Senator Elizabeth Warren (D-Mass), picks her adversaries so well that she gains popularity and unearned credibility through the power of cognitive dissonance. Listen closely, however, and you will hear the ranting of a class-biased demagogue.
Joining in on the bipartisan and well-deserved roasting of Wells Fargo CEO John Stumpf before the Senate Banking Committee hearing this week, Warren accused Stumpf of profiting from the mass scam in which over 5000 bank employees signed up customers for services they hadn’t requested, without their knowledge. The bank collected fees for these accounts, cards and services, and the employees got bonuses.
He probably did profit, since the bank did more business and his stock holdings increased in value. Was he aware of the scam, or even behind it? There is no evidence of that yet. Warren also said he should resign. She’s sure right about that. He is accountable as the CEO, and he failed his duty of oversight. It is, as Warren said, typical and wrong that all the firing so far have avoided the executive suites.
But Warren seems to be oddly unaware of her double standard regarding management and leadership accountability. The standards that she was railing at Stumpf for not meeting should also apply to Barack Obama’s accountability for a corrupt IRS, a rogue NSA, a drunk Secret Service, a politically-biased Justice Department, a horrifically incompetent Office of Personnel Management, a criminally negligent VA, and, of course, a technically-challenged State Department that was operated as cash-cow for its Secretary’s personal foundation. Elizabeth Warren’s application of standards are driven by class bias and partisanship, not conduct or principle. She has enables an administration that has avoided assigning accountability or accepting it for multiple fiascos. The most recent? From Fox News:
“More than 800 illegal immigrants from countries of concern who were set for deportation were mistakenly granted U.S. citizenship because the Department of Homeland Security didn’t have their fingerprints on file, according to an internal audit released Monday. The Homeland Security Department’s inspector general found the immigrants used different names or birthdates to apply for citizenship with the U.S. Citizenship and Immigration. In the case of 858 immigrants from “special interest countries or neighboring countries with high rates of immigration fraud,” the discrepancies weren’t caught because their fingerprints were missing from government databases. A few even managed to get aviation or transportation worker credentials, though they were later revoked. One became a law enforcement officer. “
Did you miss this? You might have, because the only reports of it that I could find were on so-called “conservative media” sites….all part of the mainstream media’s “We have to stop Trump even if it means not reporting news that makes Democrats look bad” initiative.
Warren grilled Stumpf about “cross-selling,” which she described as if it was evil incarnate. Cross-selling is nothing more than getting current customers to buy additional products and services. It’s Business 101: your best future customers are your current ones. This is capitalism, and Warren, a socialist who views the profit motive as unethical, often talks as if she would like to criminalize it, and perhaps she would. “Cross-selling is all about pumping up Wells’ stock price, isn’t it?” Warren asked.
Well, it’s about making money…you know, then more jobs, higher salaries, families with more resources. Companies that make money see their stock rise. This is why Stumpf has been the best paid of the various bank CEO’s: the bank under his management made money and avoided the scandals other banks kept falling into. Only people like Bernie Sanders and Warren make that sound shady, because their message is “banks bad, bank management bad.” The fact that the stock of a bank goes up when the bank makes money doesn’t intrinsically have anything to do with illegally charging customers for what they didn’t ask for or agree to, but you’d be hard pressed to get that from Warren’s rhetoric.
Warren produced transcripts of Wells Fargo earnings calls Stumpf participated in from 2012 to 2014, while the scam was in full swing. “In all 12 of these calls, you personally cited Wells Fargo’s success at cross-selling retail accounts as one of the main reasons to buy more stock in the company,” Warren told Stumpf. She went on to quote him from the transcripts, as he touted the company’s record growth to more than six accounts per household.
So what? If the accounts were legitimate, it means that customers liked their bank, and sought more services and product for it. If the customer base was averaging six accounts per household, great! That’s something for Stumpf and his bank to be proud of, and it should raise the value of the stocks. The problem is that the growth was a sham. If it wasn’t a sham, there’s nothing—nothing—wrong with cross sales, nothing wrong with the bank making money, nothing wrong with the stock rising, nothing wrong with Stumpf being rewarded… except that his compensation is obscene and unreasonable already. Still, that’s not what the hearing was supposed to be about.
Warren produced documentation that Stumpf held about 6.75 million shares in the company in that time frame, and that the share price had risen by about $30, “which comes out to more than $200 million in gains, all for you personally, and thanks in part to those cross-sell numbers that you talked about on every one of those calls.”
Again, so what? Is Warren’s point that the CEO of a company shouldn’t make money if the business does well? Is her point that a bank shouldn’t seek profits, or try to sell customers products and services they may want? If her point is that Stumpf was aware of the scam and did nothing about it, she has nothing but the weakest of circumstantial evidence, and knows it: she was a law professor, for heaven’s sake.
“You should resign … and you should be criminally investigated.”
The bank certainly should be investigated, and it is being investigated. A U’S’ Senator should not imply in a public hearing that a citizen is a criminal without actual evidence or at least a hint of some. Yes, it is impossible to believe that over 5000 employees in the same company all independently came up with the same plot to cheat customers. It was a stupid plot, however: what were the chances that it wouldn’t be discovered? Why would the highest paid bank executive risk everything for such an outrageous conspiracy?
To Elizabeth Warren, Stumpf’s crime is that he runs a bank.
Here was the full, unexpurgated, anti-capitalism and ethics-addled demagogue at work, as Warren delivered her final attack on the Wells Fargo CEO:
“Here’s what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the crash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison. But you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket.And when it all blew up, you kept your job, you kept your multi-multimillion-dollar bonuses, and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich. This is about accountability. You should resign. You should give back the money that you took while this scam was going on, and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission. This just isn’t right.”
1. Yes, the bogus charges for fake accounts constituted theft, just as taking cash from the till is.
2. Contrary to Warren’s innuendo, however, just as the bank manager whose teller steals twenties isn’t guilty of a crime, neither is the CEO whose employees engage in a conspiracy to bill customers for services and products they didn’t ask for.
3. Correct: neither should incompetent management benefit from criminal conduct that employees engage in while they are asleep at their posts. Warren is right that Stumpf and other Wells Fargo executives should give back any enrichment created by the illicit product fees.
3. I must have missed the part about Stumpf squeezing employees “to the breaking point.” Because Warren hates business and capitalism, she appears to believe that sales bonuses are some kind of torture. IF, and only if, management knows or should know that its sales quotas are causing employees to cheat and break laws, then management should be criminally culpable. Warren has no proof of that at all.
4. What’s “the breaking point” where any employee has no choice but to break the law, steal money from customers and falsifying documents? There is none. This is the “I have no choice” rationalization for unethical conduct. Sure, there is a choice. Don’t cheat. Don’t be corrupted. There was no gun to the heads of any of those 5000+ employees. If an employer tells an ethical employee, “Cheat or you’re fired!” the response is, “I quit!” and also, “I’m going to talk to a local reporter and a lawyer about this.”
5. The worst: “You went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich.”
Warren is dangerous and shameless.
a. “Just” trying to meet quotas? No, they were “just” robbing customers. This is deceit by Warren. “Just” meeting quotas would mean “just” meeting them fairly and honestly.
b. He blamed them because they were guilty. The fact that Stumpf is accountable, responsible, and should resign or be fired doesn’t remove the blame earned by employees who stole from customers.
c. Warren here embraces the dead bottom of the situational ethics barrel where classist revolutionaries dwell: if you aren’t rich, its okay to steal. Her inspiration comes from Abby “Steal This Book” Hoffman, Lenin, Jesse James and all the anarchists and demagogues through history who told their followers that the way to achieve social justice is to steal wealth from those who have worked to earn it, and give it out like CARE packages to the unfortunate, the criminal, the lazy and the manipulative.
d. The dishonest employees’ salaries are irrelevant to the seriousness of their misconduct—except to Warren, who suggests a sliding scale: the less one is paid, the more justifiable crime is. Moreover, it was not only tellers (whose starting salaries are about 12 dollars an hour, but who earn more with seniority) but also their managers who perpetrated the scam.
e. “Cross-selling” is not what was wrong here, but again and deceitfully, Warren misleads the public by suggesting otherwise.
It is nothing less than frightening that this radical, anti-capitalist demagogue could be elected to the Senate, and that she is so effective at attracting support through misleading rhetoric and cleverly disguised socialist ideology.