In the latest shake-up in its executive ranks, Wells Fargo said Friday that it fired the head of its consumer lending unit, effective immediately.
Franklin Codel, based in Des Moines, Iowa, was terminated for “acting in a manner that was contrary to the company’s policies and expectations of its senior leaders during a communication he had with a former team member,” Wells said in a statement.
Codel was dismissed following a discussion with a former employee about that employee’s termination, Wells Fargo spokesman Tom Goyda said. The employee worked in Codel’s consumer lending unit. Wells declined to provide further details.
According to a Wall Street Journal report, Codel was fired after he made disparaging remarks about regulators to a previously terminated senior mortgage official. The employee, Greg Gwizdz, worked under Codel and was terminated earlier this year, the newspaper said. Gwizdz reported the comments to the bank, which informed regulators, according to the newspaper. Gwizdz could not immediately be reached by the Observer.
The San Francisco-based bank said the reasons for the dismissal did not involve consumer lending operations, the servicing of its customers or its financial results. The termination was also not connected to a sales scandal that erupted last fall in the bank’s retail banking unit, the bank said. That scandal, however, has put the company under intense scrutiny from its regulators.
Codel, who joined Wells Fargo in 1993, had been one of the 10 top executives beneath CEO Tim Sloan, and his departure adds to recent turnover in the company’s upper ranks. Wells promoted Codel to head of consumer lending in October 2016, putting him in charge of the home lending business that he already oversaw as well as auto lending, personal lending and student lending.
A securities filing Friday shows Codel forfeited roughly 16,000 shares awarded from 2014 to this past February and more than 60,000 options awarded in 2008 and 2009. A Wells spokesperson confirmed Codel’s dismissal resulted in the forfeiture of the awards, which had been granted as part of Codel's compensation.
Friday’s announcement is another black eye for a bank that is still trying to recover from the sales scandal that emerged in September 2016. In that matter, the bank agreed to pay $185 million in penalties to settle allegations that its employees created more than 2 million unauthorized customer accounts to meet aggressive sales goals.
The scandal led to the departure of former CEO John Stumpf and former community banking head Carrie Tolstedt. It also spurred congressional hearings and ongoing federal and state investigations.
Meanwhile, Codel’s consumer lending unit has also faced its own troubles, starting this summer.
In July, Codel issued an apology after Wells said as many as 570,000 customers may have been charged premiums for auto insurance they did not need, a practice that in some cases may have also contributed to vehicle repossessions. Wells said customer remediation was expected to total about $80 million.
The executive who had led Wells Fargo’s auto lending business during the sales abuses, Dawn Martin Harp, retired in April and her deputy, Bill Katafias, also departed, Reuters reported in July. Codel told Reuters that both of those executives were held accountable “from a compensation perspective.”
In another area supervised by Codel, the bank last month announced plans to refund customers charged fees to extend mortgage rate lock-ins. The bank said an internal review found some borrowers were being charged fees in cases where the company was primarily responsible for delays that made the extensions necessary.
Wells said it expects to name Codel’s successor by the end of the year. In the meantime, the head of the group’s four main business lines will report to Sloan. Those leaders are Michael DeVito, interim head of home lending; Laura Schupbach, head of Wells Fargo dealer services; John Rasmussen, head of personal lending; and Laurie Nordquist, head of personal and small business insurance.
Rasmussen and Nordquist are based in Minnesota, DeVito in Iowa and Schupbach in Arizona.
“Difficult as this situation is, the decision reflects our commitment to our values and culture and to executive accountability,” Sloan said in a statement.
Wells bases its home-lending business in Des Moines, but it has significant mortgage-related operations in the Charlotte area, which is its biggest employee hub.
Codel’s termination is “probably some of the most direct bad news impacting the mortgage operation, which has been somewhat immune from Wells’ problems,” said Guy Cecala, CEO of Inside Mortgage Finance, a mortgage industry publication.
Despite the sales scandal and other recent issues, Wells remains the largest home-loan lender in the U.S. with 12 percent market share, ahead of JPMorgan Chase’s 6 percent, Cecala said. In the first nine months of this year, Wells made $157 billion in mortgages, compared with $81 billion at Chase, he said.
“We see no evidence that really anything that’s happened to date is disturbing their mortgage operation,” Cecala said. “And I would expect the same thing, no impact, as a result of this.”
Codel’s dismissal is the latest top-level management change at Wells since last fall. In addition to the departures of Stumpf and Tolstedt last year, former wealth and investment management head David Carroll and former general counsel James Strother retired this year.