Talk of a New Wells Fargo CEO Swirls; Be Skeptical

March, 2019

In the Media

If you’re into who’s in and who’s out among the nation’s big banks, today is a catnip kind of day.

The New York Post reported today that directors of Wells Fargo (NYSE:WFC) were talking to Harvey Schwartz, a former top executive at Goldman Sachs (NYSE:GS), about taking over from current CEO Tim Sloan.

Sloan, CEO since 2016, is under pressure from regulators, who don’t think the nation’s fourth-largest bank is making enough progress getting over the scandals that roiled it in the last few years. That included opening sham accounts and assessing customers fees for services they didn’t know about and didn’t want, charging higher fees to African-American and Latino borrowers with similar credit profiles as white customers and a computer error that cost hundreds of borrowers their homes in the financial crisis.

Sen. Elizabeth Warren, the Massachusetts Democrat running for president, said she believes Sloan should resign.

It is true that Wells Fargo’s fourth-quarter earnings of $1.21 a share beat estimates of analysts polled by But that was after missing estimates for two quarters. Revenue has been steady over the last year. And the $1.11 forecast for fiscal first-quarter earnings is a penny below last year’s $1.12.

The stock may be up 8.5% this year, but it is flat on the month and trading 16% below its 52-week high reached last summer. It fell 24% in 2018. It was off slightly on Thursday because of a different problem: the impact of the Federal Reserve’s decision not to raise interest rates on banking profits.

Which brings us back to Schwartz, former chief operating officer at Goldman who lost out on the top post to David Solomon.

He’s not talking about any discussions with Wells Fargo. There may be another candidate, which the Post said it couldn’t name. And Wells Fargo denied there were any talks with anyone.

Even if Schwartz is talking to Wells Fargo, it’s not clear he wants the job. Wells Fargo is based in San Francisco and has a major headquarters in Charlotte, N.C., and, the Post story said, he doesn’t want to live in either place. And he is supposedly thinking about running a family investment office.

Then there’s how much money Wells Fargo would have to pay to get an outsider to make a move to either place palatable. Sloan made nearly $18 million in salary and stock grants in 2018. Presumably, Schwartz would cost more — much more. And you would have to get the regulators (the Comptroller of the Currency and the Federal Reserve) and the Wells Fargo critics to sign on.

Plus, the situation is risky, given all of Wells Fargo’s issues.

“When you replace a CEO in an institution that has issues and crisis — and is in the news in a bad way — it’s a very, very difficult search,” Jeanne Branthover, a managing partner at executive search firm DHR International, told Bloomberg last month.


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