Wells Fargo boss steps down

As the news went from bad to worse for embattled banking institution Wells Fargo, CEO John Stumpf was called to testify before Congress. U.S. Representatives grilled the executive, some openly calling for him to step down immediately. Stumpf was apologetic but stopped there. He had no plans, he said, to leave his post.

That, apparently, has changed. Stumpf announced his retirement, effective immediately, last week. In his announcement, he also said he would be relinquishing his title as chairman. The Associated Press reported he will not receive a severance and will forfeit $41 million in stock options. But will it be enough?

Will this abrupt leadership change salve the wounds caused by predatory sales and illegal activities that proved to be rampant through the company at the consumer level? Bankers opened fraudulent accounts in the names of current customers without their approval — millions of accounts. There is little doubt that the actions were pervasive, and there was less doubt about Stumpf’s future. Most figured he would be gone…the only question was when.

The quick transition didn’t give Wells Fargo much time to look for an outside “face” to deflect some of the trickle-down guilt from the scandal. Instead, Wells Fargo’s COO Tim Sloan will step into the CEO spot. Sloan is a familiar face around the San Francisco-based bank, having been with the company 29 years. Meanwhile, Stephen Sanger, the bank’s lead director will take the chairman spot.

While it’s not entirely unsurprising, promoting two longtime “company men” to fill the spot vacated by Stumpf will likely do little to assuage the frustration and embarrassment stemming from the scandal. Regardless of the role they played — or did not play — in the event surrounding the scandal, they have already been tarred with the same brush. Stumpf acting as sacrificial lamb won’t restore the customer confidence Wells Fargo is counting on to hold its position in the consumer banking marketplace.

It’s an especially bitter pill for longtime Wells Fargo leaders and stockholders. Prior to the news breaking about the fraudulent accounts, Stumpf was widely regarded as the strong leader who not only guided the company through the financial crisis but also the one who kept WF relatively scandal-free during the time when all US banks were under heavy scrutiny.

But all that goodwill is gone, and the brand won’t get it back by promoting people their customers associate with the scandal. They need to do more.

David Firester is the founder of TRAC Intelligence.