Public cynicism about major corporations hasn't gone away since the Wall Street-induced recession of 2007-2008 and Wells Fargo has demonstrated why.
Republican and Democratic senators alike expressed their indignation Tuesday as Wells Fargo CEO John G. Stumpf tap-danced his way around a scandal that began in 2011 if not earlier. Employees opened secret, unauthorized credit card and deposit accounts — as many as 2 million — in customers' names to meet corporate sales goals. Some customers were assessed late fees for accounts they didn't know they had.
More than 5,000 employees have been fired for unethical sales since the scandal came to light, and while many complained that the company's aggressive sales goals forced their actions, they could have quit and gone elsewhere. However, Mr. Stumpf acknowledged to the Senate Banking Committee that no one in senior management, "the people who actually oversaw this fraud" in the words of Senator Elizabeth Warren, a Massachusetts Democrat, were dismissed as a result.
Accusing Mr. Shrumpf of "gutless leadership," Ms. Warren got the CEO to acknowledge that he had not given back any of his salary or bonuses, which totalled $19 million in 2015, in response to the scandal. Senator Bob Corker, a Tennessee Republican, said it would be "malpractice" if the Wells Fargo board didn't claw back executive compensation, but too few corporate boards have done this in response to scandalous behavior.
The Consumer Finance Protection Bureau (CFSB), which Senator Warren was instrumental in establishing, fined Wells Fargo $190 million, but a corporation that claimed $86 billion in revenue in 2015 can shrug that off. Although the CFSB does good work, its annual budget of $600 million and constant fight for survival in the face of Republican opposition means there are limits to what it can do.
Perhaps the public shaming of Wells Fargo will have an impact on other CEOs and top corporate executives. If corporations don't want government regulators looking over their shoulders then their leaders, and their boards, must assure that customers are treated fairly, and not regarded as marks to be exploited.