When you run a bank that spends 5 years setting up 2 million fraudulent checking and credit card accounts and charging unsuspecting customers fees on those accounts, which they never requested, you don’t apologize and pledge to fix a problem you’ve known about for years. You resign. This holds as well for your Board members, who are supposed to oversee your performance, not sit back and provide you raises so you will give them raises.
Wells Fargo’s John Stumpf has been CEO since 2010. During this time, over 5,000 employees were fired due to this illegal practice. If he was firing 5,000 people over five years he must surely have known that whatever he and his management team were doing to keep their employees from engaging in fraud wasn’t working.
What Wells Fargo was doing was compensating its workers for sales performance. It still is. As a result, the obvious happened and is happening. The employees did what it took and do what it takes to raise their sales and, thereby, their salaries.
John Strumpf’s failure to stop sales-based compensation is the primary basis for the fraud. To the extent he directly knew of it, he should, along with the rest of Wells Fargo’s top management who knew it was going on, be criminally prosecuted. That’s what needs to happen when bankers commit fraud.
I realize that’s something the Obama Justice Department was never able to understand perhaps because of the campaign contributions it received from Wall Street. It gave every Wall Street crook, leader, or purveyor of crooks (with the exception of Bernie Madoff who had to turn himself in to get prosecuted) a Stay-Out-Of-Jail-For-Free card. The list of Wall Street bankers who should be criminally prosecuted starts, in my mind, with Jamie Diamond whose bank, JP Morgan Chase, has engaged in one fraud after another for years, including laundering Madoff’s money for two decades.
As President, I would radically change the banks. Their twin game of leverage and opacity — We borrow, gamble, leave the public with any losses, and hide the bacon. — would be up. They would all need to operate as 100 percent, equity-financed mutual funds with real-time, full disclosure of their assets.
My book on banking, Jimmy Stewart Is Dead, lays out precisely the reform I’d undertake as President. Unlike the weak-kneed banking reforms of Clinton and Trump, my banking reform would totally end Wall Street’s gambling at the taxpayer’s expense. It would also shut down many of the operations of our so-called regulatory agencies, whose “services” by government officials looking to move to Wall Street would no longer be needed.