Reprinted from Robert Reich Blog
Last week, Congress engaged in a bipartisan barrage of CEO bashing.
The Senate Banking Committee assailed Wells Fargo CEO John Stumpf for pushing employees to create as many as two million bogus bank and credit card accounts without customer's consent -- making customers pay overdraft and late fees on accounts they never knew they had.
Louisiana Republican David Vitter pressed Stumpf on when he knew about the wrongdoing. "In 2011, about 1,000 employees were fired over this," said Vitter, incredulously, "and you were never told about that?"
Meanwhile, the House Committee on Oversight and Government Reform criticized Mylan Pharmaceutical's CEO Heather Bresch for raising the price of its Epipen, an emergency allergy treatment, by 500 percent -- forcing customers to pay $608 for a two-pack that had cost $100 in 2009.
Noting that Mylan had sought legislation to increase the number of patients who receive prescriptions for EpiPens, Representative Mick Mulvaney, Republican of South Carolina, angrily told Bresch: "You get a level of scrutiny and a level of treatment that would ordinarily curl my hair, but you asked for it."
Such shaming before congressional committees tends to reassure the public Congress is taking action. But -- especially with Republicans in charge -- Congress is doing nothing to prevent the wrongdoing from recurring.
Can we be clear? CEOs have only one goal in mind -- making money. If they can make more money by misleading or price gouging, they'll continue to do so until it's no longer as profitable.
For years we've watched Congress grill CEOs of Wall Street banks about bank fraud.
If it's not John Stumpf's sham accounts, it's JPMorgan Chase's Jamie Dimon, whose bank failed to report trading losses (remember the "London Whale?"). Or it's Goldman Sachs's Lloyd Blankfein, whose bank defrauded investors.
Wells Fargo's Strumpf made $19 million last year, partly because all those new accounts helped maintain the bank's profit machine. Sure, the bank was fined $185 million by the Consumer Financial Protection Bureau for the fraud, but that's chicken feed relative to what the bank pulls in. Between April and July, 2016 alone it had revenues of $22.16 billion.
Why should we expect Wells Fargo or any other big bank to stop such frauds, when they're so lucrative?
For years we've watched Congress condemn CEOs of pharmaceutical companies for price gouging: If not Mylan's Heather Bresch, it's Turing Pharmaceutical's Martin Shkreli, who jacked up the price of Daraprim -- used to treat HIV patients -- from $13.50 to $750 a pill.
Or Valeant Pharmaceutical's Michael Pearson, who quadrupled the price of Syprine, used to treat an inherited disorder that can cause severe liver and nerve damage. Or Amphaster Pharmaceuticals CEO Jack Y. Zhang, who hoisted the price of naloxone, used in cases of heroin overdoses, to more than $400 a pop.
Heather Bresch made $18.9 million last year. Mylan's incentive plan will bestow additional bonuses of $82 million on top executives if they hit certain high profit targets by 2018.
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