As the scandal over Wells Fargo’s bogus consumer accounts was coming to a head this summer, executives concluded they had to act. It was time for a chat with Carrie Tolstedt, the manager who oversaw the retail business.
The man assigned to do the messy task: Tim Sloan, the bank’s 56-year-old president, chief operating officer and trusted No. 2 to CEO John Stumpf. As Stumpf recounted for Congress recently, Sloan told Tolstedt that the bank would “go in a different direction.” She was soon replaced.
It was quintessential Sloan, the quiet fixer, the man called in to clean up messes or help cinch giant acquisitions. He’s also long been considered Stumpf’s likely successor, a view that’s only grown as the CEO has taken a public beating in recent days. Sloan finds himself in what analysts say is an enviable position amid the crisis. By dint of his past jobs, he can make the case that he is insulated from the taint of the current controversy.
Sloan has spent his career working with corporations and institutional investors or the finance parts of Wells Fargo – not the now-tarnished retail side, where the allegedly fraudulent consumer accounts were manufactured.
That distance should make it easier for the bank’s board to act if it decides that the 63-year-old Stumpf has to step down, said Marty Mosby, an analyst at Vining Sparks in Memphis, Tenn.
“The backdrop they have is somewhat fortunate,” Mosby said. “Tim Sloan was on the business side of the bank. He was wholesale banking. He wasn’t really retail banking. So they have a little cover.”
On Sept. 8, Wells agreed to pay $185 million in fines over allegations of “widespread illegal” sales practices that dated to at least 2011. Regulators said bank employees, racing to meet aggressive sales goals, opened 2 million accounts that may not have been authorized by customers.
To be sure, Sloan’s role since November overseeing the company’s four business divisions, including the retail bank, may still leave him vulnerable to criticism. He also has sat for years on the company’s operating committee, giving him a front-row seat to top executives’ deliberations over management issues, strategy and handling risks.
Stumpf’s troubles keep mounting: Last week, he stepped down from the Federal Reserve’s Federal Advisory Council amid political pressure. The bank has disclosed new investigations from federal prosecutors and state attorneys general. And during two trips to Capitol Hill, Senate and House lawmakers have called on the CEO to resign.
The bank’s stock is down more than 10 percent since the controversy erupted, and this week the board said Stumpf will forfeit all of his outstanding unvested equity awards, worth $41 million, and forgo his salary during a board investigation.
Still, Stumpf has given no indication that he plans to leave the bank and has said he is committed to fixing its problems.
Oscar Suris, a Wells Fargo spokesman, declined to comment or make Sloan available for an interview.
Both Stumpf and Sloan are longtime employees of Wells Fargo and its predecessors. Stumpf joined in 1982, Sloan in 1987. They share a host of traits – Midwestern, deliberate, loyal – not to mention the gray hair and tanned look of a bank CEO. One difference: Sloan’s a golfer, Stumpf prefers bridge.
In 2015, Sloan was the bank’s second-highest-paid executive behind Stumpf, making about $11 million in salary, bonus and stock awards, according to the company’s March proxy.
Still, a former colleague describes Sloan as an everyman executive who wouldn’t be seen wearing a custom-made Italian suit, preferring an off-the-rack brand. That style carries over to his management approach.
“He is not someone you would consider a transformational CEO if this company needs to go in a new direction,” said Brian Kleinhanzl, an analyst at Keefe, Bruyette & Woods.
Sloan commutes most weeks to the bank’s headquarters in San Francisco from the eight-bedroom, 5,800-square-foot house he shares with his wife and three children in San Marino, a tony enclave in Los Angeles County.
He hasn’t been immune to controversy. In 2011 and 2012, Wells Fargo customers angry about the bank’s mortgage dealings protested at his house. He didn’t answer the door either time, according to local news reports.
Over the past decade Sloan has taken on sensitive projects for Stumpf.
In the midst of the financial crisis in 2008, he was one of two senior executives from Wells Fargo’s wholesale division to lead the examination of Charlotte-based Wachovia’s commercial and investment bank. The analysis helped Stumpf get comfortable with the deal, a $12.7 billion transaction that propelled Wells Fargo deeper into investment banking.
In 2011, Sloan stepped into the breach to quiet concerns when Wells Fargo announced the surprise resignation of Chief Financial Officer Howard Atkins for undisclosed personal reasons.
Born in Cleveland, Sloan grew up in the Detroit area, where his father served as a longtime executive at Ford Motor Co. He earned a bachelor’s degree, and then an MBA, from the University of Michigan (and remains a fan of the school’s football and basketball teams today).
His parents now live in Davidson, not far from Wells Fargo’s East Coast headquarters in Charlotte, where the bank has its biggest employee hub.
After graduation, Sloan landed his first formal job at Continental Illinois National Bank & Trust Co. in 1984, just as bad energy loans were driving the lender into what was then the largest bank collapse in U.S. history. Sloan landed in the workout group.
“Everybody should spend some time in workouts,” he told Bloomberg in 2011. “You look at other people’s mistakes, and then you learn from them.”
At Wells Fargo, in the mid-1990s he helped set up the merchant banking group, which made real estate loans, offered mezzanine debt and occasionally took equity stakes with the bank’s own money, according to a former colleague.
By 2000, he was running capital markets when the bank bought First Security Corp. and picked up a small investment banking business, according to American Banker.
He showed an eye for acquisitions. In 1999, Sloan led Wells Fargo’s purchase of Eastdil Realty LLC. Six years later, the bank bought Secured Capital Corp. and merged the two firms, creating what has become a top U.S. real estate investment bank, Eastdil Secured.
Sloan was named chief financial officer in 2011, the year when the suspect consumer banking behavior is thought to have begun. But as CFO, where he oversaw finance, planning and the like, Sloan was removed from the retail operations.
“Though he did have a tenure as CFO when this was going on, he didn’t have business line responsibility,” said analyst Mosby.
Three years later he was named head of the bank’s wholesale banking division, which counts companies – not consumers – as clients. In that role, he was parallel to Tolstedt in the executive ranks.
In November 2015, Sloan became Tolstedt’s boss, when his new role as COO and president gave him oversight of her community banking division. By then, the investigation was well underway. Los Angeles had filed its lawsuit claiming improprieties, and the Office of the Comptroller of the Currency had found shortcomings in the bank’s sales practices.
Eight months later, Tolstedt was on her way out.
Observer staff writer Rick Rothacker contributed.