The doc, Charlie Scharf recollects, was 3,162 pages. It included 6,000 duties; 28,000 folks labored on it. This staggeringly lengthy quantity was the plan to avoid wasting Wells Fargo, solid by Scharf and his workforce shortly after he took over as CEO in October 2019.
On the time, Wells had been laboring below a regulatory crackdown unleashed by the cataclysm that blackened the previously burnished Wells title, the closely publicized scandal revealing that the financial institution had bilked thousands and thousands of shoppers by creating faux and unneeded accounts at its branches. That culminated in a draconian penalty imposed by the Federal Reserve: a tough restrict on its whole property that primarily blocked Wells from elevating the deposits that kind the lifeblood of banking.
The method was grueling. Scharf recollects that each Monday morning, he would lead a two-hour assembly of the 15-member working committee during which they laboriously labored by the place their departments stood on reaching their targets. “Charlie would go across the desk asking, ‘Why are you lacking these dates? Why are we falling behind?’” relates one of many mind belief topic to the grillings. He’d relentlessly demand that executives who had been lagging come again subsequent week with a components to course right, and catch up. Those that couldn’t sustain didn’t final lengthy.
Within the early going, Scharf would get harshly worded emails from the regulators demanding extra progress. “I simply lived all of it week, and on Friday afternoons I’d usually get this official correspondence from regulators,” he recollects. “The language was jarring. I didn’t wish to work on Friday evening except I needed to. I needed to take time with my household and decompress. So I’d say, I’m not going to open these items till Saturday or typically Sunday.”
The duty of saving the establishment seemed past daunting. Buyers huge and small took a dim view of its prospects. Warren Buffett, whose Berkshire Hathaway had been a giant Wells investor for 20 years, slammed the prior prime administration for “ignoring [the sales fiasco] after they came upon about it,” and dumped his total stake. From February 2018 to December 2020, its share value dropped by two-thirds, shaving its market cap from $322 billion to $88 billion. Calls in Congress for a breakup had been rising; Sen. Elizabeth Warren (D-Mass.) demanded that the financial institution break up into models that would extra readily adjust to banking norms, and Sen. Sherrod Brown (D-Ohio) trashed Wells as “too huge to handle.”
Scharf admits that as a banker, he’d by no means confronted something remotely as robust because the mission at Wells. “I keep in mind understanding what I used to be getting myself into, but it surely was a lot worse directionally than I believed … The regulatory strain was past something I’ve skilled, and so was the political strain,” the CEO avows. Certainly, introduced in to enact a turnaround, Scharf was going through rising odds that regulators might dismantle one in all America’s most legendary monetary establishments.
Scharf had been coaching for this job his complete life
Scharf is perched on a sofa in his workplace, framed by floor-to-ceiling home windows overlooking the southward sweep of the Wall Road district the place he labored as a youngster, the Statue of Liberty a copper-green miniature within the distance. He’s attired in denims and tan sneakers, his brief white hair completely coiffed, sans his traditional, just about trademark owl-lens glasses.
The Wells Fargo rescue job suited Scharf for a fundamental purpose: He’d been coaching for a activity similar to this one all his working life. He virtually grew up within the Wall Road engine room. Scharf’s dad was a stockbroker who finally labored for Sandy Weill at Smith Barney, and was nonetheless there when his son turned the agency’s CFO in 1995. Beginning at age 13, Charlie through the summers would commute along with his father from the household house in Westfield, N.J., a tony suburb 20 minutes west of Newark Airport, to the elder Scharf’s brokerage home. “We’d get off the practice on the World Commerce Middle, and he’d go to his constructing and I’d go to mine,” he recollects. The younger Scharf’s varied posts included such back-office positions as inputting knowledge and dealing within the securities vault.
As a senior at Johns Hopkins College in Baltimore, Scharf began interviewing at prestigious monetary corporations in Manhattan when his father really helpful an oddball selection that set his skilled trajectory. “He stated, ‘This wonderful man named Sandy Weill has constructed an amazing administration workforce at this tiny firm known as Industrial Credit score in Baltimore, and I don’t know what it’s, however they’re going to do nice issues, and you ought to be with nice folks.’” His father had a cousin who knew Jamie Dimon’s dad and managed to get Charlie’s résumé to Dimon, the buyer finance purveyor’s CFO.
Sooner or later in March 1987, Scharf spent a day at Industrial Credit score, interviewing with Dimon and several other different executives. “Earlier than I left, Jamie involves the ready room and tells me, ‘We’re going to give you a job.’ I later realized that by hiring me on the spot, he needed to show some extent, that Industrial Credit score was not a slow-moving firm that hadn’t employed younger folks for years.” For his half, Dimon remembers that Scharf at the same time as a teenager wasn’t simple to please. “I saved sending him round to completely different jobs, and nearly in every single place he went he’d come again, and I’d say, ‘How are you doing?’ and he’d say, ‘This space is screwed up, this space is horrible,’ he was all the time fairly crucial. So I stated, ‘Okay, child, you’re going to work for me as my assistant. I wish to see what you’ve received.’”
The frat home vibe at Industrial Credit score shocked the inexperienced recruit. “Neither the workplaces nor Jamie seemed like something out of company America,” marvels Scharf. The employees lounged on worn crimson velour couches, the fax machine was all the time on the blink, and the AC system was so previous it hissed loudly, when it cooled in any respect. “Individuals had been strolling round smoking, it was the period,” says Scott Powell, Wells’ COO and a fellow teenager on the agency in these days. Nicknamed “the Child,” Dimon sported an unruly head of hair that matched his fireball character. Remembers Scharf, Dimon would bark instructions into “an enormous, outdated squawk field just like the one in Charlie’s Angels.” The Dimon and Weill technique of communication, says Scharf, was to scream at one another till they reached consensus.
A sequence of roles with extra obligations adopted—together with following Dimon to Financial institution One in Chicago after his well-known falling out with Weill. Lastly in 2012 Visa got here calling and made Scharf its CEO, a task he excelled at earlier than leaving all of the sudden to, as he says, to assist a detailed member of the family navigate a troublesome life journey, including that “When CEOs say they left ‘for private causes,’ it often means they had been fired or playing around. However for me, it actually was private causes,” he says. “And I’ll by no means remorse it.”
Scharf realized big-time from Dimon’s intensive, super-detailed, hands-on-all-the-levers administration fashion, but it surely’s his ex-boss’s private qualities that almost all impressed and influenced him. “What I got here to appreciate by the years is that there’s a giant distinction between being supervisor and chief,” he avows. “Being chief means you encourage folks by what you’re doing and the way you do it, the way you carry your self, that they wish to observe you into extraordinarily robust jobs just because they consider in you. That’s Jamie.”
Whereas Dimon is very theatrical, Scharf seldom raises his voice in conferences, even when he’s sad. “What he’s actually good at is decreasing the temperature to seek out options,” says somebody who’s labored with Scharf.
Nonetheless, Scharf’s simply as robust and blunt as Dimon. “He doesn’t waste time making an attempt to make folks really feel good when he makes a tricky resolution. He moved folks out rapidly, with no anguish,” says somebody who is aware of him properly. A well-recognized chorus is that he is not going to shrink back from “calling folks on their BS.” Don’t search for flexibility when you’re not hitting revenue and efficiency targets, say managers in his orbit. “Charlie may be very measured,” says Fernando Rivas, head of company and funding banking at Wells, “however he’s uncompromising on outcomes and values.”
Observes an individual who’s labored with Scharf: “The unusual factor about him is, lots of people are sort and good on the floor however colder beneath. Charlie is simply the other. On the floor he will be intimidating, however go a tiny bit beneath and also you discover a candy, caring particular person.”
How Wells Fargo misplaced its means
The Wells Fargo he inherited, nonetheless, was a basket case. Having skirted the International Monetary Disaster with its mixture of “Important Road, not Wall Road” fundamentals for on a regular basis Individuals and their companies—in reality, Wells drastically benefited from the meltdown by way of its emergency buy of failing Wachovia—the financial institution by the shut of 2012 boasted the best market cap of any U.S. megabank.
Then the troubles started.
Submit GFC, regulators needed all banks to tighten up compliance. Prior Wells administration proved completely incapable of instituting the broad infrastructure required to tightly handle danger. “It in all probability was hubris from avoiding the issues within the GFC,” says COO Powell. A Home Monetary Providers Committee Employees Report from early 2020 reached the identical conclusion, quoting an emergency rent helicoptered in from J.P. Morgan who stated she discovered the controls “immature and insufficient,” and regulators skewered the managers in cost for exhibiting “no sense of urgency” in fixing them. Wells had traditionally been a extremely decentralized complicated assembled from sundry mergers and acquisitions—administration used the adage “80 horses pulling the stagecoach.”
The chief danger officer was unable to impose unified requirements throughout the fiefdoms. “They had been farming out all danger administration to particular person companies,” and utilizing handbook processes that had been a decade previous, says Wells lead director Steve Black. “And so they had been in quicksand making an attempt to repair it.” The Home report refers back to the then chief danger officer as vainly “making an attempt to persuade and persuade” the buyer chief to stick to total guidelines, and getting nowhere.
The “faux accounts” catastrophe—during which congressional investigations discovered that Wells deployed a high-pressure tradition of “cross-selling” that rewarded department bankers for opening a number of accounts that clients knew nothing about—price Wells over $8 billion in fines. In its press launch, the Justice Division skewered previous administration for “full failure of management at a number of ranges” and the “staggering dimension, scope and length of Wells Fargo’s illicit conduct”; 5,000 alleged abusers had been fired from 2011 to 2016. In 2017, regulators compelled the CEO and head of the buyer financial institution to resign, and clawed again a complete of $69 million of their compensation.
Scharf gained the arrogance of regulators, partly, by making himself the level particular person at Wells. “We had a proper assembly with all three regulators as soon as a month, however I’d personally name the officers in control of all three virtually each week, usually a number of occasions. I needed them to see how severely we had been taking this, which was not the case earlier than I arrived. I additionally needed to set an instance for the opposite executives, that I’m not going to ask them to spend extra time with regulators except I did it myself.”
To implement the adjustments, Scharf recruited a crack new workforce who’d put in and labored below the sorts of controls Wells wanted. All however two of the working committee’s 15 members are Scharf hires, a lot of whom gained his belief earlier in his profession, and the pair on the highest workforce who labored at Wells when Scharf arrived now fill new roles. A key addition was COO Powell, whom Scharf labored with at Financial institution One and J.P. Morgan, and who’s a seasoned professional at putting in simply the sort of self-discipline Wells wanted. Surprisingly, Scharf named as chief danger officer not an outsider, however a Wells veteran. Derek Flowers caught the CEO’s eye for his professional work as a credit score danger supervisor in varied divisions, and he’s confirmed a whiz, says Scharf, on the company CRO job that additionally encompasses operations and compliance. Flowers reviews on to Scharf and the board’s audit committee. “The perfect executives at Wells weren’t on the prime however the mid and upper-mid degree, and we promoted a lot of them, together with Derek,” says Scharf. “And that builds confidence with the troops, as a result of they know who the nice individuals are.” Scharf additionally lavished sources on creating the intricate, intensive structure required to fulfill the consent orders, and preserve the brand new superstructure. At this time, Wells spends $2.5 billion extra a 12 months on danger administration than when Scharf took cost (that’s about 3% of whole bills). Scharf has raised the variety of danger managers stationed in enterprise models by 10,000, an addition that doubled the whole workforce monitoring credit score, operations, and compliance.
For seven years, the ceiling that restricted holdings of deposits and securities to $1.95 trillion compelled Wells to reject gigantic quantities of buyer money. “I’d estimate that we left $600 billion on the desk,” reckons Scharf. In that span, J.P. Morgan, Bank of America, and Citi have respectively grown their steadiness sheets 58%, 40%, and 34%. Consequently, web curiosity revenue at Wells, an enormous income line for banks, just about treaded water whereas that metric jumped for its rivals.
However Scharf didn’t stand nonetheless. He developed an overarching technique to develop promising franchises the place Wells had means underinvested. The concept: Increase price revenue—a class that wasn’t restricted—to offset the decline or flattening in curiosity revenues in huge swaths of the financial institution necessitated by the asset restrict.
Maintaining property fastened per the caps required some unwelcome maneuvers, explains Rivas, the company and funding banking chief at Wells who lengthy served as Scharf’s prime M&A advisor, and whom the CEO recruited from a prime job at J.P. Morgan. “Asking clients, ‘Will you please take your deposits elsewhere?’ is an unnatural factor for a financial institution to do,” declares Rivas.
Although Wells had lengthy boasted that “we’re kitchen desk, not league tables,” Scharf educated a highlight on funding banking. Shifting the C-suite from San Francisco to Manhattan helped. Most of all, the industrial financial institution—just about tied for largest within the nation with J.P. Morgan—was serving scores of firms that wanted recommendation in buying different household firms, for instance, or in elevating recent fairness or debt financing.
Then Scharf educated his sights on bank cards. “Pre-pandemic, Wells was means off base within the essential premium bank card house; they weren’t exhibiting any pulse,” says Brian Kelly, founding father of the Factors Man journey website. One downside was that Wells had poor fraud detection fashions, so it was regularly turning down transactions it ought to have safely authorised, drastically annoying particularly rich shoppers, Scharf included. “I used to be at dinner in London with my spouse and pals, and I am going to pay, and my card will get rejected,” he recollects. As well as, Wells lacked the experience to grant the high-net-worth crowd sufficiently beneficiant strains of credit score.
Scharf channeled huge investments into the beforehand undernourished division, even green-lighting the comedic advert sequence that includes Steve Martin and Martin Brief, and funding the IT upgrades that solved the credit score strains downside, in addition to discovering the analytical candy spot for accepting or declining costs. Although there have been stumbles—reminiscent of a Bilt cobranded card to pay for hire that flopped—even that gave Wells much-needed publicity to Gen Z. From 2020 to 2024 total buy volumes and card balances excellent have each doubled. “Some folks would say they’re loopy to compete with Amex and Chase, which have large expertise and interplay,” says Dimon. “However Wells has a aggressive benefit, they’ve an enormous consumer base of over 40 million clients, what I name a ‘heat market,’ so they need to.”
In the meantime, Scharf was focusing on deep cuts in spending—looking for out from his earlier expertise locations the place “two layers,” one superfluous and bureaucratic, had been allowed to coexist inside an enormous company. “We noticed it at Citigroup, on the former J.P. Morgan, at Travelers. At Wells, we had further layers, the identical work being performed in two companies that would have been centralized, together with HR, authorized, IT, and different areas,” he says.
Scharf demanded that every one high-ranking executives have a minimum of seven direct reviews, double the earlier quantity. Wells was swimming in unused actual property. In Minneapolis, Des Moines, and several other different cities, its workforce was usually unfold throughout a number of small and infrequently getting older services. From 2019 to the shut of 2024, the financial institution diminished its international footprint from 87 million sq. ft to 60.3 million, and shrank the workplace constructing depend from 650 to 400, by concentrating staff in larger, newer areas. When Scharf arrived, Wells had three-quarters of J.P. Morgan’s revenues however 6% extra staff. Underneath Scharf, Wells’ headcount has declined by nearly 25% to 210,000. He consciously downshifted in areas reminiscent of house loans, which turned much less worthwhile given larger capital necessities following the GFC, and held “reputational danger” he didn’t need ought to foreclosures spike.
Going ahead, Scharf’s holy grail is return on tangible widespread fairness or ROTCE, primarily the cents an enterprise offers shareholders for each greenback they make investments. Final 12 months, Wells hit 13.4%. That determine waxed Citigroup (7%), just about tied BofA, and fell properly wanting J.P. Morgan’s 20%. A number of years in the past, Scharf set a objective of 15% that then seemed extremely aspirational. However he’s nearly there, hitting 14.4% on common for the primary two quarters of 2025. For Scharf, getting to fifteen% is only a means station. He’s aiming to cost towards the industry-topping, J.P. Morgan–fashion summit.
The magnitude of the adjustments Scharf made turned evident in Could of this 12 months, when he received one of the vital necessary telephone calls of his life. It was a congratulatory overture from a prime Fed official whom he declines to call who delivered the information that the central financial institution would quickly be lifting the restrict on property, successfully restoring full freedom of motion to an establishment shackled for years. When the official announcement got here on June 3, the CEO and several other lieutenants gathered exterior his workplace to sip Champagne and cheer the information. The air was thick with celebration, but additionally reduction.
That’s to not say the job is completed. John McDonald, an analyst at Truist Securities, likens Wells’ subsequent act to this: “Wells needed to drop pounds, and Charlie received them on a eating regimen. Now they’re on the fitness center and have to construct muscle.”
Scharf has taken the inventory from $52 when he began to $81 as of early October. Together with robust dividends, Wells generated a 11.1% annual return since he took cost six years in the past, properly beneath J.P. Morgan’s 198.7% however virtually matching BofA (11.2%) and beating Citi (9.2%), and a beat on the KBW Financial institution Index at 10.0%.
“In the event you have a look at the place Wells was when he arrived and the place it’s now, not many individuals might have performed what he did,” says Frank Bisignano, a colleague from J.P. Morgan and former CEO of funds colossus Fiserv who’s now commissioner of the Social Safety Administration and chief govt officer of the IRS. “He was courageous to take the job. You have a look at nice coaches, they create their teaching staffs with them. That’s what Charlie did at Wells, and it’s an indication of nice management.”
Free of the worst days of the Wells saga, Scharf is palpably grateful for the moments he has along with his household, his daughter’s upcoming wedding ceremony, the weekends on Lengthy Island in Remsenburg, a bayfront village properly west of the Hamptons glamour zone, the place he seldom runs into rivals and staff on the hotspots. He unwinds by training woodworking in his store on the property, an exercise he finds “soothing.” He prides himself on fashioning raised moldings and customized bookshelves. Dimon jokes that Scharf’s in all probability the one company chieftain who unwinds in a woodshop.
However his previous mentor Dimon has excessive reward for the job Scharf has performed. “The world is his oyster now that the asset cap is lifted and Wells can as soon as once more deal with progress. Charlie did a superb job,” says this famend truth-teller. However Dimon can’t resist including one last little bit of roasting for his buddy and protégé of 30-plus years. “Although,” he says with a smile, “I in all probability would have needed to do it sooner.” Six thousand duties later, Charlie Scharf did it on his personal timeline. And the stagecoach is rolling once more.
