By Emily Glazer
A month ago, Hope Hardison was a top lieutenant to Wells Fargo
& Co. Chief Executive Timothy Sloan, playing a major role in
the cleanup of the bank's sales scandal.
Today, she's on leave from her job as the bank's chief
administrative officer following a rare rebuke from one of its key
regulators.
Ms. Hardison's swift comedown signals that the gulf between the
embattled bank and its government overseers is widening. In the two
years since it came to light that Wells Fargo branch employees
opened perhaps millions of fake accounts, problems have continued
to pop up throughout the bank.
Among them, the bank has struggled to convince regulators -- the
Office of the Comptroller of the Currency and the Federal Reserve,
most prominently -- that it has the right people in place to clean
up the mess.
"We take the relationships with our regulators very seriously
and value our ongoing constructive dialogue and their feedback,"
Wells Fargo spokeswoman Arati Randolph said in a statement. "We
have made fundamental changes at Wells Fargo over the past two
years, including changes in leadership, organizational structure,
risk and compliance, customer experience and culture."
Last month, the OCC ramped up the pressure, sending letters to
Ms. Hardison and David Julian, the bank's chief auditor, slamming
them for oversight failures, The Wall Street Journal previously
reported. The regulator rarely sends such letters to individuals;
they indicate that the regulator is considering fines or industry
bans on the recipients.
A lawyer for Ms. Hardison declined to comment. Mr. Julian didn't
respond to requests for comment.
Such letters are generally sent to individuals "to emphasize
accountability" relating to "egregious behavior," said Thomas
Curry, a partner at law firm Nutter McClennen & Fish LLP who
served as Comptroller of the Currency from 2012 to 2017.
Privately, some bank's executives have groused about the
regulators' moves. At a recent gathering of female Wells Fargo
employees in Florida, the head of the bank's wealth and investment
management unit described Ms. Hardison and Mr. Julian as "victims"
of regulators, people familiar with the event said.
The executive, Jon Weiss, said the bank's senior leaders were
heartbroken over the latest developments in part since the two on
leave had "worked so hard," the people said.
Mr. Sloan, speaking at an internal town hall last Thursday,
thanked Ms. Hardison and Mr. Julian "for their leadership and hard
work in the transformation of Wells Fargo."
Ms. Hardison has worked at Wells Fargo since 1993, rising to
become one of the bank's most senior leaders. In her role as chief
administrative officer, she oversaw functions centered on the
bank's culture and reputation, including human resources,
government relations and customer refunds stemming from the sales
scandal. She also served on the bank's powerful operating
committee.
Current and former executives describe her as a personable free
spirit, known for using the word "kooky" in meetings to describe
things she thought were odd or didn't agree with.
Before becoming administrative chief, Ms. Hardison was the
bank's head of human resources. She held that position from 2010
until late 2015, when problems were cropping up throughout the
branches and the bank was firing around 1,000 low-level employees a
year.
She at times expressed concerns about the number of people
fired, according to an April 2017 report from the bank's board of
directors. The bank's decentralized structure gave a lot of
autonomy to the retail bank's leaders and made it difficult for
others to intervene.
Ms. Hardison pushed the bank to report that as many as 2.1
million accounts may have been affected by sales practices
problems, current and former executives said. The bank disclosed
that figure in September 2016, even though it wasn't sure of the
correct number, the executives said. Months later, following a
broader and more thorough review, the bank said that up to 3.5
million accounts were potentially affected.
Following the bank's September 2016 settlement with regulators
over its sales practices, Ms. Hardison traveled throughout the
country, speaking to employees and orchestrating panels for other
executives to discuss how the bank was changing, according to
current and former executives.
Still, Ms. Hardison was among the executives singled out in the
2017 board report. According to the report, Ms. Hardison was sent a
detailed table showing "sales integrity violations, the number of
allegations, cases worked, employees cleared, confirmed fraud or
policy violations and related terminations and resignations." But
she "did not recall reviewing this report in detail or having
understood at that time the scope and nature of the sales integrity
violations," the report said.
Though Mr. Julian wasn't cited in the report, the audit group he
oversaw was. His group rarely gave an unsatisfactory rating even if
it found issues relating to sales-practice problems, according to
the board report.
As the bank tried to move past the scandal, Ms. Hardison was
also at the forefront of Wells Fargo's "Re-Established" advertising
campaign, which it launched in May to demonstrate how it is
emerging from a challenging period.
Yet new problems have continued to add up, including the cleanup
from improper customer charges in its foreign exchange division and
a Justice Department investigation of document altering by
employees in its wholesale banking unit. Some rank-and-file workers
questioned why Ms. Hardison remained in such a prominent role at
the bank, according to current and former employees.
Ms. Hardison's absence has hindered the bank's efforts to get a
handle on its problems, according to people familiar with the
matter. The bank, for example, put firings on hold in mid-October,
the people said, and only recently began allowing managers to
proceed with some terminations.
Mr. Sloan, speaking in Denver at the town hall, said the bank
has a "deep leadership bench" but acknowledged that the departures
"had an immediate impact on several very important functions in the
company."
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
November 14, 2018 05:44 ET (10:44 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.