John Stumpf, CEO of Wells Fargo, is retiring effective now, 3 weeks after he apologized to the Senate Banking Committee for the bank's unauthorized accounts scandal.
Stumpf is replaced as CEO by Tim Sloan, who has worked for Wells Fargo for 29 years and was the bank's president and chief operating officer.
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Intense pressure on employees
Stumpf's abrupt retirement comes almost 5 weeks after the Consumer Financial Protection Bureau assessed $185 million in fines and penalties against Wells Fargo for opening up to 2 million unauthorized deposit and credit card accounts. Former Wells Fargo employees have told Bankrate that they labored under intense pressure to sign up customers for new accounts, even if the customers didn't need them.
Wells Fargo's goal was for every customer to have 8 products with the bank -- checking accounts, debit cards, internet banking, mortgages, overdraft protection and so on. Personal bankers and tellers were pushed to "cross sell" accounts to customers who walked into branches.
"It's not a very enjoyable experience as a banker because every day you are forced to 'find' solutions for customers that are already overloaded with bank products," says Ashley Narcisse, who worked for Wells Fargo in Southern California.
Stumpf's difficult day
In his Sept. 20 appearance before the Senate Banking Committee, Stumpf said, "I am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members, and to the American public."
He added: "Wrongful sales practice behavior goes entirely against our values, ethics and culture."
His conciliatory statement didn't satisfy committee members of either party, who excoriated Stumpf for 3 hours. Sen. Elizabeth Warren, the Democrat from Massachusetts who came up with the idea of the Consumer Financial Protection Bureau, told Stumpf, "You should resign. You should give back the money that you took while this scam was going on, and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission."
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In a statement, the bank's new non-executive chairman, Stephen Sanger, says Stumpf "believes new leadership at this time is appropriate to guide Wells Fargo through its current challenges and take the company forward." Sanger called Sloan a proven leader.