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Wells Fargo board members resign after scathing House report

The Washington Post logo The Washington Post 2 days ago Renae Merle
a man wearing a suit and tie: Wells Fargo Chief Executive Charles Scharf speaks during a 2019 conference in California. © Lucy Nicholson/Reuters Wells Fargo Chief Executive Charles Scharf speaks during a 2019 conference in California.

Wells Fargo announced Monday that two of its board members, including its chairwoman, Elizabeth A. Duke, have resigned, following a scathing House report found that the bank’s leaders were slow to address a series of consumer abuse scandals.

Duke and board member James Quigley were both featured in a more than 100-page report by the House Financial Services Committee that cited thousands of pages of documents, emails and internal notes to conclude the San Francisco-based bank had not properly addressed its problems.

Duke had served on the board since 2016 and was elected chair in January 2018, making her among the highest ranking women in banking. Quigley had been a board member since 2013 and is CEO emeritus at Deloitte, the consulting firm.

Charles H. Noski, the former chief financial officer of Bank of America, will become chair of the company’s board.

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In 2017, Duke, then vice chair of Wells Fargo’s board, questioned why the Consumer Financial Protection Bureau (CFPB) was including her on communications about actions the bank needed to take, according to the report. “Why are you sending it to me, the board, rather than the department manager?” she asked, according to notes taken by a CFPB official that were cited in the report.

A CFPB official later said Duke’s response came as a “surprise,” given that board members “would not typically object to receiving communication from a regulator,” according to the report.

In another exchange, James Quigley, also a board member, resisted attending a meeting with one of the bank’s regulators because he was overseas on vacation. “I am currently scheduled to be in the Galápagos Islands on these dates,” he said in a 2019 email, according to the report. “The sense of urgency is surprising, are they politically trying to put an enforcement action in place in front of the hearing? ”

Rep. Maxine Waters (D-Calif.), chair of the committee, had called on Duke and Quigley to resign last week.

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Duke and Quigley were scheduled to appear before Waters’ committee on Wednesday. Their resignations were effective on Sunday.

They said in a statement that their resignations would allow the bank’s new CEO, Charles Scharf, to “turn the page” and "avoid distraction that could impede the bank’s future progress.”

“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,” the statement said.

Among the country’s largest and most profitable banks, Wells Fargo has struggled to overcome a fake-accounts scandal, which ballooned as the bank admitted to other consumer abuses, including mistakenly foreclosing on hundreds of clients and repossessing the cars of thousands of others.

Last month, the bank reached a $3 billion settlement with the Justice Department and the Securities and Exchange Commission, acknowledging that for more than a decade, thousands of employees falsified records, forged signatures and misused customers’ personal information to meet unrealistic sales goals, opening millions of accounts consumers didn’t want in the process.

The committee’s report threatens to deepen the bank’s problems. The report found that the bank repeatedly failed to live up to regulators demands that it repay consumers and weren’t aggressive about addressing its cultural problems, despite public promises.

Scharf, the new CEO, is scheduled to appear before the Financial Services Committee on Tuesday, a potential turning point in the bank’s efforts to repair its relationship with lawmakers and regulators.

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