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Wells Fargo names BNY Mellon chief Scharf president/CEO

Wells Fargo & Co. named Charles Scharf its president and CEO, effective Oct. 21.

Scharf was the chairman and CEO of Bank of New York Mellon Corp.

Wells Fargo had been operating without a permanent CEO since March 28, when Timothy Sloan stepped down following withering criticism from lawmakers and regulators over his leadership and the bank's efforts to recover from its consumer scandals.

At the time, Sloan said the decision was his but that "the focus on me has become a distraction that impacts our ability to successfully move Wells Fargo forward."

The search for a new CEO was conducted by the bank's independent directors, who were tasked with finding external candidates. Wells Fargo declined to provide updates on the process, but rumors swirled and media outlets underscored the scale of the challenges awaiting the bank's next leader and reported that prospects like former U.S. Bancorp CEO Richard Davis rebuffed overtures from the company.

Wells Fargo has been struggling to restore its reputation and overhaul its compliance, risk and audit processes since September 2016, when it was fined $185 million because employees had opened millions of fake accounts to meet aggressive sales targets.

Sloan's predecessor, John Stumpf, left the company about a month later amid a string of negative headlines punctuated by a contentious appearance on Capitol Hill.

Wells Fargo's troubles have continued to flare up and the company remains under regulatory scrutiny. In February 2018, Wells Fargo entered into a consent decree with the Federal Reserve that caps its size at the level of assets it held at year-end 2017 while the bank works on its overhaul. Just a few months later, it was fined $1 billion over mortgage rate-lock fees and "force-placed" auto insurance.

As interim CEO, C. Allen Parker has said that he had been focused on strengthening customer relationships, bolstering employee morale and meeting regulatory expectations. Parker joined Wells Fargo in 2017 as general counsel after a long run as a corporate lawyer at Cravath Swaine & Moore LLP, a background that some analysts believe positioned him well to manage the bank's cleanup.

But the company had acknowledged some degree of strategic drift in the absence of a permanent CEO, saying that the outlook for 2020 and beyond is contingent on decisions that its new leader would make. "Our strategic and financial targets beyond 2019 will be established once we have a permanent CEO in place," Parker said on the company's July 16 earnings call.

Even with a permanent CEO, Wells Fargo is likely to operate under heightened regulatory and political scrutiny for some time. Speaking on July 31 after the central bank's policymaking meeting that month, Fed Chairman Jerome Powell echoed remarks he made days before Sloan's departure was announced.

Wells Fargo has "deep-seated issues," Powell said. "They will be under the growth cap, our enforcement action, until the [Fed] votes to lift it, and that's not something we're considering doing right now."