It took a fraud as simple as Wells Fargo’s to bring down the CEO of a big US bank

It took a fraud as simple as Wells Fargo’s to bring down the CEO of a big US bank

In retrospect, it seems obvious that John Stumpf wouldn't keep his job.

The Wells Fargo CEO retired yesterday (Oct. 12), capping a brutal five weeks that began with the revelation that thousands of the bank's employees were misusing customer information to open accounts they never asked for. The fallout included two punishing hearings before Congress and an embarrassing report indicating the fraud started as early as 2005.

Whether Stumpf jumped or was pushed out by the board, it now seems clear the company is eager to turn the page, just in time for its third-quarter earnings release, which is scheduled for Oct. 14.

But it wasn't long ago that Stumpf appeared safe. He was chairman of the board, he had the backing of investors including Warren Buffett, and significantly, he delivered a 68% total return to shareholders over the course of his tenure—not bad considering he was steering Wells Fargo through the financial crisis or the aftermath for most of the nine years he led the company. And he wasn't just another banking chief, he was 2015's CEO of the Year, according to Morningstar (which might now be having some second thoughts).

I was so confident that he would withstand the onslaught, that I publicly predicted as much. I figured the company would accept its $185 million fine—a pittance for a bank with $86 billion in annual revenue—and accept Stumpf's tongue-lashing by Congress as just another cost of doing business.

Here's what I didn't fully appreciate:

This fraud was different. Unlike previous banking scandals, Wells Fargo's crimes were easily understood—and the targets of the malfeasance were ordinary banking customers. This scandal didn't involve exotic financial instruments like synthetic credit default swaps, and the victims weren't faceless institutional investors, but our neighbors.

It couldn't be easily explained away. JPMorgan Chase CEO Jamie Dimon was able to evade more serious consequences over the the so-called London Whale trading scandal because he could blame a flawed hedging strategy and the bad actions of a few traders. It was much harder for Wells Fargo to dismiss its problems as limited in scope after it fired 5,300 employees, and with so much of the blame aimed directly at the bank's ruthless sales culture.

Occasionally the system works. It's easy to become jaded  after years of watching CEOs and other senior executives evade responsibility for their actions. The biggest US bankspaid more than $100 billion in fines for their involvement in the mortgage crisis, without a single CEO of these institutions losing his job over it. Yet in this case, the mounting pressure from Congress, the media, and the bank's falling share price was enough to trigger Stumpf's exit.

It could be that the Wells Fargo scandal presented a unique set of circumstances, and so is unlikely to repeated. Or perhaps it's the dawn of a new era of corporate responsibility. But I'm not making any predictions.