Wells Fargo's critics unappeased as four directors to leave
The plan for four Wells Fargo board members, including its three longest-serving directors, to retire next month failed to appease some of the bank’s most prominent critics, who’ve demanded the board push out all members who were on the panel when employees created as many as 3.5 million fake accounts.
Federico F. Pena, Lloyd H. Dean, Enrique Hernandez Jr. and John S. Chen will leave at the company’s annual shareholder meeting on April 24, the company said Thursday.
California State Treasurer John Chiang, who’s on the boards of the state’s biggest pension funds, promised last month “to raise holy hell” if four longtime Wells Fargo directors weren’t gone before the bank’s annual meeting. His list of targets included three in Thursday’s announcement — Pena, Hernandez, and Dean.
Late Thursday, Chiang called for Chief Executive Officer Tim Sloan to step down, too.
“Tim Sloan has shown himself to be too much a champion of the old guard to truly be the change agent that Wells Fargo so desperately needs,” Chiang, a Democratic gubernatorial candidate, said in an emailed statement. “It’s time for him to go.”
Another prominent critic, U.S. Senator Elizabeth Warren, gave the bank measured credit for the board changes — even if they didn’t go far enough.
“No director who served during the fake-accounts scam should remain on the Wells Fargo board,” she said. “But this is a positive step toward holding senior officials accountable for the massive fraud that occurred on their watch,” the Massachusetts Democrat said in a statement.
Hernandez, Dean, and Chen have been directors for more than a decade, and Pena joined the board in 2011. They didn’t respond to messages seeking comment, some of which were left with representatives of companies where they work.
Wells Fargo has been remaking its board in the wake of a sales scandal that erupted in September 2016. Then-CEO John Stumpf left the firm in October of that year, passing his chairman title to Stephen Sanger. Betsy Duke was named vice chairman at the time and ultimately succeeded Sanger to run the board.
The bank said Thursday that the board will nominate the remaining 12 directors for shareholder approval at next month’s annual meeting. It’s unclear whether the board will shrink to that number or replace the four departing directors. Bank spokesman Ancel Martinez declined to comment.
Wells said earlier on Thursday that government agencies had inquired about improprieties in the wealth management business related to 401(k) rollovers and other products. The lender is also responding to queries from government agencies into its foreign-exchange business. Last month, the Fed put in place sanctions preventing the bank from getting any bigger until it fixes its problems.
“We will not lightly lift” that restriction, Fed Chairman Jerome Powell told lawmakers at a Senate Banking Committee hearing Thursday. The firm will probably be subject to the sanctions for a “significant period,” he said.
“There’s never just one cockroach in the kitchen,” Warren Buffett, whose Berkshire Hathaway Inc. is Wells Fargo’s biggest shareholder, said about the possibility that Wells Fargo could uncover additional wrongdoing in an interview that aired Monday on CNBC.
Even with the board revisions, five directors who were on the panel before the scandals erupted will remain: Duke, John Baker II, Donald James, James Quigley, and Suzanne Vautrinot.
As recently as mid-February, CEO Sloan defended the quality of the board.
“I think we’ve got a terrific board right now,” Sloan said in a Bloomberg interview.