Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

Senator Elizabeth Warren's plea to the Federal Reserve to remove a dozen Wells Fargo & Co. directors may not find a receptive audience. Regardless, some of the lender's directors should heed her call on their own. 

In April, 12 directors who oversaw Wells Fargo's business during the fake accounts scandal somehow emerged from the annual general meeting intact. As I warned, it was more of a narrow escape than a narrow victory. Now, barely two months later, Ms. Warren is urging Fed Chair Janet Yellen to use the tools bestowed upon her by Congress to show them the exit. 

The fallout from Wells Fargo's retail sales practices scandal has held back its shares since November's election, while rivals have rallied
Source: Bloomberg

Ms. Warren isn't merely grandstanding. The scandal shone a spotlight on inadequate risk management practices, which haven't gone completely unpunished: Excluding withheld executive compensation, settlements and fines now add up to roughly $330 million. Even agencies have felt the brunt of the scandal: Wells Fargo's primary banking regulator, the Office of the Comptroller of the Currency, removed its most senior bank examiner.

As far as the Fed is concerned, even if the fake-account spree at Wells Fargo had gone unchecked longer, it most likely would not have threatened the bank's survival or the larger financial system. So while I'm not excusing the board's accountability or the scandal as an issue, the Fed has better ways to spend its time. It must develop positions in response to the many proposals in last week's Treasury report that lay the groundwork for agencies to amend bank regulation without requiring legislative action. Signs point to there being at least some action on the Fed's part, considering Yellen's statement last week that she was sympathetic to Treasury's objective to reduce the regulatory burden without compromising safety and soundness or creating systemic risk. 

Still, Ms. Warren's salvo raises the possibility that come June 28, when the results of the qualitative section of the Fed's annual stress tests are released, Wells Fargo may be the only bank to receive a failing grade, which would squash its chances of a delivering a higher payout to shareholders.

Time to Say Goodbye?
Wells Fargo's shareholder voting showed a level of dissatisfaction with the bank's directors who were present during the fake-accounts scandal
Source: Wells Fargo

Wells Fargo could help head off that outcome by swiftly improving the perception of its corporate governance. While the departure of the whole dozen is a stretch, two to six directors -- or those that had 34 percent to 47 percent of shareholders vote against them, including Chairman Stephen Sanger -- should step down. And it wouldn't necessarily just be falling on their swords in service of the bank. Outright rejection by shareholders at next year's meeting would tarnish their own records and make them less appealing as candidates for other boards in the future. 

Here are the 2016 payments for Wells Fargo's directors
Source: Company filing
Note: Enrique Hernandez, the director who garnered the least shareholder approval, is chair of two committees and entitled to $65,000 in additional compensation above base.

Such resignations most likely wouldn't stop exacerbated coverage of other allegations -- such as unauthorized mortgage modifications -- that come Wells Fargo's way but have little effect on its shares. But it would build goodwill among shareholders, consumers and politicians like Ms. Warren, who as a Senate Democrat has some power to halt the regulation changes that do require congressional approval. 

The Fed has said it'll respond to Ms. Warren's letter. Pre-emptive action from Wells Fargo and the departures of at least some of its directors could help it get out in front of any damaging action. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Gillian Tan in New York at

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Daniel Niemi at