Barack Obama took office during the worst economic crisis since the Great Depression. One of the reasons for the crisis was that major banks had been buying and selling mortgage-related securities that were irresponsibly and even fraudulently issued, and when the housing market collapsed, they found themselves owing sums of money they’d never planned to have to pay. So they either went out of business or had to be bailed out by the federal government.
While Obama criticized bank CEOs publicly and helped pass the Dodd-Frank Act, which imposed tighter regulations on the financial sector, the Department of Justice led by his appointees only prosecuted one bank executive at the companies that had knowingly traded in bogus securities, fraudulently foreclosed on homeowners during the housing collapse, lied to the public about internal financial conditions, and the like. The prosecutor who ran the DOJ’s criminal division at the time said that part of what he considered when making that decision was the impact that indictments of executives could have on “the markets”—an argument, or admission, that some financial companies had been allowed to become so large that laws governing their conduct can’t be enforced.
One of the leading banks spared from the reach of the criminal justice system was Wells Fargo. The company paid $2 billion to settle allegations that, before the housing crash, it knowingly issued mortgages for which income information had been falsified and then sold those mortgages to outside investors, but no one was prosecuted criminally in the case. In the past three years, the bank has been in the news constantly for subsequent fraud, including systematically charging millions of its customers fees for new accounts it opened in their names without permission.
Thursday, Wells Fargo announced that it has hired Obama chief of staff William Daley as its “Vice Chairman of Public Affairs,” a job in which he will oversee the bank’s lobbying operations. So:
2. Avoid criminal punishment for the fraud.
3. More fraud.
4. Hire one of the people from Item 2 to help you manage the fallout from Item 3.
Under the circumstances, it would take a lot of optimism to imagine Item No. 5 in the sequence being “no more fraud.”
Elizabeth Warren has made ending these kinds of cycles a priority of her campaign. Her Anti-Corruption and Public Integrity Act would ban or drastically limit “revolving door” lobbying payoffs like the one Daley is taking. (The act as written would ban Cabinet secretaries for life from lobbying, but, for what it’s worth, not Cabinet-level advisers like the chief of staff.) She would restore authority to Consumer Financial Protection Bureau, the agency she created, which is one of the groups that discovered Wells Fargo scamming its customers. (Under the Trump administration, the CFPB is conducting “enforcement actions” at less than half its previous pace.) And she’s proposed legislation that would make it easier to prosecute executives whose companies steal from customers or lie to the public.
Naturally, the institutional Democratic Party—the party that ostensibly believes the government should regulate businesses—is currently hitting Warren with a major backlash for having proposed such things. Pete Buttigieg (who as of this summer had received campaign contributions from “at least 15 bank executives from Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, Citigroup and Bank of America,” according to CNBC) has rebranded himself as the “unity” candidate and said Warren’s posture on corporate abuses amounts to a call for “infinite partisan combat” that puts “fighting” over “outcomes.” Beto O’Rourke, before dropping out, said that “sometimes I think that Sen. Warren is more focused on being punitive and pitting some part of the country against the other instead of lifting people up and making sure that this country comes together.” Joe Biden attacked Warren this week at a fundraising event he was holding at the office of a D.C. firm whose lobbying clients include Mastercard and Purdue Pharma. Wall Street executive and Obama adviser Steven Rattner wrote in a New York Times op-ed on Monday that Warren’s attacks on “America’s global champions, like banks and tech giants,” would trigger an economic disaster.
Truly, who hasn’t been recognized as an American in, let’s say, Yemen, by a group of children who excitedly begin a “Wells Fargo” chant to honor the United States’ beloved global champions?
It is true that there are regular, non-rich people who believe Warren’s plan to end private health insurance is the most important way in which she is “too extreme.” But Democratic voters might note that the people funding her rivals think another thing that’s “too extreme” is suggesting that the public is not best-served by a system in which Obama’s chief of staff works for Wells Fargo, his press secretary works for McDonald’s, his first campaign manager works for Uber and Mark Zuckerberg, his second campaign manager works for the American Petroleum Institute and United Arab Emirates, and he himself works for a financial services firm with major investments in the health care industry. Whose “unity” and whose “outcomes” are we really talking about here?