Banking & LendingIndustry News

Wells Fargo Consumer Lending chief axed for disparaging communication to former executive

Second largest home mortgaging service contends with series of scandals

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Still reeling from a scandal involving fake banking accounts, Wells Fargo this week fired its head of consumer lending over disparaging “communication” with a former executive, officials said on Friday.

Franklin Codel, who last year was promoted as head of Consumer Lending following a position as head of the San Francisco-based bank’s Home Lending division, was terminated following a communication between he and a former executive, in which he disparaged the regulatory system and a so-called “Golden Parachute” payment, according to The Wall Street Journal.

“Difficult as this situation is, the decision reflects our commitment to our values and culture and to executive accountability,” Wells Fargo CEO Tim Sloan said in the statement released Friday. “We have a strong team in Consumer Lending and I am fully confident that the transition will be smooth and that its businesses will continue to operate normally in serving our customers.”

As head of Consumer Lending, Codel, based in Iowa, managed 45,000 employees while overseeing the bank’s home lending, auto dealer services, personal lending and personal insurance divisions. Wells Fargo is the world’s second largest home mortgaging service.

In the statement, Sloan said Codel acted “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 regarding that team member’s earlier termination.” The reasons for the dismissal, he added, did not involve the business or operations of Consumer Lending, the servicing of its customers, or its performance or financial results.

“The dismissal also did not pertain to sales practices at the company,” Sloan said.

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Wells Fargo suffered serious setbacks this year and last following news that bank employees had created as many as 3.5 million fake accounts using fictitious information to hit internal sales goals. The bank was fined $185 million and axed 70 senior executives. Then-CEO John Stumpf announced his retirement in 2016 following pressure from the public and lawmakers.

Earlier this year, meanwhile, the bank was blasted for fraudulently charging as many as 570,000 customers for auto insurance and approximately 110,000 mortgage customers.

So-called golden parachute payments, or financial compensation guaranteed to executives upon dismissal, are regulated by the Federal Deposit Insurance Corp. and administered by the Federal Reserve and the Office of the Comptroller of the Currency, according to the Journal. Because of the prior scandals at Wells Fargo, the bank may have been particularly cautious.

Email Jotham Sederstrom