This century has really been ‘the best of times and the worst of times’ for big businesses in this country.

There have been, by turns, unconscionable scandals (Enron, Worldcom, lest we forget), decimations in some sectors caused by the Great Recession, and oil price plummets, but also record pharmaceuticals and financial institution profits, a blossoming in tech and in executive compensation, a stock market bust, recovery and boom, and unprecedented influence in Washington born of savvy investments in both major parties.

Through it all, there’s a growing suspicion among the public that the sum of all those effects means that the economic system serves somebody else, and with both impunity and immunity from consequences. There’s a stench and a fear that ‘it’s rigged,’ as we’ve heard this year from major candidates on both ends of the political spectrum. Wells Fargo may be reaping that ill-wind.

In matters of scale, their current scandal is of only a garden-variety. The bank has been fined $185 million, but that pales in comparison to multi-billion-dollar levies against it and others in matters of drug money-laundering, rate-rigging and Big Fraud. It consists of the bank’s practice of opening low millions of new accounts in its customers’ names -- without their knowledge, and then charging fees for those accounts. The nefarious practice was/is widespread, done under internal sales pressure generated … somewhere … in the executive suite. It’s also a particularly personal violation, compared, say with the fifth bundling-and-sale of your second mortgage.

The bank has apologized and promised to stop. They claim to have cleaned-house of some 5,300 miscreant minions (‘banana!’), although their arithmetic has been called suspicious and probably needs an audit. Their CEO did the obligatory grovel before Congress – all of which is straight out of the dog-eared corporate scandal deflection playbook.

Still the hits have just kept coming at Wells Fargo. Has the public reached a tipping point of frustration with this manner of shenanigans?

Most recently, two further consequences have been imposed at the bank. First, dramatic (to the rest of us) amounts of bonus monies have been “clawed-back” by the bank’s Board from the CEO and his former deputy in charge of the guilty operations. CEO Stumpf has been docked some $41 million in stock and other compensation, and the recently departed Carrie Tolstedt lost $19 million and had her pension reduced. Lest anyone fear for her presence in the breadline, however, Fortune magazine reported earlier that she was leaving with a whopping $124.5 million from the firm.*

The State of California also announced yesterday that it will cease doing most of the people’s business with Wells Fargo for at least a year. It’s unknown how big a dent this will leave – it is probably within the realm of rounding. Mr. Stumpf is due back in DC today for another round of bi-partisan grandstanding. It is particularly unclear that it will count for more than that (see paragraph 2 – the banks have invested wisely).

Still, there appears to be growing pressure for him to resign. It’s also true that the penalty, the Board claw-back and the State activism are new and interesting. The fine comes largely from the Consumer Financial Protection Bureau, which was formed in 2010 at the urging of now-Senator Warren. The claw-back provisions are contained in the Dodd-Frank law passed at about the same time, and subject to eviscerating counter-lobbying, ever since.

The Board and the California state actions are also a hopeful sign of greater governance activity and civic activism. One analyst called the Board’s actions a kind of gradualism – a trial balloon to see if that’s going to be considered ‘enough.’ It’s also true that a really effective Board, and especially its independent directors, will focus on the 'prevention' of chicanery, and not just its 'cure.' After all, those independent members each make enough to be One Percenters on their part-time WF Board gigs, alone. 'Oversight' means real plowing, and not just closing the doors on an empty barn.

We can also hope that California’s slap will be heard elsewhere, although it may be unclear which banks are better. Kind of like your cable provider – is the dismal shade of difference worth the effort to make a change?

In the bigger picture, optimists among the public may hope for a new era with some deterrent effect, and not just a “there, but for grace” attitude among other institutions tempted to cheat and violate their customers.

The world needs its optimists – it obviously also needs its business regulators.


* Per Fortune magazine: “In the July announcement of her exit, which made no mention of the soon-to-be-settled case, Wells Fargo’s CEO John Stumpf said Tolstedt had been one of the bank’s most important leaders and “a standard-bearer of our culture” and “a champion for our customers.”” Uh-oh!