The CEO of Wells Fargo Bank finally got it.
In appearances before Congress, John G. Stumpf didn’t seem to understand why senators and representatives from both parties were so mad at him.
He showed no signs of understanding that creating bogus credit card accounts and fake bank accounts in the names of millions of people, bilking them for millions of dollars in bank fees, perpetrating frauds so widespread that his company was fined $185 million by federal regulators and firing thousands of low-level bank employees for these deceitful business practices but holding no company executives, least of all himself, accountable were reasons for outrage.
He didn’t seem to get it either when Sen. Elizabeth Warren told him, “You should resign.”
But then he got it. Or, rather, his board of directors got it, and forced Stumpf to submit his “retirement” letter last week.
The Wells Fargo scam had been going on for years, which suggests a corporate culture so corrupt that, like its CEO, it was blind and deaf to basic principles of morality, ethics and simple honesty.
That culture is all too familiar. The worst financial crisis since the Great Depression was caused by the unethical, dishonest lending practices of giant banks. Uncountable deaths were caused by tobacco companies that hid evidence of the link between cigarettes and cancer as they hyped their product to unsuspecting smokers. More recently, lives were lost because a Japanese company continued to distribute automobile airbags that it knew could explode with fatal discharges of shrapnel and by an automaker that sold cars knowing they had an ignition defect that had caused fatalities.
The bad-behavior list could go on, but it should not be taken as a blanket indictment of business. There are many companies that give the same attention to ethics as to profits. Some of these are very large corporations, but the more likely exemplars of good corporate behavior are enterprises that are closer to their customers, small businesses such as those the people of Ozaukee County deal with every day. Many of these businesses take corporate citizenship beyond a commitment to deal fairly with their customers to supporting their communities with contributions of funding and in-kind donations of services and products for good causes.
Repellent as they are, the offenses of Wells Fargo and its ilk nonetheless should not be dismissed as aberrations, and memories of them should be kept handy as reality checks for use the next time someone asserts that government should be run like a business. That assertion is so common that it has achieved cliché status.
Just the other day in Wisconsin, where an effort to privatize parts of the state government as business operations has been ongoing (such as the scandal-and-ineptitude-plagued move that turned the Department of Commerce into the Wisconsin Economic Development Corporation), Gov. Scott Walker offered no state help for small school districts that can’t make ends meet under reduced state education funding and local tax levy limits. Instead he instructed them to adopt business methods, saying these districts just need to function like private businesses and find new ways to be efficient.
Governments and school districts are not private businesses. There are long lists of economic and organizational reasons government can never function like a business. But the one that matters most is that the purpose of business—its mission and objective—is to make a profit for owners and investors.
Pursued with integrity, this is an honorable enterprise. But look where it can lead when integrity is absent: Those thousands of fired Wells Fargo workers who set up fake accounts were reported to be under intense pressure to meet lofty sales goals set by supervisors who were under intense pressure to generate profits.
The purpose of government is different—it is to serve the people.