Wells Fargo general counsel Allen Parker. Courtesy photo.

In one of his first major acts after moving from general counsel to acting CEO, Allen Parker has created a new working group at Wells Fargo & Co. aimed at taking on the scandal-plagued bank's regulatory and compliance challenges.

Parker named Derek Flowers, a 21-year bank veteran who is currently its chief credit and market risk officer, to head the new “strategic execution and operations group.” Flowers will report directly to Parker. Neither Flowers nor Parker were available for comment Thursday.

In an internal memo to the management committee earlier this week, Parker announced the changes, saying, “One of our priorities is meeting and, where possible, exceeding the expectations of our regulators.”

The memo said the group would focus on “executing against our regulatory priorities and, in that connection, strengthening and driving the implementation of certain business and risk-management processes.”

Derek Flowers of Wells Fargo (Photo: Courtesy Photo)

It said Flowers would move into his new post in the coming weeks, adding, “Derek brings strong leadership and regulatory experience to this role, and we are confident that he will strengthen our capabilities and focus in this critical area.”

San Francisco-based Wells Fargo failed to answer questions about the new group Thursday, but Parker's memo said, “In the near future, we will provide more information about the transition effort, as well as plans to fill Derek's current role.”

The move is the latest in a series of personnel shakeups in an effort to restore the bank's reputation and integrity. After two years of reform efforts and billions of dollars in legal fees and penalties, the bank is still grappling with regulatory probes. It also is operating under an unprecedented growth cap imposed by the Federal Reserve Board.

Parker, formerly the presiding partner at Cravath, Swaine & Moore in New York, where he worked for 32 years, became Wells Fargo's general counsel two years ago. The former CEO, the general counsel, numerous in-house counsel and compliance personnel, several banking executives and most of the board of directors left after the first of several scandals. It involved a scheme that saw some branch employees open several million bank accounts in customers' names without their consent.

Parker's job was to rebuild the damaged legal and compliance teams. According to a 103-page progress report released in January, Parker oversaw key changes to the legal department to strengthen its control and risk management capabilities over the past two years, including:

• Consolidating overall support for consumer banking under a single senior deputy general counsel.
• Adding new deputy general counsel and repositioning existing deputy general counsel to create alignment by line of business and enterprise functional areas.
• Creating the Enterprise Risk, Regulatory & Audit Division to strengthen the legal department's support of risk management, regulatory relations and the audit functions by providing a dedicated focus for these areas.

Tim Sloan was named CEO, but after a series of more bank misconduct, Sloan departed under pressure in March and Parker was asked to temporarily fill the CEO role.

In the past two years the bank has also hired a new chief auditing officer, Julie Scammahorn, from Citigroup Inc. in February; Sarah Dahlgren, a former executive at the Federal Reserve Bank of New York, in 2018 as head of regulatory relations; a new chief risk officer, Amanda Norton, who was JPMorgan Chase & Co's chief risk officer of consumer and community banking; and a new compliance risk officer, Mike Roemer, who formerly was head of compliance at Barclays bank.

Now it adds another layer of compliance as it tries to satisfy regulators and members of Congress who are fed up with the misconduct. It has pledged to seek a new CEO from outside the bank in hopes of changing the culture.

Several news media have reported the bank is seriously considering Eileen Murray, co-CEO of the hedge fund Bridgewater Associates. If she ends up in the job, Murray would be the first female CEO of a major U.S. bank.