When Wells Fargo & Co. this month announced the rise of Elizabeth "Betsy" Duke to the head of its board, it marked a first in American banking and an important advance for an industry long deficient in female leaders, bankers say.
When she ascends from vice chair to chair in January of 2018, Duke will become the first woman to head the board of one of the top four U.S. commercial banks by assets, a group that also includes JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc.
Notably, barring a board leadership announcement at another bank this year, she will become only the fourth woman serving as the top director at one of the largest 100 U.S. banking companies. She stands to join a group that includes Marsha Williams at Fifth Third Bancorp, Beth Mooney at KeyCorp and Sally Steele at Community Bank System Inc., according to an S&P Global Market Intelligence analysis.
"Betsy is an incredible banker, and we will take, as a gender, every opportunity we can to celebrate successes," Howard Bancorp Inc. Chairman, President and CEO Mary Ann Scully said in an interview.
Scully said that Duke, a former Federal Reserve governor and bank executive, is eminently qualified to chair a major bank board and is a wise pick to help Wells recover from a sales scandal that emerged in 2016. The debacle, which involved employees opening phony accounts to meet lofty sales goals over several years dating to the past decade, scarred Wells' reputation, curbed revenue, inflated costs and exposed inadequacies in its oversight. Ensuing scrutiny has unearthed additional troubles, including a recent revelation that Wells wrongly charged auto loan borrowers for insurance.
Critics said that among the failings at Wells was a lack of banking experience on its board, a shortcoming that may have hurt the board's ability to identify and address in timely fashion the sales fraud. For example, the man whom Duke will replace, former General Mills executive Stephen Sanger, did not bring a banking background to Wells.
Some of Wells' most strident critics, including U.S. Sen. Elizabeth Warren and U.S. Rep. Maxine Waters, have said Duke is enmeshed in the bank's troubles. But analysts have noted that Duke joined the Wells board in 2015, long after the sales deceits began and shortly before they came to light on the national stage.
In a career that spans decades, Duke has been an executive at banks both big and small, chair of the American Bankers Association, and a Fed governor for five years in the aftermath of the 2008 financial crisis — a period of immense challenge for the industry and far-reaching change in the regulatory environment.
All of that noted, Scully and others say, Duke's rise, while a positive, exposes a broader problem for the banking industry. Scully said there are far more experienced and talented women bankers than there are women chairs and top executives. This suggests that, when banks are hiring leaders, they are often drawing from a shallow talent pool, one filled with plenty of men but few women.
"It constantly stuns me that we are where we are" in terms of so few women in top banking positions, Scully said.
Laura Lee Stewart, president and CEO of Sound Financial Bancorp Inc., echoed that sentiment in an interview.
"The progress is slower than what many of us anticipated," Stewart said. "We should be seeing more by now."
In addition to an inherent unjustness, Stewart said the inequity shortchanges banks. She said that, in the case of bank boards, many of them simply are not as good as they could be because companies are often overlooking roughly half of the workforce.
She said that, if a company is not giving full consideration to people of both genders — or for that matter candidates of all races, backgrounds and ages — it is missing out on skill, intellect and experience that would help it get better. She said change is slow because many boards and executive teams consist of older white men, and many of these companies do not have formal programs in place aimed at diversifying leadership ranks.
"So there is a dampening effect on progress," Stewart said. "Until we really focus on diversity on our boards, people making the decisions will have a natural tendency to be most comfortable with candidates that are most like themselves."
For her part, Duke told Bloomberg News that, earlier in her career, she was wary of accepting a role as a breaker of glass ceilings, including when she became the first woman chair of the ABA in 2004. But she now champions the cause of increasing women in leadership.
"I thought it would make it seem like I was only the chairwoman because they wanted the first woman — something stupid like that," Duke said. "After I got done" heading the ABA, "I realized that that was truly a mistake. It's really important to embrace being a role model of high-visibility positions for women."