WFC Wells Fargo and Company

By Ben Eisen 

Elizabeth Duke has resigned as chairman of Wells Fargo & Co.'s board of directors, days ahead of a congressional hearing during which she was expected to face calls to step down.

Charles Noski, who joined the board in June 2019 and played a key role in hiring the bank's new chief executive, will serve as chairman, the bank said Monday. Mr. Noski is a retired vice chairman and former chief financial officer of Bank of America Corp.

Ms. Duke was set to testify before the House Financial Services Committee Wednesday. Democrats and Republicans on the committee last week each released lengthy reports criticizing the bank's efforts to clean up after the sales scandal.

James Quigley, who was also set to testify Wednesday, also resigned from the board. Maxine Waters, the California Democrat who chairs the committee, called on both of them to step down.

Ms. Waters called out Ms. Duke and Mr. Quigley for neglecting their duties in dealing with regulators. In a report last week, the Democrats presented emails they alleged to show a lack of urgency. In one email, Ms. Duke asked why a regulatory request was being sent to her rather than a department manager at the bank. In another, Mr. Quigley asked to postpone a meeting because he was in the Galápagos Islands.

The two board members made the decision to step down on their own, a person familiar with the matter said. They saw a difficult path forward as politicians on both sides of the aisle turned up the pressure on the board, and they didn't want to become the center of attention, the person said.

"We believe that our decision will facilitate the bank's and the new CEO's ability to turn the page and avoid distraction that could impede the bank's future progress," Ms. Duke and Mr. Quigley said in a statement.

The bank's two previous CEOs resigned shortly after tense hearings before Congress during which they failed to convince regulators that they had a grip on the scandal.

More recently, Wells Fargo, which is facing pressure to resolve a lengthy regulatory checklist, has taken pains to convince regulators and others that the worst is behind it. Last month, the bank paid $3 billion to settle investigations by the Justice Department and Securities and Exchange Commission.

Still, Wells Fargo has big hurdles to overcome. The Federal Reserve in early 2018 imposed an unprecedented cap on Wells Fargo's growth, and CEO Charles Scharf told investors in January that the bank still has 12 public enforcement actions. He said these issues won't necessarily be resolved this year.

Ms. Duke led the effort to find a new chief executive last year after Timothy Sloan stepped down. Mr. Scharf, who took over as CEO in October, is scheduled to testify before the House Financial Services Committee Tuesday. Wells Fargo now has its third CEO since the bank's fake-account scandal burst into public view.

Ms. Duke joined Wells Fargo's board in 2015. She became vice chair in October 2016, shortly after the bank disclosed that branch employees had opened perhaps millions of fake accounts without customer consent. She replaced Stephen Sanger as chairman at the start of 2018, becoming the first woman to lead the board of one of the nation's largest banks.

A Federal Reserve governor during the financial crisis, Ms. Duke had also served as an executive or CEO at a number of community banks in Virginia.

Mr. Quigley, the retired CEO of accounting firm Deloitte, joined the board in 2013.

Colin Kellaher contributed to this article.

Write to Ben Eisen at ben.eisen@wsj.com

(END) Dow Jones Newswires

March 09, 2020 14:37 ET (18:37 GMT)

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