Two Wells Fargo board members – including the board chairwoman – resigned their positions following a highly critical report from a U.S. house committee, alleging the board was slow to address the bank’s fake account scandal.
Elizabeth A. Duke, the board chair, and James H. Quigley resigned their positions effective Sunday, Wells Fargo announced in a news release Monday. Charles H. Noski, a former chief financial officer of Bank of America, will serve as the new board chairman.
Last month, Wells Fargo reached a $3 billion settlement with the Department of Justice, which found the bank’s employees created fake accounts to meet the bank’s “onerous sales goals.” This included using customers’ identities without their consent to open checking, savings, debit card, credit card, bill pay and global remittance accounts.
Critical House Report
In a report issued last week, the House Financial Services Committee found that the board did too little to address issues associated with the scandal. The report singled out Duke and Quigley for their lack of interest.
A Consumer Financial Protection Bureau regional director expressed frustration that Duke would not meet with them in July or August 2017. Additionally, Duke objected to being asked about the issues, the report found:
“Board members also appeared reluctant to engage in oversight of the Bank’s efforts to comply with the 2016 Sales Practices Consent Orders. Notes from a November 28, 2017 meeting between the CFPB and then-vice chair of Wells Fargo’s board, Betsy Duke, CEO Tim Sloan, and General Counsel C. Allen Parker reflect that Duke questioned the CFPB’s practice of including her on letters requesting the Bank take certain actions: “Why are you sending it to me, the board, rather than the department manager?” (emphasis added).
The report also concluded that Quigley also was reluctant to meet with regulators and believed the board did not need to be dragged in to the fake account issue:
Notes regarding a November 21, 2016 meeting between Quigley and the CFPB reflected his complaint that, “the Board was spending too much time on Sales Practices and that he was looking to reduce the level of detail with a ‘Less is More’ comment in regards to Board materials on Sales Practices” (emphasis added). In an interview with Committee staff, OCC staff expressed concerns about Quigley’s leadership. (Office of the Comptroller of the Currency) staff recounted that Quigley did not pose “hard questions” to management.218 Additionally, OCC staff explained that Quigley believed management was performing well and that the Bank’s condition was acceptable despite its ongoing regulatory issues.
Calls To Resign
Last week, Financial Services Committee Chair Maxine Waters called on Duke and Quigley to resign.
Duke and Quigley said in a statement that they were “fiercely determined” to do right by customers since they learned of the scandal but that they were resigning for the good of the bank.
“As the markets face increasing volatility, a strong Wells Fargo is needed now more than ever,” they said. “Out of continued loyalty to Wells Fargo and ongoing commitment to serve our customers and employees, we recommended to our colleagues on the Board that we step down from our leadership roles and they have accepted our resignation from the Board. We believe that our decision will facilitate the bank’s and the new CEO’s ability to turn the page and avoid distraction that could impede the bank’s future progress.”
Wells Fargo CEO Charlie Scharf said Duke and Quigley “have helped the Board navigate significant challenges relating to the sales practices issues, and they began the hard work of instituting necessary changes in leadership, governance, compensation programs and our business model that form the foundation on which we are continuing to rebuild the trust we’ve lost. We wish them the best.”