What's going on?

John Stumpf, the Chairman and CEO of Wells Fargo, resigned from both roles on Wednesday amidst a scandal relating to inappropriate sales tactics. Someone new will try to lead the bank back to its former status as America�s most valuable bank�

What does this mean?

Wells Fargo had previously announced that Stumpf will have $41 million of compensation �clawed back.��It�s all part of the fallout from an investigation into the bank�s sales practices, which included opening multiple accounts without clients� permission in order to make more money off of them.

The new CEO, Timothy Sloan, has been at the bank for almost three decades and was widely seen as Stumpf�s heir apparent. Questions are already being asked as to whether Sloan�s appointment marks enough of a shift for the stricken lender (i.e. perhaps it should be hiring someone from outside the company).

Why should I care?

The bigger picture: Banks love to combine the role of Chairman and CEO � expect more opposition to that setup.
Wells Fargo is getting both a new Chairman and new CEO (because Stumpf held both posts). At most other major US banks, the same person holds both roles. There was already pressure from shareholders and regulators for different people to occupy the two positions (the idea is that it would improve oversight of a bank�s activities). That pressure will likely ramp up now.

For the stock: Bank stocks in general would benefit from higher interest rates � but this controversy might hold Wells Fargo back.
If interest rates are indeed going higher (see below), then banks should benefit: they will be able to charge customers more for borrowing money. Wells Fargo, however, is losing business due to the reputational hit from the scandal (for example, some state governments have suspended their business dealings with the bank). It�s not yet clear quite how much damage to earnings the scandal will cause, but it will likely offset at least some of the benefits if interest rates do go up.