John Stumpf has stepped down as CEO and chairman of Wells Fargo. The bank’s president Tim Sloan will take over as CEO immediately.
The resignation comes in the wake of a scandal in which Wells Fargo employees opened 2 million bank and credit card accounts under customers’ names without their consent. Over the years, some 5,300 employees were fired for such actions.
On Sept. 8, the Consumer Financial Protection Bureau fined Wells Fargo $100 million for such illegal banking practices. The bank will pay another $85 million to California and federal regulators.
Another $5 million will be paid in customer remediation.
In a statement, Consumer Financial Protection Bureau Director Richard Cordray explained how Wells Fargo employees opened illegal accounts in order to “hit sales targets and receive bonuses.”
In mid-September, lawmakers on Capitol Hill on both sides of the isle grilled Stumpf on his knowledge of what transpired under his watch. Stumpf apologized, but lawmakers were not appeased.
At one hearing, Sen. Elizabeth Warren told Stumpf he ought to resign. “You squeezed your employees to the breaking point so they would cheat customers,” she said. “You should resign.”
Two days later, Stumpf stepped down from his position on the Federal Reserve Advisory Council. But it would take him nearly three more weeks to step down from Wells Fargo.
Wells Fargo has also been accused of retaliating against whistleblowers. CNN Money reported how whistleblowers were often fired shortly after reporting illegal practices. One man explained how he was fired just eight days after emailing an HR representative for “excessive tardiness.”
Wells Fargo chief John Stumpf apologized before Congress for the bank opening two million unauthorized accounts. Regulators say workers were under sales pressure, but Stumpf said it was not a scheme. Gwen Ifill talks with Michael Corkery of The New York Times. Video by PBS NewsHour
“I am grateful for the opportunity to have led Wells Fargo,” the 63-year-old Stumpf in a statement. “While I have been deeply committed and focused on managing the Company through this period, I have decided it is best for the Company that I step aside.”
Following the news of Stumpf’s resignation, Wells Fargo’s stock was “up more than 1 percent in extended trading,” CNBC reported.
This is not the first scandal that has been associated with the banking giant. Wells Fargo has also been accused of discriminatory mortgage lending practices against Hispanic and black customers. In 2012, Wells Fargo paid $175 million to settle the accusations.
Stumpf had been CEO of Wells Fargo since 2007. He earned $19.3 million last year, reported the Associated Press. A spokesman for the bank told CNBC that “no severance payment or agreement related” to his resignation.