Why bankers got fined for wrongdoing — but teachers went to jail
John Stumpf, chief executive officer of Wells Fargo & Co., swears in to a House Financial Services Committee hearing in Washington, D.C., U.S., on Thursday, Sept. 29, 2016. Stumpf, fighting to keep his job amid a national political furor, will forgo more than $41 million of stock and salary as the banks board investigates how employees opened legions of bogus accounts for customers. (Photo by Andrew Harrer/Bloomberg)
It’s long been common to hear about private companies that are accused of wrongdoing by officials and paying fine to settle a lawsuit — but aren’t required to admit any guilt, even when it is painfully obvious they are. In this post, educator Larry Cuban explains why “[i]mmunity from accountability is currently widespread in the private sector, but not in the public sector.” Cuban was a high school social studies teacher for 14 years, a district superintendent (seven years in Arlington, VA), and is professor emeritus of education at Stanford University, where he has taught for more than two decades. He is the author of numerous books, including “Inside the Black Box of Classroom Practice: Change without Reform in American Education.” This appeared on his blog in two parts (here and here) and he gave me permission to publish.
By Larry Cuban
Wells Fargo, a bank that made more than $80 billion in revenue and has a market value of $277 billion, was fined $185 million by federal regulators for creating 1.5 million fake credit card accounts. In the plea bargain that regulators made with bank officials, Wells Fargo admitted no responsibility for the financial misconduct. The company had fired more than 5,000 of its lowest-paid employees, but neither the senior vice president for community banking — where the fraud occurred — nor the CEO have lost their positions.
CEO John Stumpf, who was named in 2013 as Morningstar’s CEO of the Year and earns about $20 million a year, did face U.S. Senate Banking Committee questions about the phony accounts last week. In testimony, he said, “I take full responsibility for all of the unethical practices in our retail banking business.” But Sen. Elizabeth Warren (D-MA), a member of the Banking Committee, said what the bank did was a “scam” and that Stumpf “should resign” and “be criminally investigated.”