Dear Wells Fargo, Elizabeth Warren has some more questions
A month after blasting Wells Fargo’s (WFC) then-CEO John Stumpf for what she called his “gutless leadership” following the bank’s phony accounts scandal, Sen. Elizabeth Warren has questions about his replacement.
In a letter Thursday to Wells Fargo chairman Steven Sanger, the Massachusetts senator said it’s not clear if the bank’s board of directors had properly addressed whether new CEO Tim Sloan “knew about or played any role in the scandal.”
After Stumpf’s ouster from Wells, the financial giant named Sloan, a 29-year veteran of the bank, to replace him. He previously served as chief financial officer and head of wholesale banking. In November, Sloan took on the additional titles of president and chief operating officer.
“Carrie Tolstedt, the former head of retail banking at Wells Fargo, reported directly to Mr. Sloan beginning in November 2015. And last week, Mr. Sloan admitted that he was aware of the reports of fraudulent activity by bank staff as early as 2013,” Warren said in the letter, which was also signed by Sen. Robert Menendez, D-New Jersey.
“It is difficult to believe that he had no knowledge of or bears no responsibility for the actions of thousands of Wells Fargo employees creating fake accounts under his and other top executives’ watch,” the letter continued.
In the face of outrage from the public and politicians, Wells last month said Stumpf would forfeit unvested stock awards valued at $41 million and that he would not get any bonuses for 2016.
Warren and Menendez noted in their letter that the figure represented only a “fraction” of the total pay and bonuses Stumpf had received during his time with the bank, and that he would leave Wells with $133.1 million.
“The board is conducting an independent investigation that will follow the facts wherever they lead and we will share the findings of our investigation when it is completed,” a spokesperson for the board emailed. The board is confident in Sloan’s leadership, and the new CEO is committed to ensuring that the conduct that led to the account scandal doesn’t happen again, the spokesperson added.
The Consumer Financial Protection Bureau in September fined Wells Fargo $185 million for opening millions of phony accounts without customers’ knowledge.
Warren made it clear that she believes the 63-year-old Stumpf was getting off easy in leaving Wells following the sham accounts scandal, saying in a tweet last week that a bank CEO “should not be able to oversee a massive fraud and simply walk away to enjoy his millions in retirement.”
The lawmakers’ letter suggests that the uproar over Wells Fargo’s sales practices is not likely to dissipate even with Stumpf’s resignation, according to Jaret Seiberg, an analyst with Cowen and Co.
“This is creating a make or break moment for Tim Sloan,” Seiberg wrote in a note. “He needs to be able to explain what he knew about the cross-selling controversy, when he learned of it and what he did about it.”