Wells Fargo CEO quits post on Federal Reserve council
Washington — Wells Fargo’s embattled CEO is resigning his position on the Federal Reserve’s advisory council amid a scandal over millions of accounts allegedly opened by the bank without customers’ permission.
The San Francisco Fed said Thursday that John Stumpf is giving up his position as representative from the central bank’s San Francisco region on the advisory council.
The move was a “personal decision” by Stumpf, Wells Fargo spokeswoman Jennifer Dunn said. “His top priority is leading Wells Fargo.”
His resignation from the council, which meets four times a year with the Fed’s board of governors to discuss economic and banking issues, was effective immediately. Members serve one-year terms starting in January.
The announcement came two days after Stumpf faced bipartisan outrage from a Senate panel over the alleged misconduct, believed to have gone on at the second-largest U.S. bank for years. Some 5,300 employees were fired.
Wells Fargo & Co., which is based in San Francisco, was fined $185 million by U.S. and California regulators earlier this month.
In a feverish drive to meet sales targets, bank employees opened the unauthorized accounts, transferred customers’ money into them, and signed people up for online banking, according to the regulators. Debit cards were issued and activated, as well as PINs created, without customers’ knowledge.
Stumpf told the Senate Banking Committee in his testimony Tuesday he was “deeply sorry” the bank failed to meet its responsibility to customers and didn’t act sooner to stem the misconduct. He promised to assist affected customers. The bank says it has already refunded to customers $2.6 million in fees charged for products that were sold without authorization.
Senators of both parties accused the bank of fraud and told Stumpf he was scapegoating legions of lower-level employees while senior executives kept their jobs and received hefty pay packages.
Stumpf, a 34-year veteran of Wells Fargo and CEO since 2007, earned $19.3 million last year. Carrie Tolstedt, the former head of the retail banking business, announced in July that she would retire from the bank this year. She is expected to leave with as much as $125 million in salary, stock options and other compensation.
The bank says it will end its sales quota system at year’s end.
While it varied by branch size and day of the week, a typical employee had to sell between 13 and 15 banking products a day — a new account, a mortgage, a retirement account, or even online banking. The targets were high even in small towns.