Stumpf Takes One for the Team
Sometimes you get the right fall guy.
Whether voluntary or not, John Stumpf is stepping down as chief executive officer and chairman of Wells Fargo. Now it's no secret that corporate press releases announcing the departure of a top executive often use the word "retire" as a euphemism, and this one was no different. The fact that Wells Fargo announced a sweeping management reorganization just days before the bank will have to face analysts after it reports third-quarter earnings lends some intrigue to the development, but it had the air of inevitability.
It's all too obvious that the backlash against the fake-account scandal at the bank could not be contained with Stumpf at the top, so a change was clearly the only way to demonstrate a legitimate and concerted effort to hold management responsible at the highest levels.
It's not just the right thing, but probably the only thing Wells Fargo could do at this point. It's hard to imagine any CEO being capable of stopping the bleeding from a scandal that has led to multiple investigations and lawsuits, a bipartisan assault on the bank in Congress and the cancellation of business relationships from states as big as California and Illinois.
Deeper in the press release was another significant change that could be the first rumbling of a tectonic shift for big banks. Wells Fargo is splitting the titles of chief executive officer and chairman. Tim Sloan, the president and chief operating officer, will take over as CEO, and Stephen Sanger, former chairman and CEO of General Mills, will become nonexecutive chairman. The elevation to vice chair of Elizabeth Duke, a former member of the Federal Reserve's Board of Governors, also adds some gravitas. Critics of the hybrid job title thus reap by scandal what they could not by cajoling.
The bank is lucky it had the "quiet fixer" Sloan on hand to make for a somewhat smooth transition. His background working with corporate and institutional-investor clients gives him enough distance from the troubled, but more important, retail side of the firm to potentially allow him to ascend to the top job without reeking too much from the stench of the scandal.