John Stumpf, the embattled chairman and chief executive of Wells Fargo, is stepping down, amid mounting anger from investors and policymakers over the creation of fraudulent customer accounts.
Stumpf, 63, will leave his post after nearly a decade as CEO, the bank said Wednesday. The change was described as a retirement by Wells and is effective immediately. He will be succeeded by Tim Sloan, 56, who currently serves as president and chief operating officer. Sloan, in his current role, is responsible for the bank's four main business groups: community banking, consumer lending, wealth and investment management and wholesale banking.
The departure marks the rare case of a major U.S. bank CEO resigning amid accusations of company misconduct. It also caps a remarkable change in fortune for a bank that, following the crisis, was regarded as a marquee brand.
Calls for Stumpf's resignation had escalated in recent weeks after the San Francisco company said on Sept. 8 it would pay nearly $190 million to settle charges that employees created roughly 2 million fake accounts to meet sales goals and collect bonuses.
More than 5,300 employees across the country were fired between 2011 and 2014 for creating the unlawful accounts.
Shortly after the settlement was disclosed, Wells Fargo said it would eliminate incentive packages that reward branch employees for cross-selling and hitting sales targets.
Still, Wells has struggled to contain the fallout from the cross-selling scandal - and, in the meantime, the company's once-sterling reputation has taken a significant hit.
Adding to the furor was a disastrous appearance by Stumpf in front of the Senate Banking Committee on Sept. 20. During his testimony, Stumpf fumbled basic questions such as when exactly the company uncovered the pervasive fraud.
Stumpf also provided confusing answers about whether senior executives have been held responsible for the scandal - and if they will be subject to clawbacks in pay. Carrie Tolstedt, the former executive in charge of retail banking, retired in July and is eligible for a $125 million compensation package.
Stumpf was named CEO of Wells Fargo in June 2007, succeeding longtime executive Richard Kovacevich. Stumpf added the title of chairman nearly three years later, in January 2010.
In his first few months on the job, Stumpf oversaw one of one of the biggest deals in banking history, when Wells Fargo agreed in late 2008 to buy the $510 billion-asset Wachovia, which was on the brink of collapse.
Stumpf spent more than three decades at Wells Fargo and its predecessor companies. He joined Minneapolis-based Norwest. in 1982 and quickly worked his way up the ranks. When Wells Fargo merged with Norwest in 1998, Stumpf took over as head of banking operations in the Southwest.
In 2002, Stumpf was named executive vice president and head of community banking. He was promoted to the roles of president and chief operating officer three years later.
In the lead-up to the announcement Wednesday, Sloan was widely viewed as the heir apparent. Still, some analysts had called on Wells to consider external candidates, arguing that an outsider was necessary to change company culture.
Sloan has been with Wells Fargo for 29 years. He was named president and chief operating officer in November 2015.