There will be no end to corporate crime unless CEOs, CFOs and COOs start going to jail. The crash of 2007 revealed all kinds of shady, unscrupulous financial industry practices. Banks paid billions in fines — often referred to as ‘the cost of doing business’ — but only one executive served any time, Kareem Serageldin of Credit Suisse.

And so it is not surprising that banks and the like are back to behaving badly. This time it is Wells Fargo.

The New York Times published a story on how Wells Fargo might face an additional fine of $1B for screwing its customers. It added an opinion piece that agonizes over whether the punishment is just desserts or overly tough on the current stockholders.

We can easily dispose of the stockholder claims. Unlike bondholders, who merely lend money, equity holders have an ownership stake in the company — and as such, they are legally liable to the full extent of that ownership (i.e., the value of their stocks). If the company commits a crime, they are party to it and shouldn’t be indemnified for corporate losses. In Mitt Romney’s infamous words:

“Corporations are people, my friend. Everything corporations earn ultimately goes to people. Where do you think it goes?”

While the article refers to stockholders as “battered”, it makes no mention of the effect on employees in forgone wage increases or worse, job losses. Once again the worker is consigned to the low rung of the sympathy ladder.

But the meat of the matter is that once again senior management of a criminal enterprise are let off.

“Whether they’ve [management] paid adequately for their multiple transgressions is an open question — no one has gone to jail, or even faced criminal charges.” 

They haven’t paid adequately. Although CEO John Strumpf was fired and suffered a $69 million ‘claw back’ from his final compensation, he still sailed into retirement with $130 million. Carrie Tolstedt, who led the community banking division responsible for the fake accounts still held on to $57 million after a $67 million ‘clawback’.

The bank itself, even after the $1 billion dollar penalty, will still show 1st quarter profits of $5.1 billion. (Note: the hit to earnings is only $800 million because they can use the fine to reduce their tax liability.)

Can you imagine if you ‘punished drug dealers by taking 20% of their profits and told them they had been very naughty? It would hardly deter the future drug dealers of America from pursuing their careers.

The bottom line is that many corporate bosses will not aggressively address corporate crime if the only effect is to the bottom line. They have to be personally charged with crimes, they have to stand trial, and they have to go to jail.

We do that to people who rob banks, why don’t we do it to bankers who rob people?


Are Nutritionists the New Weathermen? Full of Opinions and Rarely Right.

June 4, 2016

It is hard to think of professionals that know less about their subject than nutritionists. We all eat. We all obsess about nutrition & weight. Yet try and find two nutritionists who agree on what we should eat. Add TV shills promoting wonder foods. And no wonder we’re clueless. Then mix in the worst actor. We may […]

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Profit Over People – the Corporate Imperative.

October 6, 2015

“You’re thinking I’m one of those wise-ass California vegetarians who is going to tell you that eating a few strips of bacon is bad for your health. I’m not. I say it’s a free country and you should be able to kill yourself at any rate you choose, as long as your cold dead body […]

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The GOP Push for Lax Regulation Benefits Business, Not the Consumer.

September 23, 2015

“And the so-called ‘political process’ is a fraud: Our elected officials, like our bureaucratic functionaries, like even our judges, are largely the indentured servants of the commercial interests” ― Edward Abbey. The GOP doesn’t like regulation. They don’t like it because their corporate sponsors don’t like it – regulations cost money. But the GOP would […]

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The Immigration Paradox

June 1, 2015

“There is always danger for those who are afraid” ― George Bernard Shaw. Conservatives hate illegal immigrants. Buisness loves illegal immigrants. Conservatives love business. How can this be? The answer is that big business conservatives pay lip-service to hating illegal immigrants. It’s nothing but expediency. Let’s unpack it. What do big business conservatives and the […]

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The FIFA Scandal Shows that Loosening Financial Regulation Is A Gift to Bankers.

May 30, 2015

“A criminal remains a criminal whether he uses a convict’s suit or a monarch’s crown.” ― Victor Hugo It is said that the only things we can be sure of are death and taxes – let’s add cheating, and take a good look at taxes. Almost every week some business pleads ‘no contest’ to some […]

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When Crap Is Cheap You Can Buy A Lot of It. The ‘Walmarting’ of America.

April 28, 2015

“What we obtain too cheap, we esteem too lightly; it is dearness only that gives everything its value” – Thomas Paine. Since Sam Walton opened the first Walmart in 1962 in Rogers, Arkansas, the company has been relentless in cutting costs to cut prices. Quality was the first victim. It wasn’t that Walmart was the first […]

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The Military/Industrial Complex and the Culture of Dependency.

March 30, 2015

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist” ― Dwight D. Eisenhower. Tom Kennedy, Wes Bush, and Greg Hayes are names not familiar to most Americans, but those government […]

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Really? – 3.6.15 – Carson thinks about prison sex; Still crazy in Kansas; Fossil fuel’s animal rights activists.

March 6, 2015

Ben Carson is a really dumb smart guy. Ben Carson was by all accounts a brilliant surgeon. He also espouses some quite liberal positions on universal health care. And has some interesting thoughts about gun-control in the inner-cities. Otherwise, he is a dyed-in-the-wool conservative. Not just in the policies he cleaves to, but in the […]

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