NEW YORK (Reuters Breakingviews) - Wells Fargo is circling the stagecoaches around Chief Executive John Stumpf’s top deputy. The $1.9 trillion lender just handed more power to President and Chief Operating Officer Tim Sloan, with three new senior executives and an expanded financial-technology group reporting to him. That ostensibly puts Sloan in even better position to succeed his boss. It’s not clear, however, why a man so closely linked to the fake-accounts scandal should be CEO.
Sloan has been a member of Wells Fargo’s operating committee for most of this decade, including when the bank started to fire 5,300 people for their roles in opening some 2 million bogus bank and credit-card accounts. His involvement might have been somewhat excused had he stayed head of commercial or wholesale banking, where he spent most of his career.
As chief administrative officer between 2010 and 2011, however, Sloan’s role included overseeing Wells Fargo’s human resources and reputation management. He then became finance chief for three years. And one of his direct reports when he was promoted to COO last year was Carrie Tolstedt, who ran the offending community-banking division until earlier this year.
That makes Sloan a member of the inner circle that would have known about the wrongdoing from its early days and tried to deal with it. This group hardly covered itself in glory: it was still handing out pink slips in 2016, five years after the first bankers were shown the door. Stumpf and Tolstedt already have ceded compensation for the mess. Internal probes by the board and regulators may yet implicate Sloan and others.
Stumpf has no more than two years left at the helm, based on the company’s retirement-age rules. If after all the dust settles on the rot at Wells Fargo it sticks with its internal heir apparent, the bank will have to make the case for him.
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