With corporate responsibility a key focus in today’s industry, Wells Fargo may be considering the fact that their next CEO appointment will be a crucial message to investors and industry regulators.
Warren Buffet has said it would be “not smart” to hire a Wall Street executive due to the recent shift to a Congress that looks more unfavorably on the banking industry… especially large banks that have faced scrutiny in recent years.
Despite the bank’s past problems, however, by some estimates Wells Fargo reaches almost 1/3 of the total countries’ families with at least some form of bank service.
Usually when a bank CEO steps down, a succession plan that has all but been signed off on is ready for implementation with someone inside the bank taking the top position. While that was true at Goldman Sachs for example, when David Solomon took the CEO position from Lloyd Blankfein, most industry experts speculate that will not happen this time.
Despite Buffet’s recommendation to go outside the industry for the successor, most experts say it would likely come from another large institution such as Bank of America or JP Morgan.
While Buffet’s view is understandable given the fact that perhaps one of the most important things for Wells Fargo to do is make a symbolic pick that lawmakers might approve of, $1.9 Trillion in assets at a top five United States based bank also requires an executive that can handle the operation of a major bank.
Some of the possibilities floated have been Gary Cohn of Goldman Sachs and J.P. Morgan’s Marianne Lake. Lake is fully qualified, and would certainly be a welcome sign in smashing the glass ceiling in an industry that is still a male dominated business.
However, if Wells Fargo is going to poach a major industry player from a large competitor, it will most likely pay a large sum of money to pull she or he out of its present bank in addition to the scrutiny it might find itself in from Washington D.C. lawmakers.
So what is the answer? Perhaps Wells Fargo should consider looking for a CEO from a successful midsize bank that has acted responsibly over the years. The person would have executive leadership, and would most likely be more sensitive to the retail side of the bank.
This could be a welcome sign to lawmakers. Additionally, this type of experience provides someone at a CEO level that has director skills, might align well with the position, and not be marred with suspicion by coming from another large bank. This might be the answer to the riddle that Warren Buffet was looking to solve with an outsider.
Betsy Duke, the Chair of Wells Fargo stated, “There’s a highly accomplished leader out there who’s going to look at the challenge and opportunity and say ‘I’m a really good fit for Wells Fargo.”
Perhaps Ms. Duke will find that person somewhere between an outsider and an insider with a different kind of leadership experience.