Saturday, September 10, 2016
Weapon of Choice: Fountain Pen
Two "small" items in today's news put me in mind of our greatest troubadour. I employ the scare quotes because these stories that would have been leading news items in other times, given the scale of the crimes involved. But in a year in which the presidential campaign is about greater and lesser degrees of lies and loathing, and on a day in which North Korea tested a nuke half the size of that with which America leveled Hiroshima*, it may have been easy to overlook trifling frauds measured in the mere billions of dollars.
The two stories I heard were about criminal proceedings that were proceeding on the terms of the criminals. That is to say, these are stories of white-collar crimes in which the rules have rather soft edges.
The first is the story of Wells Fargo, which fired 5,000 employees for defrauding customers. The company also paid $185,000,000 in penalties (perhaps the price of keeping these well-dressed thugs out of jail) and set aside $5,000,000 for repaying defrauded customers. That is to say, the company paid penalties equivalent to two days of earnings, while setting aside the earnings of a typical hour or so for repaying customers.
What did these wayward employees do? Exactly what one would expect them to do. Think about the pressure people who sell cars are under to meet their quotas, and the rewards they get when they meet or exceed targets. Now imagine a salesperson who could cause you to buy a car without you knowing it. That is what these banksters were doing -- selling various kinds of accounts to existing customers without their knowledge, leaving customers to pay penalties if they overdrew the accounts that funded these purchases.
NO: I did not make up that last paragraph. I'm not that smart. The settlement seems hardly necessary -- overbuilt for-profit prisons have plenty of space for these worthies.
UPDATE: Carrie Tolstedt, the executive ultimately responsible for these crimes, has decided to retire early. CEO John Stumpf praised her as “a standard-bearer of our culture” and “a champion for our customers" while ensuring that she would walk out the door with $124,600,000 in her final paycheck. Banking reforms following the 2008 were supposed to prevent such bonanzas, but loopholes apparently were found.
Meanwhile, an even bigger crime resulted in an actual indictment that was announced today, though jail time seems unlikely for Volkswagen engineer James Robert Liang. He is busily turning in those who helped him to implement the now-famous scheme to thwart emissions testing of VW vehicles, specifically those with "clean" diesel engines. As soon as he realized that he could not meet the ambitious emission targets that had been set for him, he designed a way for the engines to recognize testing equipment and operate in a non-performance mode during tests. The result was the sale of 600,000 vehicles for something like $10,000,000,000, many of which VW is busy buying back. Remedies in this case are being offered to the people who purchased the cars and are considered the primary victims of Liang's scheme, but the real victims are harder to identify -- everyone who suffered needless respiratory problems as a result of thousands of cars exceeding emissions standards over many years.
Woody had some words about the difference between those who rob banks and those who are banks. Guess which he found more unsavory.
"Some will rob you with a six gun; others with a fountain pen."
*Hiroshima -- hearing the news about North Korea's determination to be in the nuclear "club" reminded me of our propensity to continue debating President Truman's decision to vaporize civilians in Japan. The cold calculus of justifying the killing of two cities is limited to the conflicts of that time, and fails to weigh the costs of launching an entire Nuclear Age.
Listening to the song again, I was reminded of Guthrie's deep connection to Oklahoma, where the earth itself is increasingly the victim of crimes made legal by wrong-doers who write their own laws. It has been well known for a few years -- by those who care to know -- that hydro-fracturing in petroleum exploration was leading not only to poisoned waters, but also to increasingly common earthquakes. Some of those who believed the science considered small quakes a reasonable price to pay for petroleum revenues, while others found it easiest to pretend to believe that fracking and earthquakes were merely coincident in time and place. A week ago today, a magnitude 5.8 quake rocked Pawnee, but seems to have shifted few opinions.