NEW YORK/WASHINGTON (Reuters) - Wells Fargo & Co announced on Friday it fired its head of consumer lending, a move that people familiar with the matter said was because he disparaged a bank regulator to a fired employee.
The abrupt departure of Franklin Codel, Wells Fargo’s head of consumer lending, came as the bank grapples with the fallout from a sales scandal in which thousands of employees enrolled perhaps millions of customers in products they did not want or need.
The fired employee, Greg Gwizdz, reported Codel’s comments to Wells Fargo, which then fired Codel, one of the people said. Gwizdz, a former mortgage sales executive, was fired by Wells Fargo several months ago for a number of issues, according to Wells Fargo spokesman Tom Goyda. A call to Gwizdz was answered by a woman who said she was his wife and who declined to take a message. A call to Codel’s home was not returned.
Wells Fargo is now subject to tighter regulatory oversight and faces ongoing probes and lawsuits due to the scandal. As a result, once top Wells Fargo executives became aware of Codel’s comments, they felt they needed to take action, one of the sources said
After being promoted as part of a broader management shakeup last year, Codel had become a key executive in the bank’s effort to make things right with customers and fix operational flaws that led to a hard-charging sales culture.
In announcing the dismissal earlier on Friday, Wells Fargo said it expects to name a replacement by year-end.
Codel forfeited more than 61,000 stock options and nearly 16,000 restricted shares, according to securities filings Friday. Goyda said the forfeitures were in connection with his firing.
The conversation between Gwizdz and Codel was about compensation Wells Fargo withheld from Gwizdz, according to one of the people familiar with the matter.
As part of a $190 million settlement Wells Fargo reached with regulators in September 2016, payouts to departing employees must be cleared by the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp (FDIC).
They have approved payouts for hundreds of former Wells Fargo employees since that time but have disagreed on a handful of executives. The decision process can sometimes take months, frustrating former employees waiting for deferred stock or severance.
It was not clear, however, whether Gwizdz would have been entitled to a payout since he was fired by the bank. Goyda declined to comment on the bank’s policies regarding employees fired for cause. Bryan Hubbard, spokesman for the OCC, said the regulator does not comment on banks’ personnel matters. A call to FDIC spokesman David Barr was not immediately returned.
In Friday’s announcement, Wells Fargo said it dismissed Codel because his behavior “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.”
Goyda declined to elaborate on the communication.
“We hold our executives to high standards regardless of the regulatory environment, and if something was done that was improper, that would have applied regardless of the scrutiny that we’re under,” he told Reuters in a statement.
Wells Fargo, the third-largest U.S. bank by assets, has been mired in scandal since the settlement, which involved thousands of employees enrolling customers into credit card and deposit accounts without their knowledge to meet sales targets.
Since then, it has faced more lawsuits and probes and detailed more sales practice issues in other businesses. The number of phony accounts has grown to as many as 3.5 million. Codel had been overseeing efforts to fix problems related to auto lending and mortgages that Wells Fargo unveiled in August.
The mortgage issue, related to inconsistent application of policies regarding interest rate lock extensions, was one of the reasons Gwizdz was fired, Goyda said.
People who know Codel described him as an ethical person who had a careless interaction with a former employee.
Wells Fargo Chief Executive Tim Sloan described it as a “difficult” situation in the company statement. Sloan will be the boss of Codel’s direct reports until a replacement is found.
Those reports include Michael DeVito, interim head of Wells Fargo Home Lending; Laura Schupbach, head of Wells Fargo Dealer Services; John Rasmussen, head of personal lending; and Laurie Nordquist, head of personal and small business insurance.
Reporting by Dan Freed in New York and Patrick Rucker in Washington; Additional reporting by Nikhil Subba in Bengaluru; Writing by Lauren Tara LaCapra; Editing by Meredith Mazzilli and Cynthia Osterman