October 13, 2016 – By now, we’re all familiar with the Wells Fargo Banking scandals, but what many may not know, is the humble beginnings of the now despised and displaced CEO John Stumpf had taken on his way to the top of one of the largest Banks in the world.
In 1982, starting from the bottom and moving his way up, Stumpf got his start in banking as a Repo Man at First Bank in St Paul, Minnesota. Fresh out of college, Stumpf used to get in to work at 10am and work until 5pm tracking down borrowers whose loans were past due. After a quick dinner, he’d change out of his banker suit and suit up for his second shift – hitting the streets where he would hunt down and seize cars, often working past midnight.
“When you collect bad loans…. you sure learn a lot about making good ones,” Stumpf told Institutional Investors. You also learn a lot about the power of persuasion, persistence and desperation.
“You’d have these cars memorized. You would know there was a ’69 Buick of a certain color and the person was 90 days past due and wasn’t answer your telephone calls. You would track him down, call the tow truck and just as the car started to lift off the ground, out of the bar would walk a giant of a guy with two six-packs of confidence in him and he wants to know what you are doing with his car. Now that is exciting! You learned the power of persuasion,” he told reporters for the Forbes article, “The Bank that Works.”
Six years later, he joined Northwestern National Bank which became Norwest and quickly rose up the ranks to become the chief credit officer for Minneapolis. He went on to run various regions including regional president for Norwest Bank Texas where he led the acquisitions of 30 banks in the state with total assets of more than $13 billion.
In 1998 Norwest was scooped up by Wells Fargo in 1998. As the company grew, so did Stumpf’s reputation and responsibilities. In 2002, Wells Fargo put him in charge of community banking five years later, he was named CEO.
“I never set out to be CEO. I always set out to be a good team member, a good colleague. I would say this job, while I love it and I’m privileged to work with all my colleagues, it is lonely,” he says then grins, “who do you go to lunch with and talk about?”
What has transpired in the past few months has put a dark ending on what was otherwise a genuine American “rags to riches” story.
Sept. 8, 2016: Wells Fargo is hit with a $185 million fine with the City Attorney and federal regulators over “widespread illegal” sales practices.
Sept. 13: Mr. Stumpf blames employees for the allegedly illegal sales practices across the company in an interview with the Journal. Wells Fargo shares fall and J.P. Morgan becomes the biggest U.S. bank by market capitalization again.
Sept. 20: Mr. Stumpf testifies before the Senate Banking Committee and his performance, widely viewed as a failure, does little to put the bank’s sales issues behind it. Instead, senators from both sides of the aisle unleash one of the harshest grillings of a financial executive since the crisis. Sen. Elizabeth Warren (D-Mass.) says Mr. Stumpf should resign.
Sept. 27: The bank’s board moves to claw back $41 million of Mr. Stumpf’s pay over the scandal.
Sept. 29: Mr. Stumpf faces another brutal hearing on Capitol Hill, this time before the House Financial Services Committee. Many lawmakers from both parties tell him he should step down.
Oct. 12: John Stumpf retires.
While not a perfect happy ending for 63 year old John Stumpf, rest assured he will retire comfortably with his net worth of $41M in San Francisco, California. No need for tears here.