf shouldn't either," the organization's president Robert Weissman said in a statement, calling for federal authorities to press ahead with criminal probes.

"Americans are beyond sick and tired of big banks and their executives escaping accountability."

Stumpf's ouster represents a scalp for the bank's critics on Capitol Hill. Senator Elizabeth Warren, who has campaigned for stronger oversight of the US financial sector, accused him of "gutless leadership" and calling on him to step aside.

Stumpf had been with the company for more than three decades, having joined Norwest Bank in 1982 prior to its merger with Wells Fargo.

He became CEO in 2007 on the eve of the financial crisis. But he leaves the bank in a difficult state. Prior to the scandal, Wells Fargo had been the world's largest bank by market value. But shares in the company have fallen more than 9 percent following the September settlement, closing Wednesday at $45.32 in New York.