Wells Fargo Taps Mortgage Head to Lead All Consumer Lending

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Franklin Codel, Wells Fargo's head of mortgage, will now oversee all consumer lending as part of a management shakeup that comes amid the bank's fake account scandal.

Codel, who succeeded Michael Heid after his retirement last October, will continue in his role as head of home lending. Additionally, Codel will join Wells' operating committee and assume the expanded role of consumer lending overseeing dealer services, which includes indirect auto lending, commercial services and personal lending, which oversees direct auto, personal loans and student lending.

Prior to becoming head of home lending last year, Codel had been responsible for Wells Fargo's mortgage production unit since 2011. Effective Nov. 1, eight business lines will report to Codel, including capital markets, business capability development and home lending production and servicing, the bank announced this week prior to the abrupt retirement of CEO John Stumpf Wednesday. Codel will report to Tim Sloan, who has served as the bank's president and chief operating officer before being tapped to succeed Stumpf as CEO.

Codel's new expanded responsibilities come as Avid Modjtabai, his boss and the head of consumer lending, was tapped to lead a new payments group focused on digital and online offerings, investments in research and development and strategic partnerships. Wells said the group will bring together teams across the company in order to "accelerate the company's focus on delivering the next generation of payments capabilities."

In all, Wells Fargo named three new or expanded roles, all of which were added to the bank's operating committee, along with the creation of the new payments group.

"We're not aware of any of our competitors that have anything like this," Sloan said in an interview about the new business group. "Every bank is organized differently. I wouldn't say we've discovered alchemy here and we're going to turn this into gold. We're all competing for the same consumer and commercial customers, and by bringing these together we can be faster and integrate all the payment products."

Modjtabai is a 23-year veteran of Wells and already serves on the bank's operating committee reporting to Sloan. Seven business lines will report to Modjtabai, including consumer credit cards and retail services, deposit products and treasury management and merchant services.

The shift comes amid the ongoing scandal after the bank agreed to pay $190 million in fines and restitution after regulators accused it of opening roughly 2 million phony accounts. The enforcement action has drawn heavy criticism against Wells, including calls from lawmakers for Stumpf's ouster.

Wells' board has launched a separate investigation into the bank's illegal sales practices. Last month, the bank announced that it would extend the remediation to consumers harmed by the creation of phony accounts to seven years, from 2009 through 2015. Sloan said those dates were extended "just to make sure we didn't miss anyone."

When asked if the management changes were related to the phony accounts scandal, Sloan said, "No."

Yet the shake-up would effectively concentrate more authority in Sloan, as the new roles will report directly to him.

Perry Pelos, a 29-year Wells veteran who most recently served as head of commercial banking services, was named head of wholesale banking, a unit that Sloan had previously headed. Pelos will also join Wells' operating committee reporting to Sloan.

Thirteen business lines will report to Pelos, including middle-market banking, specialized lending, commercial banking, Wells Fargo Insurance and Wells Fargo Securities.

Separately, Mary Mack, who was named head of community banking in July, also was named to the operating committee reporting to Sloan.

Mack had succeeded Carrie Tolstedt, the former head of community banking who left the company last month at the direction of the board of directors, which has clawed back $19 million for Tolstedt's role in the bank's phony accounts scandal.

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