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Wells Fargo Fraud Is Stark Reminder of Need for Tougher Rules

The scandal surrounding Wells Fargo Bank’s glaring unethical behavior towards its customers is only one of too many scandals involving corporate bad behavior.

It makes us wonder what our business schools are teaching their MBA students about corporate responsibility and ethics these days.

Wells Fargo CEO John G. Stumpf was far from contrite when he “apologized” for the bad actions of supposedly overzealous company employees he claims acted independently to open millions of unauthorized banking accounts and purchase company services, in the process defrauding customers of millions of dollars in unauthorized fees that fraudulently pumped up the financial institution’s bottom line.

Those unethical actions also served to increase bonuses to the company’s top executives, who face no real penalty for their part in the scandal, including failing to provide the oversight that could have/should have, caught the misdeeds and corporate culture that made it possible.

We have to wonder if Stumpf believes American consumers will feel comforted and vindicated by him throwing the company’s lowest paid employees, the Wells Fargo sales force, under the bus while the executives who engineered the sales quota plan that put pressure on the employees in the first place, walk away with hundreds of millions of dollars in corporate bonuses.

The $185 million in fines and penalties the company will pay are just a drop in the bucket for the company. Sadly, employees at the lower end of the company’s pay scale and consumers will likely bare the burden of making up the financial loss.

Regardless of how large the fines are, they will probably do little to stop the casino mentality of Corporate America. Not until the executives who not only allow but also often promote abusive corporate behavior start to go to jail or are forced to suffer large personal financial penalties, will we begin to see a change in corporate behavior.

It’s been less than a decade since the near collapse of the country’s financial institutions that led to the Great Recession and the loss of millions of jobs, pension plans and foreclosed homes. The Wells Fargo debacle is a stark reminder that financial institutions still need close oversight.

Unfortunately, Stumpf and his executives aren’t the only bad actors among American corporations. Efforts by Republicans to unwind tougher banking regulations under Dodd/Frank, reforms following the financial melt down to curtail excessive bad and speculative practices by the nation’s big banks are ongoing.

It’s time our elected officials stand up and acknowledge the bad actors in our economy, including banks and pharmaceutical companies, and reign in their abusive practices, even if it means sending some executives to jail.