In a sudden, stunning move, Wells Fargo chairman and chief executive John Stumpf resigned effectively immediately on Wednesday as the bank struggles to manage the fallout from a scandal over the creation of phony accounts.
The scandal, revealed in early September when the bank agreed to pay a multimillion dollar fine to federal, state and local authorities, involved the creation of thousands of fake customer accounts in order to meet sales targets. More than 5,000 low-level employees were fired in the wake of that revelation.
Despite the groundswell of public opprobrium, the bank’s internal investigation has not concluded and there was little evidence that Wells Fargo’s board was considering terminating Stumpf. However, members of Congress had savaged Stumpf during a series of appearances before Congressional committees in recent weeks. His testimony was widely panned and politicians in both parties turned Stumpf and Wells Fargo into examples of corporate greed.
Stumpf’s resignation marks one of the few times since the global financial crisis of 2008 that a bank executive has been felled by problems within their organization. Before Wells Fargo was hit with the phony account scandal, Stumpf had been praised for successfully growing Wells Fargo, supervising a merger with Wachovia, and surviving the financial crisis virtually unscathed.
While he is leaving a lucrative position, Stumpf may not take a major financial hit. According to an analysis conducted for the New York Times, Stumpf could leave the bank with a $20 million pension, $4.3 million in deferred compensation, and bank stock worth more than $100 million.
However, even that might not be safe. Senator Elizabeth Warren (D-Mass.), a vocal critic of the banking industry and Stump’s lead tormentor on Capitol Hill, called Thursday for the federal government to sue the bank in an attempt to claw back Stumpf’s pay. In a tweet, she called for him to “return every nickel he made.”