What's next for Wells Fargo?

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Looks like "Wall Street got something right for once," said Tim Mullaney at Market​Watch. Wells Fargo CEO John Stumpf abruptly resigned last week, forced into retirement by devastating revelations that employees secretly created some 2 million fraudulent accounts in order to meet unrealistic sales quotas. The banking giant had already fired some 5,000 workers over the scandal, but as it became clear that the malfeasance was rooted deep in Wells' corporate culture, "accountability needed to be had at the top." Finally, a banking executive is taking the fall for his company's misdeeds, said Helaine Olen in Slate. Why is this time different? JPMorgan Chase's Jamie Dimon, for instance, still has his job despite the fact that lax oversight allowed rogue traders at his bank to lose more than $6 billion during the 2012 "London Whale" debacle. But while that scandal involved byzantine financial instruments like credit-default swaps, Wells' wrongdoing felt different, partly because it directly affected ordinary consumers. "It wasn't just that Wells Fargo expressed almost breathtaking contempt for its customers; it did it in a way they could easily understand."

Even with Stumpf gone, "the pain likely isn't over" for the bank, said Christina Rexrode at The Wall Street Journal. Federal prosecutors are still weighing civil and criminal charges against Wells for its aggressive sales practices, while several state attorneys general are conducting their own investigations. Stumpf himself was stripped of $41 million in compensation before he resigned, and could stand to lose more; other Wells executives could face pay clawbacks as well. Then there are looming class-action lawsuits from both employees and investors. But overall, Wells Fargo "is in decent condition," said The Economist staff. The bank weathered the financial crisis much better than its competitors, remains profitable, and has a strong balance sheet. Even so, Wells' scandal could not have come at a worse time — in the middle of an election season marked by populist fervor. In this environment, even scandals that would once have been regarded as minor can quickly "spiral out of control."

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If only for PR purposes, "Wells Fargo needs to make a clean break with the past," said Gretchen Morgenson at The New York Times. So far, that doesn't appear to be happening. Timothy Sloan, the bank's president and former chief operating officer, is taking Stumpf's place as CEO. Shareholders can fairly ask, "Is Sloan, an almost 30-year veteran of Wells Fargo and a seasoned insider, the best executive to lead the bank out of crisis?" The answer is, probably not. Wells doesn't need small, incremental tweaks right now. It needs a "do-over to repair the damage." For now, though, let's celebrate this "all-too-rare example of corporate governance working the way it should," said James Stewart, also at the Times. Stumpf was forced out within a week of his embarrassing appearances before congressional panels, in which he laid blame for the scandal on low-level employees, instead of taking responsibility himself. "Ultimately the buck should stop with the chief executive — a simple truth that many boards often ignore." For once, "the buck stopped where it should have."