How many of us were really shocked when the nation’s largest bank, Wells Fargo, was found to be brazenly cheating its customers?
It seems that every week another corporation is revealed to have engaged in unethical or criminal behavior.
Defrauding and endangering customers, despoiling the common environment, false advertising and manipulating markets are among the transgressions that we see over and over again from corporations whose only moral imperative is profit.
It wasn’t enough for Wells Fargo to be the biggest bank in America with enormous annual profits; it had to steal from its own customers.
In a crassly sordid scam, it established new accounts that customers had not authorized, and then siphoned funds from the customers’ existing accounts to pay the fees it charged on the unauthorized accounts.
This fraud was not isolated to a limited number of branches but was widespread throughout the company — an indication that it was a top-down directed practice. The company was fined $185 million and required to refund all its cheated customers — but no one at Wells Fargo has been prosecuted for any crime. Yet.
If corporations are people, as Mitt Romney says, who goes to jail when the “corporate-person” commits a grievous crime?
Carrie Tolstedt, the bank executive who headed the unit that concocted and conducted the massive customer fraud, is leaving Wells Fargo this year with a $125 million retirement package. I guess that will teach corporate executives that crime doesn’t pay.
Although the damage to its reputation has driven Wells Fargo’s stock price down enough to push it out of first place among the nation’s largest banks, a $185 million fine against its nearly $23 billion annual profit is like a flea bite on an elephant’s ass.
Meanwhile, Wells Fargo is mounting a public relations campaign of contrition to rehabilitate its image. They are always so sorry — after they get caught.
While we have seen the tobacco industry, the auto industry, the oil industry and now, we learn, the sugar industry misrepresent their products and withhold information that would reveal the danger of those products, unscrupulous behavior is not limited to a few big companies.
It is all too common in our treacherous economic jungle where the natives must always be wary of lurking rapacious predators.
Right now you can bet that there are companies engaging in some kind of unethical exploitation that will hurt thousands of people. Eventually, they may get caught, but that possibility has not deterred continued depredations in the jungle because the consequences just aren’t severe enough.
American justice is the best money can buy. So, while our prisons are crowded with people who used banned drugs but harmed no one, we allow corporate criminals who harmed multitudes of people to not only go unpunished but also to keep the profits of their crimes.
Why is it that people who rob a bank go to jail, but bankers who steal from people do not?
Regulatory agencies can levy fines but cannot prosecute the reprobates responsible for corporate criminal behavior. Federal and state prosecutors, however, can and should.
Maybe the money from the regulatory fines should be given to prosecutors to cover the costs of investigating and prosecuting the perpetrators of criminal behavior in the fined corporations.
Wells Fargo’s top executives are blaming the account scamming on “lower-level” employees and the bank reports that, since 2011, more than 5,000 of them have been fired for improper sales practices.
If the firings began in 2011 and continued thereafter, some executives should have known there was an ongoing problem. It is likely that some executives not only knew about the scam, but also allowed, and possibly encouraged it.
In American corporate capitalism, executives up and down the food chain are paid generously. Even, Tolsted’s annual salary as a unit executive was $1.7 million.
Typically, much of executive compensation — as well as the measure of executive performance — are tied to the price of the company’s stock. This creates a culture of “short-termism” in which annual, even quarterly, earnings goals must be reached or exceeded to drive up the stock price — no matter what.
It’s not hard to understand how such a culture can and does compromise ethics.
Just about everyone wants to be rich in America. It provides the only real protection in an economic jungle in which predators go unpunished and justice is a commodity. Until those responsible for corporate criminal behavior are held accountable and brought to justice, not many of us are safe.
However, we don’t need to add to our burgeoning prison population. The ideal punishment for criminal greed is economic proscription.
Depending on the scope and severity of the crime, corporate criminals should be stripped of some or all of their wealth and prevented from being paid more than the minimum wage for some period of time.
Crime should not pay.
— Randy Alcorn is a Santa Barbara political observer. Contact him at randyalcorn@cox.net, or click here to read previous columns. The opinions expressed are his own.