When an aircraft falls behind the power curve, it can strain with all its might to break out of the plummet, but ultimately its nose ends up buried in the Earth’s surface.

So it was with Wells Fargo Chairman and CEO John Stumpf, who fell behind the crisis management power curve and found his leadership of America’s largest bank crashing to Earth way ahead of schedule.
When a corporation suddenly faces a public crisis of any kind – financial scandal, product recall, executive misbehavior, etc – the big question is always, “How strongly do we react?” It’s often a tough call that has to be made under extreme time pressure, without all the essential facts fully known. Overreact, and you can make the problem bigger than it actually is. But underreact, and you can find yourself in an irreversible nosedive.

Three times since the Wells Fargo false-account scandal became public, Stumpf underestimated the gravity of the situation, and each time his responses have been only strong enough to make things worse.

It started first with the original announcement. On September 8, Wells Fargo issued a clipped and cryptic 378-word message announcing it had come to a settlement with authorities requiring it to pay $185 million.

Given the bank’s massive scale, Stumpf and his team deemed that penalty as “immaterial” from a technical accounting standpoint. And so, the internal logic must have been, ‘It’s a relatively small potatoes. So we’ll play it down, and it will pass.’

The only problem for Wells Fargo was that, within hours of the announcement, other facts quickly emerged. The scandal had been going on for five years. Two million customers accounts had been affected. More than 5,300 employees had been fired. No senior executives had been terminated. In fact, the executive who ran the retail unit where the infractions had occurred had been scheduled for a December 31 “retirement,” complete with a $128 million send-off package.

By underplaying the story, Wells Fargo actually created more interest in it, and the media heat intensified.

How could Stumpf and his team have so misread the severity of the situation?

Perhaps self-delusion? For years, Wells had cultivated its image as a virtuous “community banker.” Nobody seemed to buy into that image more than Stumpf himself, who in recent years seemed to embrace every opportunity to extoll the virtues of his company’s culture and values. Living in such a self-congratulatory internal bubble during good times tends to make one tin-eared and tone-deaf in the external world when times turn tough.

Stumpf’s second underestimation came on September 13, a day after the New York Time’s Andrew Ross Sorkin dedicated his column to “pervasive sham deals at Wells Fargo,” and a day before the Wells Fargo boss was scheduled to appear at an ominous Senate hearing.

With the public scrutiny heading toward a boil, Stumpf waded through a round of media interviews with disastrous results. Stumpf gamely bungled every attempt CNBC’s Jim Cramer gave him to save himself, and the Wall Street Journal characterized the CEO as blaming the fired employees.

The next day, Stumpf was filleted and flambéed by U.S. Sen. Elisabeth Warren, retreating into message points distressingly disconnected from the questions.

Disappointed by his appearance with Cramer, major shareholder Warren Buffet told Stumpf that he had underestimated the significance of the scandal, and Stumpf replied that he no longer did.

And yet, that’s when Stumpf’s third under-estimation came.

Seemingly chastened, and knowing that he would be appearing before an even more hostile hearing in the House of Representative less than two weeks later, Stumpf and his team put together a short list of more dramatic actions. Those actions included the “claw back” of $41 million of his own compensation. The only problem is that several journalists quickly identified that nothing was actually being clawed back, but instead the $41 million would be eliminated from future compensation.

Once again, it was too little too late, something a genuinely rattled Stumpf seemed to sense during his House testimony.

So, if Stumpf had taken those elevated actions right out of the gate on September 8, would he have stayed ahead of the power curve enough to keep his job?

Only the Wells Fargo board can answer that question, because they were the ones who on Wednesday decided to accept his “retirement.”

The timing of that decision may have come too soon. The standard CEO scapegoat formula is to have the old guy take as much of the heat and blame as possible before bringing in the new guy, whose entrance will be seen a symbolic pivot to a reformation chapter. With Well Fargo’s quarterly earnings release and investor conference call scheduled for tomorrow, the current wave of heat is far from over.

And, oh, the board’s choice of “new” guy – long-time Wells Fargo COO Tim Sloan — is not exactly being viewed as change from the leadership that got Wells Fargo behind the crisis management power curve in the first place.

Paul Pendergrass is an independent communications advisor and speechwriter who writes on business, leadership and communication.