It had come to a point. When it gets there, I can only guess at what a human in that position must think. I saw the interview with Jim Cramer. I do believe that Timothy J. Sloan believed that he was the right person at the right time. To lead a firm with a troubled recent past out of that past. The problem for many was that Sloan had been at Wells Fargo (WFC) for 31 years. He had taken over the position of Chief Executive shortly after the scandal involving employees of the bank opening large numbers of bogus accounts, replacing John Stumpf.
Problems persisted throughout Sloan's tenure. The Federal Reserve Bank cited deficiencies in risk management practices in February of 2018. Less than a year ago, the Consumer Protection Bureau and the Office of the Comptroller of the Currency, according to the Wall Street Journal, imposed a $1 billion fine on the bank, finding misconduct in both the auto and mortgage lending businesses. Apparently, hundreds of thousands of customers had been improperly charged. How turbulent are the waters that this firm must swim in? Yahoo Finance is reporting this morning that 19 scandals have surfaced during Sloan's tenure. The Journal reports that nearly every business line remains under investigation.
This put Sloan in the political cross-hairs. Even if he believed that he was the right person, elected leaders such as Sen. Elizabeth Warren of Massachusetts, who is running for president, and Rep. Maxine Waters of California, who chairs the House Financial Services Committee, found fault. Sloan had become a distraction. Sloan retired. I have no opinion of the man, other than how he seemed in that interview. That matters not one bit.
C. Allen Parker will now serve as the firm's interim CEO. Parker had already been serving as the bank's general counsel. The board's search for the next CEO and president begins immediately. The board has determined that it might be best to make this an external search so that a new start might be made.
I don't really like the banking space right now. Even if the banks have found a way to make money, the perception is that profit will be tough to go by with an inverted or flat yield curve. The fact that traders are selling Treasuries today is like throwing a deck chair off of the Titanic to reduce drag. The banks will run with a lower multiple for the time being.
Not only would I not invest in Wells Fargo at this time, I would go elsewhere for my banking needs. If you simply must own a bank, my thought is to buy Citigroup (C) . At least there, you know the company is buying size right next to you.
Will I Have Enough Money to Retire?
Want to learn about retirement planning from some of the nation's top experts? Join TheStreet's Robert "Mr. Retirement" Powell live in New York on April 6 for our Retirement Strategies Symposium. For a limited time, tickets are available for $99 for this full-day event. Check out the agenda, learn about the speakers and sign up here.