John Stumpf finally fell on his sword yesterday, retiring with immediate effect from the helm of Wells Fargo in the wake of the bank’s scandal over creating fake accounts without their consent.
As with Volkswagen in the wake of its diesel scandal, the bank has chosen to appoint a long-time insider, Tim Sloan, to replace the hapless CEO.
The strongest argument in both cases is that, at a time of unprecedented upheaval, knowledge of the institution that needs root-and-branch reform is more important than the taint of association with the past regime.
The strongest argument against it is that it’s devilishly hard to dispel suspicion that the incoming CEO, carrying that taint of association, will pursue that reform with the necessary thoroughness, especially if it relates to himself or to those to whom he may owe debts of gratitude. Over a year after Matthias Mueller took over in Wolfsburg, VW still gives the impression of a company inching toward discovery and resolution, one grudging step at a time.
Fortune’s Stephen Gandel goes into Sloan’s record during the scandal in illuminating detail here.
There will be more forensic autopsies of the scandal in due course. For now, we’ll just note with satisfaction that Sloan will not be given the task of supervising himself. Stephen Sanger, the bank’s lead independent director, will be taking up the chairman’s role. At the risk of inviting the wrath of Jamie Dimon, it’s mind-boggling, eight years after the subprime scandal came to a head, that some banks still see fit to combine the roles.
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