THE FULL VIDEO
Boston Globe columnist Dante Ramos files a surprisingly scathing piece on the capitalist criminals du jour
While still treating Stumpf and Bresch as greedy anomalies, Ramos managed to deliver a fine screed for the sake of a public unaccustomed to such clarity and honesty in political analyses.
By Dante Ramos GLOBE COLUMNIST SEPTEMBER 25, 2016
American capitalism’s lousy, lousy week
If you genuinely believe in the vigor of the private sector, the Wells Fargo and Mylan CEOs performance was utterly depressing.
WHEN WELLS FARGO CEO John Stumpf went before a Senate committee the other day, Elizabeth Warren turned him into sashimi. Or at least she handed him the knives with which he sliced and diced himself. As the Massachusetts senator pressed him on a massive fraud scandal at his bank, he downplayed the problem; he minimized his ability to fire the executives who let it happen; he passed the buck to his company’s board — a board that, by the way, he leads.
If you already thought corporate America was irredeemable, nothing that Stumpf said or did would surprise you. But if you genuinely believe in the creativity and vigor of the private sector, which brings us everything from sliced bread to smartphones, Stumpf’s performance Tuesday was utterly depressing. So was EpiPen price-hiker Heather Bresch’s appearance before a House committee the following day.
If those two are any indication, American capitalism is in a rut — not because Warren or other liberal critics are encroaching, but because upper-tier executives keep finding ways to enrich themselves and each other while avoiding any adverse consequences of their own actions.
The phrase “bad economic news” usually conjures up stock-market crashes or surges in unemployment. Both hurt real people, but they’re part of a natural cycle of growth and contraction, and they don’t damage the underlying legitimacy of the system. This past week did. At a time of growing inequality, and at the height of an ugly presidential campaign, Stumpf and Bresch couldn’t have done more to persuade Americans that everything’s rigged.
Prodded by the company’s ambitious sales goals, employees of Wells Fargo set up 2 million fake accounts in existing customers’ names. Thousands of lower-level employees eventually got fired, but Carrie Tolstedt, who headed the division where the fraud occurred, gets to retire at age 56 with stock options and other compensation worth up to $125 million. And she’s still eligible for a bonus.
Working stiffs earning $12 an hour aren’t the only ones who should feel aggravated. “I don’t quite understand,” Warren asked Stumpf. “How do you explain this to your shareholders?” Stumpf had a boilerplate response, but the real answer was obvious: He didn’t see Tolstedt’s big payday as a problem that needed explaining.
On Wednesday, a House committee laid into Bresch, whose company, Mylan, has been jacking up the cost of its now-ubiquitous epinephrine injectors. In her testimony, Bresch touted her own ascent from entry-level clerk to chief executive.
This bootstrap posturing was comical. Bresch’s father, who’s now a US senator, got her hired at the drug firm, and she scaled the org chart on the strength of her expertise in cajoling the government. Not coincidentally, Mylan has extracted ever-greater profits from the EpiPen by roping lawmakers and public agencies into its marketing efforts, pushing the limits of antitrust laws, and exploiting the regulatory obstacles facing its competitors.
Americans of a certain age remember periods when the growth in corporate revenues translated into increases in the general welfare. The enlightened self-interest of individuals and companies can, and still does, yield breakthroughs that enrich a few people but also make everyone healthier and happier.
Then again, the other way for companies to pad margins — and for executives to inflate their own compensation — is by skirting the law, limiting competition, or lobbying the government for special treatment. As the tech industry matures, even global innovation leaders are leaning as much on their lawyers and accountants as on their engineers. The European Union recently sent a $14.5 billion back-tax bill to Apple, which used loopholes in Ireland to limit its overall liability. But at least there’s a new iPhone with no headphone jack, right?
Given the circumstances, it’s ironic that the prime beneficiary of Americans’ unease has been Donald Trump, whose business career embodies the idea that anything’s fair if you can get away with it. He’s stiffed his suppliers. He’s boasted about buying political access. After The Washington Post reported that he’d used his tax-advantaged, ostensibly charitable foundation to cover certain business expenses — which is illegal — Trump told a rally that “there’s nothing like doing things with other people’s money.”
Trump would have voters believe that it takes a scammer to recognize a scammer. Yet even if his professed outrage is sincere, it doesn’t change the deeper problem: Regulatory agencies lack the necessary muscle to police the marketplace, and holding executives personally liable for corporate misdeeds takes time and money and involves lots of political heat.
Still, doing so would improve public confidence in our political and economic systems at a moment when it badly needs a boost. Media reports that Wells Fargo targeted whistle-blowers shouldn’t just warrant Stumpf’s removal as CEO; they should also embolden gun-shy federal prosecutors to investigate him, as Warren urged at the Senate hearing. Meanwhile, Bresch and others should consider themselves warned. It’s not just one or two congressional committees who are bent out of shape; it’s everyone.
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