Wells Fargo is attracting all sorts of attention it doesn’t want these days. Recently revealed was that executives pressured employees to open more than two million checking and credit card accounts not authorized by customers in order to meet “strict sales quotas.” The unsuspecting customers were charged for these accounts they did not want.
Wells got caught, and then settled with the Consumer Financial Protection Bureau to return the money they scammed from customers and pay a huge $185 million fine to the federal government.
5,000 low-level employees were fired for misconduct, but the only executive that has resigned was given a rumored $125 million golden parachute. This was the person in charge of the unlawful scheme. Thus far, the CEO of Wells Fargo, John Stumpf, is refusing to resign. Senator Elizabeth Warren went at him hard this week, trying unsuccessfully to shame him into resignation.
Shouldn’t the Department of Justice investigate and ultimately prosecute every senior executive at Wells Fargo responsible for defrauding their customers? Yes, but if the past is prologue, they will not do so.
For the past decade we have been calling on the Department of Justice to investigate and prosecute key executives that played a role in the systemic fraud, market manipulation and insider-trading that crippled the global economy. It has not happened.
Like you, I am concerned that none of the CEOs/COOs who caused the 2008 global financial crisis have been held fully or personally accountable. Trillions of dollars have been lost by investors while millions of borrowers have lost their homes and/or jobs. Yet none of the people who ran the institutions that contributed to the disaster have been found liable.
Punishment is not the only way to modify behavior, but it works. Instead, executives now realize that they face virtually no consequences for reckless lending, exotic investments and fraud. Thus, these actions continue. One well-deserved “public hanging” will send a signal around the world that will dramatically reduce wrongdoing. The current settlement posture and practice is not and will not deter crime.
The current administration has protected and shielded Wall Street and the fraudsters from any consequences for wrongdoing. The President actually said that although the banks did some reprehensible things, they did nothing unlawful. It was greed, he told us, and “greed is not a crime.” That is true, but fraud is.
This was the worst fraud ever perpetrated upon a global economy. Mr. Obama is also fond of saying the fraudsters were “reckless,” while Secretary Clinton refers to their white-collar criminality as “shenanigans.” As an eye-witness to one of the largest such “white-collar crimes”, I can assure the reader that it was not reckless. Rather, it was very carefully planned, strategized, organized and controlled with the precision of a Navy SEALS or special-ops team. Shenanigans? Nothing playful about it. They were deadly serious about enriching their personal wealth.
Despite the Obama administration’s promises to clean up Wall Street in the wake of America’s worst financial crisis, there has not been a single criminal charge filed by the federal government against any top executive of the elite financial institutions. Why is that? In a word: cronyism. To ferret out the root cause of the cronyism, one need look no further than our compromised politicians. The last decade or so has been called the most “criminogenic” in U.S. history.
Even though copious evidence has surfaced of apparent criminal violations in foreclosure cases, there is a marked absence of prosecution. While talking about the evils of bankers, Mr. Obama has pushed billions to them. Likewise, while talking about the evils of the big insurance companies, he has generously doled out billions to them. Say one thing, but do the other. Thus, the fraud and unlawful practices continue. This is of great concern to many millions of people.
It has been often said that they are all in it together. They are enabled by loose regulations, zero enforcement, zero sanctions or punishment for the “white- collar criminality” and a deliberate strategy of ‘deferred prosecution’, which as we have seen, means no prosecution.
Team Obama does not really want to prosecute fraudsters. They just want to say they do. Political leaders talk tough about punishing white-collar criminals orchestrating the 2008 financial collapse, the effects of which still engulf us. However, as Nation of Change reported on December 11, 2015, “prosecution for financial fraud hit a 20-year low during the Obama administration.” How can such devastating fraud, insider trading, and market manipulation go unpunished? Interestingly, USA Today reports “he has also prosecuted more whistleblowers than all other presidents combined.”
This is distressing.
The Justice Department hadn’t brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases. The evidence, including records from federal and state courts and local clerks’ offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.
In recent years, the Justice Department has come under renewed pressure from members of Congress, state and local officials and homeowners’ lawyers to open a wide-ranging criminal investigation of mortgage servicers. So far Justice Officials haven’t responded publicly to any of the requests. The recent JP Morgan, Deutschebank and Bank of America stories remind us once more: “No convictions, no correction.”
So many leaders have failed themselves, their families, their shareholders, and their neighbors on the most important of leadership behaviors: honesty, integrity and ethical decision-making. We can and must uphold the law and prosecute those who break it, including white collar criminals, no matter how highly placed or cozy with government officials. We will never be able to get this behind us if we do not get full and complete investigations with accountability and punishment for the guilty parties.
Michael Winston, author of the new book, World-Class Performance, had a career of distinction in executive positions for over three decades in five Fortune 100 companies across three industries, including serving in executive positions for Motorola, Merrill Lynch, McDonnell Douglas, Lockheed and Countrywide. As Chief Leadership Officer for Countrywide Financial, Winston built the strategy, leadership and culture and tried to stop the fraud, corruption and deception he observed. His warnings were dismissed and ignored. Winston’s experiences in confronting Countrywide executives about fraud, market manipulation and insider-trading are highlighted in numerous media reports including a New York Times feature. He is a founding member of the Bank Whistleblowers United, and holds a Ph.D. from the University of Illinois, a Master’s Degree from the University of Notre Dame and attended executive programs at Stanford University and the University of Pennsylvania’s Wharton School.