CEO John Stumpf is offered up to the Beltway gods.
By Review & Outlook
The Wall Street Journal
October 13, 2016
The political class got its second ritual sacrifice for the sins of Wells Fargo, as the bank’s chairman and CEO John Stumpf resigned Wednesday, effective immediately.
Mr. Stumpf had already forfeited $41 million in unvested equity grants as recompense for the sales tactics that caused employees to open accounts that customers hadn’t asked for. Now he’s paying with his job, as the bank tries to appease the political lords who under Dodd-Frank have become more or less co-owners of our largest banks. The politicians claim to want compensation clawbacks, but what they really want are heads on pikes.
You won’t read this elsewhere, but Mr. Stumpf has been one of the most successful American CEOs of recent times. Our colleague Dennis Berman reports that in nine years he produced some $149 billion in profits and saw an increase in market cap of $124 billion. Wells Fargo tried to turn down the government’s rescue funds during the 2008 financial panic because it didn’t need the help, only to be forced by Treasury to take the money.
Mr. Stumpf’s management failure is real in the sales fiasco, especially in not acting sooner to stop it. But he and the bank are paying a fearsome price for one mistake, showing again the accountability that exists in the private economy. The same can’t be true for the regulators at the Consumer Financial Protection Bureau who didn’t stop Wells’s problems and merely shot the wounded after they came to light. A bureaucrat’s job is forever.
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