At the Washington Post Massachusetts Sen. Elizabeth Warren has an op-ed calling for more executive accountability:
Opening unauthorized bank accounts. Cheating customers on mortgages and car loans. Mistreating service members. If you can dream up a financial scam, there’s a good chance that Wells Fargo ran it on its customers in recent years. Last week, after years of pressure, the company finally parted ways with its second chief executive in three years. But that’s not nearly enough accountability. It’s time to reform our laws to make sure that corporate executives face jail time for overseeing massive scams.
In 2016, after the Wells Fargo fake-accounts scam came to light, I called out then-chief executive John Stumpf for gutlessly throwing workers at the bank under the bus — and told him he should resign. Weeks later, he did. When Wells Fargo elevated longtime senior executive Tim Sloan to replace Stumpf, I told Sloan he should be fired for his role in enabling and covering up the fake-accounts scam. For years, I pressured federal regulators, urging Sloan’s dismissal, and last week Sloan “retired.â€
Don’t get me wrong. I’m glad Sloan and Stumpf aren’t in charge anymore. But this isn’t real accountability. When a criminal on the street steals money from your wallet, they go to jail. When small-business owners cheat their customers, they go to jail. But when corporate executives at big companies oversee huge frauds that hurt tens of thousands of people, they often get to walk away with multimillion-dollar payouts.
I’m surprised that Sen. Warren didn’t mention Sarbanes-Oxley in her op-ed. Under Sarbanes-Oxley CEOs are supposed to certify that they know what’s going on in their companies. In other words Messrs. Stumpf and Sloan either perjured themselves, were personally responsible for the misconduct at their company, or just plain ignored Sarbanes-Oxley’s requirements.
Over the seventeen years that have passed since Sarb-Ox was enacted in the wake of the Enron scandal, companies have spent hundreds of billions of dollars on compliance with it. To the best of my knowledge not a single CEO has been charged under it. Those are hundreds of billions that weren’t used to expand operations, pay salaries or bonuses, compensate stock holders, or any other useful purpose. It’s a perfect example of a broken window as in Bastiat’s parable. Why isn’t it being enforced?
IMO it was never intended to be. It was feel-good legislation that allowed legislators to go back and tell the voters back home that they were doing something. Hundreds of billions of unnecessary spending is too much to pay to make legislators look better.
I need to do more sit-ups. MY belly is sore from laughing. Sarbanes-Oxley. My ass. Yes, CYA.
Just like Dodd-Frank from two of the legislators with the most blood on their hands.
Yes, Virtue Signalling legislature before that term entered the language. An even earlier version was the Alternative Minimum Tax, enacted because of the hysteria that a handful of millionaires gamed the tax system to pay no tax. And Prohibition before it, dead in the waters of the state legislatures until moralists pretending to be patriots shamed them into it to ‘save’ grain needed to feed hungry soldiers and civilians in the Great War.