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Beleaguered Wells Fargo names Jamie Dimon protege as new CEO

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Via Fox Business

Wells Fargo, the bank that lost two CEOs while dealing with the fallout from a fake-accounts scandal, has appointed former Visa chief Charles Scharf as its top executive.

Scharf, who landed a job under Jamie Dimon – now the CEO of JPMorgan Chase – by sending him a resume through family connections when he was running Commercial Credit in the late 1980s, will take over Oct. 21. He’s currently the head of Bank of New York Mellon.

“I have deep respect for all the work that has taken place to transform Wells Fargo,” Scharf said in a statement. “I am committed to fully engaging with all of our stakeholders including regulators, customers, elected officials, investors, and communities.”

San Francisco-based Wells Fargo had been led by interim chief C. Allen Parker since the departure of Tim Sloan earlier this year.

“I am honored and energized by the opportunity to assume leadership of this great institution, which is important to our financial system and in the midst of fundamental change.”

New Wells Fargo CEO Charles Scharf

Sloan had taken over more than two years earlier, when then-CEO John Stump stepped down following contentious Congressional hearings on the creation of more than 3 million fake accounts by workers trying to meet aggressive sales targets set by top management.

Much of his tenure was spent arguing to Congress and investors that his three decades of employment at Wells, which included executive roles, made him ideally suited to lead a turnaround, a claim rejected by Democrats including Sen. Elizabeth Warren of Massachusetts, who’s seeking to represent her party in next year’s presidential election.

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Scharf, who will be tasked with restoring the bank’s reputation and rebuilding businesses damaged by misconduct allegations, “has excelled at strategic leadership and execution and is well-positioned to lead Wells Fargo’s continued transformation,” board chairman Betsy Duke said in a statement. “Charlie has demonstrated a strong track record in initiating and leading change.”

Wells Fargo stock climbed 2.9 percent to $50.29 before the start of regular trading in New York.

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Once praised for being strong enough not to require a government bailout during the financial crisis, the lender’s reputation has been battered since 2016, when it paid $185 million to settle initial fake-account claims from the Consumer Financial Protection Bureau and local governments.

The scandals didn’t stop there, however. This February, insurers agreed to pay $250 million to resolve lawsuits claiming Wells Fargo leadership didn’t live up to its duties to halt, or better yet prevent, the fake accounts.

Last year, Wells paid $575 million to resolve claims by all 50 states concerning the accounts as well as problems in its mortgage and auto-lending businesses. It had previously ponied up $1 billion for government allegations that employees pressed unnecessary insurance onto some car-loan customers and charged fees to home-loan clients that the bank had committed to covering.

Earlier in 2018, Wells Fargo paid $2 billion to resolve a Justice Department claim that it packaged mortgages that were higher-risk than they appeared into securities sold prior to the 2008 financial crisis and agreed to comply with a Federal Reserve order barring it from expanding beyond its size at the end of the previous year.

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