Months after lawmakers urged the Federal Reserve to oust the 12 Wells Fargo board members who served during the bank’s fake account fiasco, the banking giant has taken it upon itself to revamp some board seats. Next year, Chairman Stephen Sanger will step down and two other members will retire.
Wells Fargo’s “range of Board refreshment actions,” announced Tuesday, come amid increased scrutiny for the bank, which has recently been linked to a number of scandals involving pushing customers into unneeded and unwanted auto insurance and overcharging small businesses to process credit card transactions.
The changes affect several of the longest tenured board members, such as chairman Stephen Sanger, as well directors Cynthia H. Milligan and Susan G. Swenson.
Not Cleaning House
While Wells’ board characterized the changes as a “refresh” and a way to continue to rebuild trust after the fake account fiasco, the changes don’t necessarily constitute a house cleaning.
For instance, in the case of Sanger, Wells Fargo says the chairman will step down Jan. 1, 2018 and be succeeded by Betsy Duke.
Duke, who is a former member of the Board of Governors of the Federal Reserve System, isn’t a stranger to Wells; she’s served on the Wells Fargo Board since Jan. 2015 and as vice chair since Oct. 2016.
Sanger notes in an announcement that Duke will lead the board as it “continues its focus on strengthening oversight and rebuilding the trust of shareholders, customers, and other stakeholders.”
In other changes, Wells Fargo’s board announced that Milligan and Swenson will retire from the board at the end of 2017.
Additionally, Wells Fargo says to “help facilitate Board refreshment,” it would appoint Juan A. Pajadas, retired principal of PricewaterhouseCoopers, as independent director, effective Sept. 1.
The Board says it will continue adding new directors. Specifically, it plans to add three more board members before the company’s 2018 shareholder meeting.
A Long Time Coming
The transition on Wells’ board isn’t necessarily unexpected as shareholders, lawmakers, and analysts have called for a Board shakeup amid the fake account fiasco.
The Los Angeles Times reports that shareholders at the bank showed their dissatisfaction with the board during the company’s annual meeting in April.
At that time, a significant number of shareholders withheld support for many board members. While corporate board members generally enjoy near unanimous support from shareholders, many, including Sanger, received less than 70% of votes, the Time reports.
This dissatisfaction, analysts warned at the time, could lead to more turnover on the board.
Additionally, in June, Massachusetts Senator Elizabeth Warren urged the Federal Reserve to oust the 12 Wells Fargo board members who served during the scandal.
Federal Reserve Chair Janet Yellen revealed during a semiannual testimony a month later before the Senate Banking Commission, that the central bank would take action if the results of its investigation warrant such a response.
Since then, Wells Fargo has been at the center of at least three additional scandals.
In late July, the bank was accused of charging its loan customers for unnecessary and unwanted insurance — resulting in 25,000 repossessed vehicles.
Weeks later, it was reported that the Federal Reserve Bank of San Francisco was investigating claims that Wells allegedly failed to refund insurance money to some borrowers who paid off their car loans early.
Just last week, Wells was accused in a lawsuit of operating an “overbilling scheme” that charged excessive and undisclosed credit card processing fees, along with “massive early termination fees” the merchants tried to end their relationships with the bank.
by Ashlee Kieler via Consumerist
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