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Recently, much has been written about the Wells Fargo scandal where, to meet aggressive sales quotas, the bank charged unwitting customers $1.5 million in fees for accounts they didn’t know they opened. They made 565,000 false credit card applications, sometimes closing the accounts as quickly as they were given credit for opening them. This misconduct stretches back at least to 2005. 

As a Wells Fargo checking account holder, I am particularly interested in how the scandal unfolds. 

In December 2013, the Los Angeles Time reported about the practice, employees filed individual lawsuits about the practice, as early as 2005 employees within the bank complained about the practice, and in 2011 — in at least two cases — employees wrote letters to John Stumpf, Chairman of the Board and CEO about the practice. Yet, it wasn't until 2013, that Wells Fargo realized that it had a big problem. 

Wells Fargo & Company, headquartered in San Francisco, is the world's second largest bank by market capitalization and the third largest bank in the U.S. by assets. John Stumpf is the Chairman of the Board, Chief Executive Officer, and President. 

In the wake of this scandal, Wells Fargo fired 5,300 low-level managers and employees for their involvement in the scandal. 

The bank agreed to pay full restitution to all victims and a $100 million fine to the Consumer Financial Protection Bureau's civil penalty fund — the largest in the regulator's five-year operating history. Wells Fargo will also pay a separate $35 million penalty to the Office of the Comptroller of the Currency, and an additional $50 million to the city and county of Los Angeles, who had filed a civil suit accusing the bank of violating California unfair competition laws. Finally, the bank said it had made provisions to include an additional $5 million in customer remediation. 

So far, Stumpf has got off largely scot free. He "retired" effectively immediately and will forfeit about $41 million in unvested equity but will receive $134 million in stock and retirement benefits or $3.6 million per year if he lives to 100 before investment income or inflation are taken into account. Carrie Tolstedt, the head of the division where the fake accounts were created, retired with $124 million in stocks and options.  

Stumpf was called to testify before the Senate Banking Committee and suffered humiliation at the hands of Senator Elizabeth Warren (D-MA) and others who scolded him for failing to stop the problem. Warren, in an 18-minute tirade, demanded to know whether he had or planned to pay back his CEO-grade compensation or resign. Stumpf sheepishly deferred that decision to the board he sits on and chairs. 

Unfortunately, the Senate Banking Committee doesn't have the authority to punish Wells Fargo or Stumpf or demand account holders be compensated or executives fired. However, Warren's tirade and Stumpf's testimony went off C-Span 2 to the internet and social media. The public shaming got more than 11 million views and almost 200,000 shares.  

Hopefully, the Senate Banking Committee's hearing will persuade the Justice Department to prosecute senior Wells Fargo executives for fraud. Supposedly, the Justice Department has issued subpoenas to Wells Fargo over the scandal. I am not optimistic that criminal proceedings will ever be brought against Stumpf or other Wells Fargo senior executives. 

As of now, we have another case of wide-spread fraud where the little fraudsters get fired while the big fraudsters retire with nice pensions and benefits. Who said misconduct doesn't pay for those at the top of the food chain.