Wells Fargo CEO
“If you want to move a large group of people forward, you’re far better off winning their hearts and their minds and making them a part of the process, than you are telling them ‘you have to do’ something.” – Charles Scharf
The Fall of Wells Fargo
Less than three years after being named Banker of the Year by the trade publication, American Banker, Wells Fargo Chief Executive, John G. Stumpf announced his departure from the company, effective immediately. It’s October of 2016 and Wells Fargo is rapidly crumbling.
Under Stumpf’s leadership, the bank had successfully navigated the 2008 financial crisis relatively unharmed; unbeknownst to many, something much more sinister was brewing beneath the companies unscathed surface.
A Company Embroiled in Scandal
While other banks covered up their misdeeds by using complex language hidden within mountains of legal work, the New York Times describes Wells Fargo’s indiscretions as “fundamentally simple.”
They add, “Under intense pressure to meet aggressive sales goals, employees created sham accounts using the names — and sometimes, the actual money — of the bank’s real customers. And in some cases the customers did not discover the activity until they started accumulating fees.”
When confronted by Congress about his bank’s practices, Stumpf was reluctant to admit any problem with the culture his leadership had fostered. In dropping the legal hammer on Wells Fargo, one Senator goes so far as to say the “scandal was one of the few things that Democrats and Republicans had agreed on in a long time.”
Amidst endless congressional hearings, countless scoldings, mounting public outcry, and the unavoidable impending doom which would be brought by a rarely bipartisan body of lawmakers, Stumpf wove the white flag and made the decision to resign.
Following the news, Senator Elizabeth Warren proclaimed, “As I said at the hearing last month, Mr. Stumpf should resign, return every nickel he made while this scam was going on, and face an investigation by the Justice Department and S.E.C…So far, he’s one for three.”
CNN reports that the longtime bank boss is walking away with around $130 million. Leading them to conclude, “Unless further action is taken by Wells Fargo’s board, Stumpf will leave with a fortune made up of stocks, cash payouts and other compensation that he amassed during three decades at Wells Fargo and its predecessor company.”
His retirement package would have been worth even more had the scandal not broken out, however, maybe those millions lost are made up for in peace and quiet.
Next Man Up
Wells Fargo promoted Timothy Sloan to be their next CEO. He was met with almost as much public scrutiny as Lumpf. People were skeptical that Sloan would bring about any meaningful change to the companies culture. He had held leadership roles throughout the scandal’s heyday, leaving many to seriously question how they could begin to trust a man who had so much to do with fueling the problem they were trying to solve.
Sloan hung in there for about two and a half years before resigning in late March of 2019.
Of his departure, Senator Elizabeth Warren says, “About damn time…he enabled Wells Fargo’s massive fake accounts scam, got rich off it, & then helped cover it up.”
Equilar, an executive compensation firm, reports that “Mr. Sloan was paid over $150 million by Wells Fargo over the last eight years, including salary, stock and bonuses”
Well’s Fargo’s Search For A Savior
Acknowledging the improbability that hiring from within would manifest any progress, Wells Fargo made publicly clear that their next CEO would come from outside the company.
Sloan would be replaced by the bank’s general counsel, C. Allen Parker, on an interim basis.
Now, it wasn’t about finding a person, it was about finding the right person. It’d take months to do so, long enough for people to question whether there was somebody even willing to take on the job.
We all have a soulmate somewhere out there.
Charles Scharf was born on April 24th, 1965. He grew up in the suburbs of New York City in a not too far part of New Jersey. He makes clear that both of his parent’s lives revolved around two things: family & work.
Playfully making note that his parents may not like what he’s about to say, in an interview with David Novak, Charlie describes his childhood home as “very small.” He mentions that the kitchen eating area, in particular, lacked space, saying, “the table was small enough and the room was small enough that you could reach across and touch everyone.”
Charlie’s dad worked as a broker in Manhattan, he’d make the daily commute to and from the city; arriving home just in time for dinner with his family. Charle thinks back on those evenings, remembering, “we used to have dinner every night together…we shared everything around the dinner table and it was just one of those things.”
He continues, “You didn’t miss dinner, not because you were afraid to, but that’s just the way it was.”
Their dinner table conversations were boundless, each family member felt encouraged to discuss anything they were experiencing in life, which in turn, engraved in Charlie a deep sense of transparency. To this day, he seriously values the advantages of being an “open book.”
Upon reflecting, two different jobs come to mind when Scharf considers what his true first job was.
Describing his paper route as a kid, he says:
When I was really young, I had a paper route. Like most kids with paper routes, I got it because I was really interested in the rewards…you got these points…accumulate enough and you could actually buy something that you didn’t have the money to go out and buy yourself!
When you go through the process of actually having to deliver papers every single day, rain or shine, stuffing the newspapers in the plastic bags, you develop a sense of responsibility at a very very young age. You’re not serving one of the world’s great problems, but people are relying on you to actually do that.
Describing working in his dad’s back office, he says:
I was 13 years old, it was a summer job. My dad had gotten me a job in the back office of the brokerage firm where he worked, which was called Loeb Rhodes. I used to commute into Manhatten with him every day.
It was just an amazing experience being this 13-year-old surrounded by people who were working for a living. You saw what it took for these people to hold down a job, provide for their families, come in day in and day out, and do their jobs while also trying to figure out where they were going with their job.
By the time college rolled around, Charles Scharf had spent many summers helping his father with financial work, and although he generally enjoyed the business, a growing curiosity for the sciences led him to pursue becoming a research chemist.
Upon graduating high school, he enrolled in courses at John Hopkins University, where he got his first glimpses of what life would be like as a scientist.
In the end, Scharf says “I loved science, I loved the application of science, and I loved the learning aspect of it…but the idea of coming into a space and working for the most part on your own, being in a very controlled environment, no windows, very focused on one thing, it just didn’t excite me and it’s not what I wanted to do.”
Scharf changed majors, taking on a more liberal arts approach to his education. It was during this time when he began thinking that maybe the work he had done all those summers with his father, in the world of business, was something he could be interested in doing again.
Jamie Dimon’s Personal Assistant
Jamie Dimon was announced to be the CEO of JPMorgan Chase on December 31st of 2006, a role he continues to serve to this day. The son of Greek immigrants, he has worked his way to establishing himself as one of the most seasoned banking executives in the world. According to Forbes, he has a current net worth of $1.7 billion.
Charles Scharf met Dimon well before he sat in the driver’s seat of the American banking industry. Rather, the year was 1987 and Dimon had the responsibility of turning around a failing financial firm called Commercial Credit Corp. The company had just been bought out by Sandy Weill, a banking executive who had recently left American Express to embark on his own high flying endeavor.
Today, Weill boasts a net worth of $1 billion and receives recognition for having merged Travelers Group and Citigroup; Citygroup is now considered a big-four American bank.
In review, in 1987 Sandy Weill was early in the process of creating what would later become Citigroup. Jamie Dimon worked for Sandy Weill and was chosen to take over the small Baltimore financial firm Commercial Credit Corp, which Weill had recently purchased.
Charles Scharf Meets Dimon
With college graduation around the corner, Charlie’s father constantly sent him newsletters that discussed the work Dimon’s team was doing at Commercial Credit. Charlie would promptly throw those articles into the trash. He didn’t think much of it at the time, however, told his father if he could somehow get in front of Dimon for an interview, he might be interested in working with them.
As fate would have it, one of Charlie’s father’s closest cousins, who was also in the financial industry, was very close to Dimon’s father. Through that family connection, they were able to get Charlie’s resume to Dimon, at which point, a date was arranged for the two to meet.
By the end of the interview, Dimon was happy to bring Charlie onto his team, there was just one issue, Commercial Credit had to figure out how much they would pay him. They hadn’t hired anybody in a while, especially not somebody so young and new to the industry.
The Alumni Magazine of NYU Stern makes a point to note that Charlie was “the first person the company had hired directly from college in years, Scharf was in fact still a senior at Johns Hopkins University when he started working there part-time,” making him, the youngest professional employee at Commercial Credit Corp.
Something More Challenging
Within a week, Scharf was in Baltimore working on the Commercial Credit turnaround, although, in the beginning, he wasn’t working with Jamie Dimon directly. He says, “for the first six months I spent the time working for someone else and he [Jamie Dimon] used to call me every once in a while and ask how I was doing…”
During one such call, Scharf remembers “very politely” complaining that his work wasn’t challenging enough. Dimon, on the other hand, tells the story emphasizing Charlie having a bullish tone behind his words. Either way, Dimon’s response to his complaint was “fine, you want a challenge? come work for me.”
About six months later, Scharf began working directly with Dimon as his personal assistant. This gave Scharf unprecedented access to experience first-hand some of the biggest banking decisions being hashed out by men who would later immortalize themselves as legends of the financial industry. Such men include Jamie Dimon, Sandy Weill, and Bob Lipp.
Scharf worked under Dimon as his personal assistant for five years, a fairly good amount of time. He says, “I don’t actually describe him as a traditional mentor because we never sat down and had conversations about what it would take to get from one place to another or how to learn about something.”
He continues, “with him, it was very real life, it was constant contact, it was constantly seeing how great leaders were thinking about things and being able to participate in it. There’s really no better way to learn than in that kind of environment, I consider myself lucky just to be able to participate in the growing of the company [Commercial Credit Corp].”
Sandy Weill’s various businesses soon fell under the parent company umbrella that was “Traveler’s Group.” Being Dimon’s assistant opened many doors for Scharf to take advantage of throughout his early banking career.
The NYU Stern Alum Magazine tracks his progress, documenting that “In 1995, he became CFO of Smith Barney, after serving in a number of senior finance roles at various Travelers Group companies, including Commercial Credit, Primerica, and Smith Barney. When Travelers merged with Citicorp in 1998 – at which point Scharf was CFO of Salomon Smith Barney – he was named CFO of Citi’s global corporate and investment bank, which generated revenues of $21 billion in 1999. In 2000, he was CFO of Bank One, and in 2002, he led the bank’s consumer banking business, helping rebuild the brand and banking staff and expanding the branch and ATM network.”
Charles Scharf became CEO of JPMorgan Chase’s retail financial services upon its 2004 merger with Bank One. His operation consisted of more than 5,000 bank branches and 13,000 ATMs, as well as relationships with more than 14,500 auto dealerships and 5,200 schools and universities.
Scharf took his first lone leap into the business world when taking on Visa’s CEO position in 2012. He explains his thought process going into the role, saying “the rise of the e-commerce world and the digitization of business were both threats and opportunities to work with third parties.”
He continues, “that was not something that we had traditionally done as a company but I thought that we could learn from people on the outside, we could leverage their expertise, and build partnerships; which, really, were actually better for both of us.”
During Scharf’s tenure, Visa fostered partnerships with Apple, Paypal, and Stripe. These relationships would ultimately put the company lightyears ahead of its competition.
Forbes tells us, “Under his watch, Visa’s stock surged over 130% as Visa’s operating income rose 26% between the end of 2013 and 2015. Those gains dramatically outperformed the S&P 500 Index and competitors like American Express. In 2013, the company was added to the Dow Jones Industrial Average, and in mid-2016 it completed the acquisition of its Visa Europe joint venture, simplifying the company’s corporate structure.”
Charles Scharf Leaves Visa
When deciding to walk away from Visa due to the difficulty of travel from New York, where his family lived, and San Francisco, where the company was headquartered, Scharf made the following public statement: “I love working and running this great global company and I am sad to have reached the conclusion that I should step down, but running a San Francisco based company just doesn’t work for me personally right now and wouldn’t be fair to Visa.”
He added, “It has been an incredible privilege and honor to work with my many colleagues who have contributed so significantly to our success and transformation, and have strengthened our position as the leading global payments provider. I feel confident that the clarity of our strategic goals and our decisive actions will ensure that we continue to thrive in this quickly evolving industry.”
Visa’s independent chairman, Robert W. Matschullat, said of his departure, “Charlie has been a visionary CEO, highly successful by any set of metrics. He has helped transform Visa, the leading global payments technology company, into a technology-driven digital commerce company and has led a strategy that will benefit this company for years to come.”
Bank of New York Mellon
Upon beginning his tenures as CEO of BNY Mellon in 2017, The Financial Brand documents that “Scharf shook up the formal, staid culture, eliminating traditional executive offices that had walls and doors — his own included.”
“We have no offices now, we have cubicles,” Scharf explained during a Milken Institute panel. “They’re nice cubicles but they’re cubicles. And we are much more engaged with the employees in the organization.”
Just as Scharf was beginning to work his magic at BNY Mellon, he received a call from an utterly defeated banking giant, Wells Fargo.
Wells Fargo Chief Executive
After their two past CEO’s crashed and burned, Wells Fargo was already six months into their search for a new leader. Being one of the largest banks in America, they needed somebody with experience who could command the respect of their executive team. Somebody fresh, who could keep them at the forefront of technological innovation. Somebody transparent, who could rebuild trust with customers, employees, and the federal government. In short, they needed Charles Scharf.
Wells Fargo is based out of San Francisco, just like Visa is. This was an obstacle the bank had to overcome if they’d land their golden boy, considering Scharf left Visa particularly because it was headquartered in San Francisco.
On the condition that Scharf would be able to run Wells Fargo from New York, rather than having to travel to and fro the west coast, the two parties came to an agreement. Wells Fargo found their CEO and Charles Scharf took his prophetic seat at the head of a big-four American bank.
Wells Fargo posted the following press release on September 27, 2019:
SAN FRANCISCO–(BUSINESS WIRE)–The Board of Directors of Wells Fargo & Company (NYSE: WFC) announced today that it has named Charles W. Scharf as the company’s chief executive officer and president, and a member of the Board of Directors, effective October 21. Scharf was chairman and CEO of Bank of New York Mellon.
Wells Fargo Board Chair Betsy Duke said, “I am delighted to welcome Charlie as our new CEO. Charlie is a proven leader and an experienced CEO who has excelled at strategic leadership and execution and is well-positioned to lead Wells Fargo’s continued transformation. With more than 24 years in leadership roles in the banking and payments industries, including as CEO of Visa Inc. and Bank of New York Mellon, Charlie has demonstrated a strong track record in initiating and leading change, driving results, strengthening operational risk and compliance, and innovating amid a rapidly evolving digital landscape. Charlie’s financial and business acumen, integrity, passion for diversity and inclusion, and commitment to strong talent management are important qualities considered by our board’s search committee.”
In March, the board appointed C. Allen Parker interim CEO and president and a member of the board. Parker will continue to serve in these roles until Scharf joins the company; Parker will thereafter support the transition as a key member of the company’s leadership team and general counsel.
“On behalf of the Board of Directors, I wish to thank Allen for his exemplary leadership during this transition. He has continued to move the company forward on our top priorities in a focused and transparent way. His leadership through this time has been invaluable for our stakeholders, particularly for our 263,000 team members,” added Duke. “I also want to thank our search committee for conducting a thorough process that was comprehensive in its diligence and reach. The committee focused on top industry talent, and in Charlie, we are confident that we have identified the best leader to take Wells Fargo forward.”
Charles Scharf Responds
Scharf stated, “I am honored and energized by the opportunity to assume leadership of this great institution, which is important to our financial system and in the midst of fundamental change. I have deep respect for all the work that has taken place to transform Wells Fargo, and I look forward to working closely with the board, members of the management team, and team members. I am committed to fully engaging with all of our stakeholders including regulators, customers, elected officials, investors, and communities.”
“I also want to note the wonderful job Allen has done as general counsel and interim CEO in providing strong leadership. Given his experiences and accomplishments, I know we will work closely together as we move forward,” added Scharf.
Jim Cramer Reacts On CNBC:
Nasdaq released a report on February 11, 2020, outlining management changes Charles Scharf is facilitating. They note, “Wells Fargo & Co WFC.N Chief Executive Charles Scharf on Tuesday announced his first major reshuffle since taking over in October, naming several executives to new roles while also tapping a JPMorgan veteran to head consumer lending.”
They add that he’s reaching into the past by hiring former colleagues from his JPMorgan Chase days, reporting, “Scharf has already brought on several former colleagues from the No. 1 U.S. bank. The latest addition, Mike Weinbach, will join the firm after 16 years at JPMorgan to lead the San Francisco-based lender’s new consumer lending division in May.”
Scharf says in a Wells Fargo press release, “The Wells Fargo franchise has extraordinary opportunity and power, and these organizational changes enable us to more effectively pursue our goals and take advantage of the opportunities in front of us.”
He continues, “these changes create the right structure to build our businesses over the long term and increase our ability to successfully execute on our top priority, which is the risk, regulatory, and control work. I am confident that this organizational model and our strengthened risk and control foundation will bring greater focus and accountability to the company.”
As we are still so much so at the beginning of the Charles Scharf era at Wells Fargo, it will be exciting to keep up with what’s to come.
If you enjoyed this story on the life of Wells Fargo CEO Charles Scharf, be sure to check out our biography of Macy’s CEO Jeff Gennette.