While what Wells Fargo did was “serious,” former FDIC Chair Sheila Bair told CNBC on Wednesday she doesn’t think the bank’s CEO, John Stumpf, should resign.
Stumpf has been under fire since Wells Fargo was fined for opening unauthorized customer accounts.
“It was bad what happened but there are a lot of good people at Wells Fargo. It’s a good franchise. It’s a valuable franchise,” Bair said in an interview with “Closing Bell.”
“So I think you have to take all of it in the mix.”
Wells Fargo said Tuesday that Stumpf will forfeit about $41 million in unvested equity and temporarily forgo his salary. On Wednesday, the state of California announced it was dropping the bank as its bond underwriter and broker-dealer. The sanctions will remain in place for a year.
And on Thursday, Stumpf is expected on Capitol Hill again, this timetestifying in front of the House Financial Services Committee.
“I do think there is some pent-up anger and I think it’s coming to roost on Wells Fargo,” Bair said.
While there was underreaction on the part of regulators at first, “now you are really seeing the pendulum swinging the other way,” she added.
That said, Bair doesn’t think the Wells Fargo scandal is in the same league as the conduct that brought about the subprime crisis.
“I don’t even think it is in ‘London Whale’ territory,” she said, referring to trades that lost JPMorgan Chase about $6 billion.
However, one of the reasons there is so much outrage over the Wells Fargo scandal is probably because people can understand it, while they couldn’t comprehend mortgage-backed securities, she noted.