Earlier this month Personal Finance growth portfolio holding Wells Fargo (WFC) agreed to pay a $185 million fine to settle serious charges. Its employees had opened bogus customer accounts to meet sales quotas, and an internal review found up to 1.5 million deposit accounts and more than 500,000 credit card accounts that it has classified as suspicious.

But the story is far from over. Some Democratic senators, with Elizabeth Warren at the helm, sent a letter to the Wells chairman asking if the bank will “claw back” senior managers’ pay. Apparently Wells has a provision to make managers pay back salary and bonuses if those managers are found of improprieties. 

Wells has taken steps to atone for its sins.  The company announced it was eliminating all product sales goals for its retail division, something it should have done a long time ago, given 5,300 employees have been fired over the past five years after being caught opening fake customer accounts. The company’s CFO, John Shrewsberry, said employees “at the lower end of the performance scale …  were apparently making bad choices to hang on to their job.” 

But while Shrewsberry pointed a finger at employees, he should have been pointing it at himself.  Cases of widespread employee malfeasance are a senior management problem: the internal conditions that created the fraud were all within the company’s ability to control, and if more than 5,000 of your employees are ripping off your customers, you either know about it, or should have.

The scale of the malfeasance was impressive, but I wasn’t surprised it happened, given how prevalent this form of compensation has become throughout the entire banking sector. I spent over half of my 30-year career working in the investment departments of several banks, every one of which pressured  their branch personnel in similar ways as Wells to sell loans, credit cards and other high margin products.

Those practices mushroomed during the Great Recession. Eight years ago demand for mortgages waned at the same time interest rates nosedived. The result was a huge drop in what had become most banks’ single biggest source of fee income—selling mortgages—and also profits evaporated from its “spread” income, or the difference between the interest rate they pay depositor the interest they rate charge for loans.

To make up for their eroding profits, many bank execs turned the screws even tighter on their already stressed out branch employees. Those employees were suddenly dealing with customers who had lost their jobs or were afraid of losing them, and so they didn’t want to take on debt in the form of a mortgage or a credit card.

Bank employees were afraid for their jobs too, and to keep them they cheated. They opened up superfluous checking, savings and debit card accounts, forging customers’ signatures and using fictitious addresses to avoid getting caught. If that sounds familiar, that’s the same type of behavior used by unscrupulous mortgage brokers in the years leading up to the housing market.

This situation isn’t unique. Lumber Liquidators was fined last year after importing massive amounts of illegal wood from the Far East. And, of course, Volkswagen rigged 11 million of their “clean diesel” cars so they’d pass emission tests, and is paying for that with $14 billion in fines and restitution.

In all these cases the senior management team either knew, or should have known, about the problem long before regulators levies severe fines and other sanctions. As for Wells Fargo, it will pay the fine and try to get the story out of the headlines (its CEO is taking the blame, but staying on because he says he’s needed to run the company) just as so many other companies have done before it. But it will take a long time to regain its reputation for having one of the shrewdest management teams in banking. Still, it’s a strong, growing bank franchise with $90 billion in revenues last year, with a nice 3.27% dividend. 

In the meantime, if shareholders overreact to this news by dumping the stock en masse then you may want to consider adding it (or adding more) to your portfolio. We’ll be following the fallout of Wells Fargo’s scandal closely in Personal Finance, and we’ll let you know if it becomes a screaming buy.