The Board of Wells Fargo recently announced it is clawing back a whopping $60 million in compensation from two top executives. They were penalized for their oversight (or lack thereof) of employees who, in an effort to hit sales goals, opened more than 2 million deposit and credit card accounts that consumers may not have authorized. The clawback includes $41 million in unvested pay from Chair and CEO John Stumpf, representing 25% of his stock awards over a 35-year career at the bank. He will also forfeit his 2016 pay and bonus pending a Board investigation of the scandal. Ouch!

Compensation clawbacks have actually been around for awhile. The idea is to align executives’ financial incentives with the long-term interests of their companies. By putting some portion of their bonus pay at risk for a period of time, clawbacks theoretically force executives and other key employees to think through the long-term consequences of their actions.

After the Enron and WorldCom accounting scandals in the early 2000’s, Congress authorized the Securities and Exchange Commission to recoup compensation when executives were paid bonuses based on books that later turned out to be cooked, but this authority was rarely used. However, the idea took on new relevance for banks after the 2008 financial crisis, when it became clear that front-loaded compensation systems were key drivers of the pervasive misbehavior that led to the subprime debacle. Financial “innovations” around mortgage securitizations and derivatives dealings provided powerful financial incentives for certain industry players to take outsized risks, assuming that others – borrowers, investors, even the firms they worked for – would ultimately be the ones holding the bag.

Mortgage originators were paid large fees to generate high risk, high interest rate mortgages which they would sell to big bank “securitizers” who would package them up into mortgage-backed securities and sell them to investors. Similarly, securitizers would be paid large, upfront fees to create the securitizations, leaving investors to take the risk of mortgage defaults later on. Then many of those same firms would sell “credit default protection” to investors of high risk mortgage securities – a kind of insurance policy against losses from mortgage defaults. Financial firms would pay their own derivatives dealers nice fat fees to originate these transactions with little scrutiny as to what would happen if the firm actually had to pay on those deals should the mortgage market turn south, which of course, it did.

Read more: How Wells Fargo’s Accounts Scandal Make JPMorgan Look Good

In response, in 2010, the Federal Reserve Board issued compensation guidelines which nudged most of the big banks to revamp their compensation policies to require that at least half of bonuses paid to top executives be deferred for a three-year period, subject to forfeiture if they took imprudent risks which caused losses later on. Many banks also included “clawback” provisions enabling boards to recoup even compensation that was past the deferral period and had already vested. (Technically, the Wells’ boards’ action is a forfeiture, not a clawback, in regulatory parlance, as it applies only to unvested compensation.) Then in 2011, regulators proposed for comment compensation rules mandated by the Dodd-Frank financial reform law. However, for the most part, they mirrored industry practice of requiring a 50% deferral of bonus pay for three years. The rules proved controversial, with reform advocates attacking them as too weak, and industry arguing they were unnecessary, so in typical Washington fashion, they sat on the shelf for five years.

Last summer, regulators finally decided to re-propose strengthened rules. The new proposals extend the deferral period to 4 years for the largest banks, and require that 60% of bonus pay be deferred. They would also add a requirement that financial institutions have the ability to clawback even vested compensation for as long as seven years.

This sounds punitive, but in reality, forfeiture and clawback provisions are only as tough as the likelihood that they will be used. They have been a standard part of most big banks’ compensation policies since 2010, even while bank boards have been reluctant to invoke them. The notable exception is JPMorgan Chase, which recouped $100 million of compensation from employees found culpable in the London Whale fiasco. (JPM’s Chair and CEO, Jamie Dimon, was not subject to clawback but he did take a one-year, 50% pay cut.) One hundred million sounds like a lot, but was only pittance of the $6 billion in losses suffered by Chase.

In contrast, consumer losses caused by Wells’ phony accounts are tagged at less than $5 million, according to the order issued by Consumer Financial Protection Bureau, hardly a captive regulator. Wells was also whacked with $185 million in government fines, not a large sum for a bank that earned $5.6 billion last quarter. The most damage was caused by market reaction to the scandal, culminating in a loss of over $20 billion in market capitalization as of the end of last week. To be sure, management lapses in setting and overseeing sales targets led to severe breaches of customer trust, with major reputational damage to this iconic bank. On the other hand, it’s all relative, as they say, and this latest scandal seems like a bit of a tadpole compared to the London Whale losses, and a single plankton in the ocean of wrongdoing that led to trillions of losses during the financial crisis.

It’s good that the Wells Board has shown a willingness to enforce its compensation policies for executives with vigor. Yet it was slow to do so. The bank initially blamed the scandal on low-level employees, and imposed executive clawbacks only when political leaders started calling for senior management heads. One wonders how much of the decision was driven by a desire to punish poor risk management, and how much by a desire to serve up some political scapegoats. It was Wells’ misfortune for the scandal to emerge so close to the elections, making it an easy political target among voters still angry over the 2008/2009 bailouts and lack of accountability for banks responsible for the crisis. Ironically, Wells was not one of the banks which got into trouble during the financial crisis. Perhaps it got a little overconfident in its handling of the current scandal.

Clawbacks can be an effective risk management tool if used fairly and consistently to address short-sighted executive behavior that places a firm at risk. But the Wells Board arguably did too much, too late. If bank boards pull clawbacks out of their hip pocket only when politically expedient, that will undermine their effectiveness as a risk management tool, truly a horror story for good bank governance.

Sheila Bair is the President of Washington College. Her previous positions include Chair of the FDIC, Assistant Secretary of the Treasury, Senior Vice President of the NYSE, and Dean’s Professor of Regulatory Policy at the University of Massachusetts. The views expressed are her own.