Former Federal Reserve governor to take top board seat
By April Hall
News that a former Federal Reserve governor will soon head Wells Fargo’s board was a welcomed move for many stakeholders who see the appointment as a big step toward putting the bank’s scandals behind it.
As part of a board shakeup announced by Wells Fargo this week, the bank named Elizabeth A. "Betsy" Duke, a former member of the Board of Governors of the Federal Reserve System, as independent chair to succeed Stephen W. Sanger, effective Jan. 1.
“Betsy was the unanimous choice to lead the board as it continues its focus on strengthening oversight and rebuilding the trust of shareholders, customers, and other stakeholders,” said Sanger in a statement. “Her broad understanding of the financial system and markets combined with years of main street community banking experience make her the ideal Chair to work with the rest of the Board and Tim Sloan as Wells Fargo continues to move forward.”
Indeed, governance experts see the pick as an encouraging sign.
“Duke's appointment was a very strong signal that shareholders were finally being heard, after their dismal votes against directors at the April meeting,” says Sheila Hooda, CEO & president of Alpha Advisory Partners and board director for Mutual of Omaha Insurance Company and Virtus Investment Partners. “While the bank board and the new CEO had started to make some changes following the public scandals, it was clearly inadequate especially as further evidence of fraudulent practices emerged at different parts of the organization.”
This continues the fallout a fake-accounts scandal came to light in 2016, costing the bank hundreds of millions of dollars in penalties to the federal government and damages to customers.
Immediately following the payment of $185 million in fines in 2016, Wells Fargo’s former CEO and chairman, John Stumpf, was ousted.
Duke has been a member of the bank's board of directors since 2015 and has served on the Federal Reserve as a governor and chair of the Reserve’s committee on consumer and community affairs. She was the first woman to chair the American Bankers Association in 2004.
“She has proven regulatory expertise, a robust appreciation of risk management and first-hand experience dealing with crises following her role as Fed governor during the financial melt down,” Hooda says. “In addition, her understanding of the financial landscape extends from her days leading community focused retail banks and this will enable her to oversee Wells Fargo as it transforms from an incentive-driven sales culture to a customer-centric model.”
Wells Fargo board also elected Juan A. Pujadas, a retired principal of PricewaterhouseCoopers LLP, as a new independent director, effective September 1.
Cynthia H. Milligan and Susan G. Swenson will retire from the Board at the end of 2017. With Pujadas, and the retirements of Sanger, Milligan, and Swenson, the Board will have 13 members and an average tenure of six years for the 12 independent directors.