Elizabeth Warren got her auto-da-fe this week, as the CEO of Wells Fargo appeared before a Senate Committee to answer questions about the bank’s cross-selling scandal.
Earlier this month, the bank agreed to pay $185 million to federal regulators and the city of Los Angeles after it came to light that thousands of workers had opened fraudulent accounts in order to earn pay rewards under Wells Fargo’s ambitious employee incentive program.
Many of the phony accounts were opened in the names of actual customers.
Sen. Warren, the progressive crusader from Massachusetts, made the most of her opportunity, calling Wells boss John Stumpf “gutless” and urging him to resign.
Whether Mr. Stumpf falls on his sword remains to be seen. Clearly the financial institution’s management team failed miserably on a number of levels and deserves to be held accountable.
But amid all the hyperventilating, let’s remember that this “massive fraud” didn’t really benefit the bank. As the Wall Street Journal’s Holman Jenkins pointed out this week, “Wells Fargo bore the personnel and paperwork cost of opening the account and then the personnel and paperwork costs of closing it. The employee got a paycheck, possibly a bonus. Wells Fargo got nothing but additional costs. … Wells Fargo was defrauding itself.”
If any customers were injured by the behavior of Wells employees — perhaps through lower credit ratings, identity theft and the like — they deserve to be duly compensated.
Meanwhile, the show on Capitol Hill made for wonderful sound bites, but not much else.