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The Chairman and CEO of Wells Fargo (WFC 0.42%), John Stumpf, was lambasted on Capital Hill this week after senators learned that the nation's third biggest bank by assets defrauded potentially millions of its customers over the past five years.

Nothing got members of the Senate Banking Committee more riled up during Stumpf's testimony on Tuesday than his refusal to commit to cutting his compensation or that of Carrie Tolstedt, who managed the unit where the fraud occurred.

Senators were none too pleased

Here's an exchange between Senator Elizabeth Warren and Stumpf:

Warren: Since this massive years-long scam came to light, you have said repeatedly "I am accountable," but what have you actually done to hold yourself accountable? Have you resigned?

Stumpf: No, I've not.

Warren: Have you returned one nickel of the millions that you earned while this scam was going on?

Stumpf: The board will take care of that.

Warren: I will take that as a "no."

This sounds bad. After all, Stumpf earns upwards of $20 million a year, the most of any big banker over the past half-decade. That's more than enough to expect near-perfection from his performance.

Stumpf also declined to say whether the bank would claw back any of Tolstedt's roughly $100 million (give or take a few million, but who's counting?) in stock and options that she accumulated through her time at the bank and is set to abscond with when she retires later this year.

Adding insult to injury, Stumpf has laid blame for the bank's scandal at the feet of its lowest-paid employees, the tellers and personal bankers in its branches -- though Stumpf calls them "stores" to reinforce Wells Fargo's aggressive sales culture. These are people who perpetrated the fraud, but seem to have done so either at the behest of their managers or to reach unreasonable sales quotas to avoid being fired.

Meanwhile, Stumpf publicly lauded Tolstedt's contributions to the bank when her pending departure was announced earlier this year. He called her a "standard-bearer of our culture," and said that she was a "champion for our customers."

Horrible optics

Those statements may be true, but to your average American the situation seems incredibly unfair. It confirms every stereotype we have of greedy, fat-cat bankers. And at the very least, the choice of words was odd, given what happened under her watch.

"Evidently, your definition of 'accountable' is to push the blame to your low-level employees who don't have the money for a fancy PR firm to defend themselves," said Warren. "It's gutless leadership."

As harsh as Warren was, it's hard to disagree with her.

Though, to be fair, Stumpf went on to make a valid point. His explanation was that he neither sat on the compensation committee of Wells Fargo's board, nor did he want to prejudice the decision of the committee's members by offering a public comment.

That makes sense. I also think it's safe to assume that the board will in fact do something about Stumpf's and Tolstedt's compensation packages. It has to. There is no way around it. The reputational damage of doing nothing is too great.

But either way, there's no question that Stumpf's response to all of this has only made things worse for Wells Fargo.