Members of Wells Fargo & Co's (NYSE: WFC) board have resigned amid backlash from the infamous fake accounts scandal and increasing congressional scrutiny.
Wells Fargo Chair Elizabeth "Betsy" Duke resigned from her post on Sunday and was joined by James Quigley, a member of Wells Fargo's audit and risk committees, and a fellow member of the Board of Directors. The departure of both directors comes amid calls by Representative Maxine Waters for the directors to resign. Former CFO of Bank of America (NYSE: BAC) Charles Noski is set to replace Duke.
Duke and Quigley issued a joint statement addressing their departure, stating, "Out of continued loyalty to Wells Fargo and ongoing commitment to serve our customers and employees, we recommended to our colleagues on the board that we step down from our leadership roles. We believe that our decision will facilitate the bank's and the new CEO's ability to turn the page and avoid distraction that could impede the bank's future progress."
The departure of Duke and Quigley is being cast in a positive light by analysts. Both Duke and Quigley were marred by controversy and were tied to the bank's lackluster response to the scandal; they were also a source of intense scrutiny from the House of Representatives Financial Services Committee. "It is hard to see how Duke could survive, given the House Financial Services Committee's focus on her role in the troubled post-controversy response." Says Jaret Seiberg of the Cowen Washington Research Group.
Quigley and Duke were scheduled to appear before the Financial Services Committee on Wednesday, but their departure leaves their potential testimonies in question. The committee had heavily scrutinized the duo for their controversial responses to the congressional inquiry. Duke appeared dismissive in a quoted statement regarding letters sent to her, "Why are you sending it to me, the board, rather than the department manager?" she said.
The shakeup in Wells Fargo's C-Suite is only the latest development in the bank's far-reaching fake account scandal. Previously, Wells Fargo had paid out $3 billion in settlements for its role in the scandal. Before that, the bank was forced to pay $185 million in fines as the scandal began to develop. Investigations into Wells Fargo had discovered that employees had created 3.5 million fake accounts to meet aggressive sales goals; employees had used the names of actual Wells Fargo customers to create these accounts.