How Elizabeth Warren Took Down the CEO of Wells Fargo, and Why It Matters

And in a vacuum, you're right. It would be somewhat unfair to drop the hammer, out of nowhere, on some unsuspecting CEO who just did "business as usual".

But that's no excuse; it just means we need to create a culture where this kind of thing becomes increasingly unacceptable, so that in the future executives will know what's expecting of them, and what the consequences can be.

The "unintended" consequences of unrealistic goal-setting should be patently obvious to anyone who's made it that far in business, and if it isn't, we should make it clear that it's something these people need to start thinking about.

In the case of Wells Fargo, this went on for a LONG time, was well-known, frequently reported on, and had a number of whistleblowers.

The CEO can't know what every last person in the organization is doing, but they should be incented to make it their business to a culture in place that doesn't permit this, nor the blacklisting of whistleblowers.

Fine. Then the company should get the "death penalty" and be liquidated.

Especially for something like the banking sector where the federal government could replace a bank almost instantaneously, the "death penalty" should get dropped on companies that engage in malfeasance.

The theory that the incentive structure discourages that sort of honest effort is much more plausible. The correct response, if that's what's going on, is to change the incentive structure. Prison being what it is, I'd far prefer a way to do that without sending anyone there, but there does need to be some kind of consequence.

The reward structure is a little one-sided:

* Things go well, CEO makes a lot of money and stays.

* Things don't go well, CEO makes a lot of money and leaves.

Nothing personal because I'm sure you didn't intend to make things worse for everyone, but your attitude is exactly what's wrong with the US and with capitalism in general - the notion that once an organization is sufficiently large that it becomes hard to trace a chain of liability, then the liability must somehow evaporate and can't be assigned to any individual parties, but must be severally absorbed by the shareholders. Oh, but the shareholders think they don't bear any moral responsibility because it's an agency problem, they only vote on the candidates that the Board of Directors offer them for senior offices. Oh, but the board of directors can't be responsible because they're not involved in the day-to-day running of the bank...and so on.

If corporate status is no more than a means by which to redistribute legal liability so thinly that none of it can accrue to any one individual, then the notion of corporate personhood is broken. I would remind you that the whole reason personhood exists in the first place is to make some sort of accountability possible, otherwise it would be virtually impossible to sue any officers of a company for lack of knowing who engineered a given policy that might form the basis of a legal complaint.

I suppose just making the fines high enough to actually punish the company should be enough.

The ceo PERSONALLY made more money during the scam than entire bank was fined. really epic stuff here, I mean, Really, way to dish out the pain!

But this is criminal identity theft. all of us would expect real consequences for that kind of activity.

They can compel him to answer questions, and those answer can then be used by prosecutors.

Here is my problem with banking, if naive, please inform me: Banking should be treated like any other base infrastructure. Financial infrastructure is critical. It is not ok for the foundation of modern commerce and civilization to be controlled by so few. We need to revamp our financial situation. period.

http://www.motherjones.com/files/images/big-bank-theory-char...

40% of the internet hitting Bing would potentially overwhelm it. Keep in mind the subprime mortgage crisis was several banks. Add microsoft and google, the world would panic.

Facebook sees 1/3 traffic of google. Just like a run on banks, people desperate for info would prob level news sites maybe even FB.

Consider that outside of content/services we have providers. Verizon down. At&t down. Overwhelm the other towers or broadband failure.

Leaving aside how disgusting it is that these are actively encouraged monopolies and kill innovation & competition, it is dangerous.

1% of Germany lost internet TODAY. Deutsche telkom hit with ddos. 5 Banks in Russia 2 weeks ago. Oct 21 we all remember what happened to dyn.

This isn't even hypothetical, literally getting worse daily.

Then again, the establishment Republicans would probably be much more comfortable with Pence in the driver's seat, so who knows?

> nobody (in) civilization has really ever lived under what is technically a free market.

So, we do or we don't?

Just look at the ridiculous situation with patents, trademarks and copyrights. All of them have long outgrown their original intention and has been so amplified and extended that they can be used to very effectively kill all smaller competition and milk consumers dry.

The argument that government is horrible has been used effectively again and again to make government horrible. Is has been stripped of cash to work effectively and become completely dependent on largess from the private enterprise to function. That attracts the most rotten people as politicians, thus ensuring that government never looks good. The last thing these people want is a well functioning government.

On the other hand, a lack of enforcement against fraud and deception can also ruin a market. For a good example of this, American consumers do not have to check for counterfeit rice, while Chinese consumers do.

Nope, since they have a mandatory binding arbitration clause. See http://www.nytimes.com/2016/11/24/business/wells-fargo-asks-....

You either aren't familiar with what the colloquialism "easy money" means or you are really underestimating the difficultly of going to court against a bank.

He signed his name to the financial reports.

Either the CEO did know, or he should have known. The bank's internal audit teams must have known (they would have reviewed staff activities as they always do for fraud, and the idea that they had missed this for many years isn't tenable)

So either the internal audit teams were instructed not to report these issues, or senior management ignored their reports.

http://www.businessinsider.com/steve-jobs-on-the-difference-...

"Somewhere between the janitor and the CEO, reasons stop mattering," says Jobs

It's one thing to have one or two departments with illegal incentives. When the entire company is run using illegal incentives, the CEO has to know. Or, he should have known.

Quite frankly, the entire executive should be fired for cause, and sued by everyone.

This "faith in the law" is libertarianism's biggest weakness, and the reason why the older I've gotten, the more appealing anarchism has become. The ways we see the law working in this case, are just the ways that law actually works. Screw the little guy and protect the big man? A feature, not a bug!

The reasonable way to oppose unfairness is to actually oppose unfairness, not to imagine that some contingent and evolved phenomenon called "law" is going to magically give us what we want. If utopia comes and police are devoted only to the enforcement of contract, those entrusted with interpreting contracts will be our rulers. Those in power, will exercise power. This recursion can't be defined out of existence.

2) That the intention of the executives was to increase the stock price by leveraging the fake accounts rather than to increase real accounts whilst policing an incentive scheme that was harsh to the point that it resulted in bad behavior by low level workers.

My point is that the revenue impact from the addition of fraudulent accounts is so negligible that to equate it to "fraud" is misleading.

Any incentive scheme has cheaters, abusers and fraudsters. That is the norm in an organization that employees thousands of unskilled workers.

This is a case of an incentive scheme that was pushed too hard despite market realities -- to the point where people felt compelled to lie to keep their jobs (which was morally wrong on their part -- regardless of "how tough it is to find work" or "needing to put bread on the table"). Those people were fired. In order to understand if this was fraud or not we need to look at whether or not these incentive schemes generated an increase in LEGITIMATE accounts being created.

If this was the case then the incentive scheme worked and policing needed to be increased or modifications needed to be made to the management to prevent bad behavior.

If this was not the case -- then we have to ask why the management chose to push harsh incentive schemes knowing that it only created fraudulent accounts.

The type of black and white thinking that is going on in this thread (and elsewhere) is emotionally driven due to the size of Stumpf's paycheck. Most people are just not used to seeing $100mm dollars.

I would be very skeptical of articles like the one linked to above. Anyone who has lead a large organization that contains people that couldn't compete or got fired and angry has heard these types of gripes... they are a dime a dozen. My point is that Stumpf paid for his sins and I don't think we need to roast him further. I think Warren's appraisal of the situation is excessive.