Corruption

If you want a better deal, change your vote

Published by Anonymous (not verified) on Sun, 31/05/2020 - 12:42pm in

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Corruption

[A by-election will be held in my electorate of Eden-Monaro 4 July. This and some likely subsequent posts are in this context, intended for local media—but relevant more widely.]


Karen Porter

If you vote the same you’ll get the same. Don’t expect much to change if the old parties stay in power. The Coalition is good at promising but not so good at delivering. That’s because they don’t really believe in government services, they think you should fend for yourself. Labor, with its usual daring, is being Liberal Lite.

So don’t expect much help with bushfire recovery. Don’t expect much to be done to avert more catastrophes. Don’t even expect much help if the virus killed your livelihood, if you vote for the same-old.

In this by-election there are some real choices, choices that can move us towards a better, fairer Australia – more like we used to be, actually. So now I’m going to suggest you step away from your old tribe and have a look at some new talent. Do you really have much to lose?

Karen Porter is running as an Independent advocating for small business, real climate action, local manufacturing, better regional health services and more. She, a mother of five, even says she wants to bring the love back to Eden-Monaro. Most importantly, she wants to stir up the Parliament, connect with other Independents already there, and reclaim our democracy.

You need to know that the revolving door between the Coalition and the mining industry spins so fast the Coalition is the mining industry: MPs, ministers, senior staffers, according to independent journalist Michael West. That is why the Prime Minister appointed his gas industry mates to the National COVID-19 Coordination Commission, who promptly recommended gifting their industry billions of dollars of public money.

I’m sorry, but the Coalition is beyond corrupt: it has been captured by miners, the banks, military industries, gamblers and other special, rich, interests. Bob Menzies would be horrified by how his Liberal Party has been hijacked. Labor may not be quite captured, but it is corrupt, taking money from the wealthy and doing their bidding. 

So don’t expect them to make the landscape more fire-resistant, to make our towns more disaster-resilient, to phase out fossil fuels and bring on a clean, safe, prosperous new world. They are there to prolong the old destructive industries for as long as they can. Is that what you want?

If not then look at Porter. She is associated with the New Liberals, not yet registered. Also look at the Science Party and the Greens, whose policies are constructive. If your response right now is “Oh but I could never vote for ____”, then look at the others. But really, what do you know about any of them? Certainly don’t believe anything you see in the Murdoch media, who grossly distort the “news” to suit their own selfish interests. And look for those who will bring us together, not those who will divide us.

So, the New Liberals are nothing like the present Liberals, but a bit more like the original Liberals. The Greens’ policies, you may be astounded to learn, are also not that far from Menzies’ policies, which included government investment, strong regulation of the banks, spending through recessions and a lot of other things that are supposed to be wicked.

It’s a funny thing though, the economy did a lot better back in the fifties and sixties than it has lately. The truth is “neoliberal” policies, featuring markets and selfishness, have never worked well, and they have given us high unemployment, huge debts, financial crises, serious inequality and social division.

If you think a vote for an alternative would be wasted because they will never form government, think again. You can put one or more of the alternatives at the top, and still preference your usual tribe. That’s what preferential voting is for.

If the newbies scored, say, twenty five percent or more of the primary vote between them it would be a very clear signal to the old parties to clean up their act. Better would be to put one of the newbies in, because that would help to revitalise a very debased and corrupt Parliament, the heart of our democracy.

You do have power. If we change our vote the world will change.

Government Employee Eye-Test Slide (1970s)

Published by Anonymous (not verified) on Tue, 26/05/2020 - 7:38pm in

A crisis is coming and the right wing is not going to give up without a fight

Published by Anonymous (not verified) on Wed, 06/05/2020 - 4:52pm in

As the FT has reported:

A bombshell ruling by Germany’s constitutional court questioning the legality of European monetary policy impinges on central bank independence and imperils the EU legal system, former policymakers and legal experts have warned.

The court on Tuesday ordered the German government to ensure the European Central Bank carried out a “proportionality assessment” of its vast purchases of government bonds to ensure their “economic and fiscal policy effects” did not outweigh other policy objectives. It threatened to prevent the Bundesbank, Germany’s central bank, from making further asset purchases if the ECB failed to comply within three months.

I am not, of course, an expert on the German constitution. I have no idea if this court ruling is technically right, or wrong. But I do know this decision is dangerous.

I have not been a big fan of the European Central Bam (ECB). Nor have I ever been a fan of the Euro, which was a deeply misconceived idea from its outset. It was always a case of politics getting in the way of necessary economics in a way that was eventually bound to cause stress for all involved.

But what I do know is that, whatever the rights or wrongs, the Euro exists, and so, by necessity as a result dues the ECB. And in that case it has a duty to behave like a central bank. By necessity that now means it must do one of two things. The first is quantitative easing (QE) and the second is direct monetary funding (DMF) of government spending by central banks. Since DMF is very hard indeed in the ECB's case, QE it has to be. There is no monetary policy otherwise. That it looks like fiscal policy is beside the point: it's all the Eurozone has.

And this matters: the livelihoods and economies of many countries across Europe do now, whether German courts like it or not, depend upon the intervention of the ECB in this way. Pragmatically, and with nosepegs applied, the ECB's role is essential at present.

But what is happening is that a group of hard right politcians and economists (and for these purposes, they can be presumed to be the same) are seeking to prevent Germany playing a part in the necessary process of saving the community of which it has chosen to be a part. This is blatant nationalist intervention. It is intended to create hardship. The object is international division. The weapon used is the integration of neoliberal thinking into legal structures that was always intended to be used for this purpose. Even as a pro-European I recognise all the flaw in its institutions that have been created to permit this.

This legal action is entirely malign. Its sole aim is to create havoc. I suspect that the courts knew that. I wonder if the ambiguity of the ruling is intended to avoid it.

Real leadership will be required to address this issue. And we can be sure that such claims will be replicated elsewhere: right wing interests are not going to give up the claims that they have established over society without a fight, including in courts, with which they are, of course, so familiar.

I have no idea how the situation will resolve in Germany. What I do know is that this is a warning signal: a crisis is coming, and upon its outcome depends the well-being of people for decades to come.

The betrayal, corruption and capture of the Liberal Party

Published by Anonymous (not verified) on Wed, 06/05/2020 - 11:25am in

[Published at Pearls and Irritations, 6 May]

The Liberal Party has strayed far from the vision propounded by its founder, Sir Robert Menzies, to the point of being captured by special interests.

According to former Senator Ron Boswell, Sir Robert Menzies, founder of the Liberal Party of Australia, said in 1970 

Australian Liberals are not the exponents of an open go, for if we are all to have an open go, each for himself and the devil take the hindmost, anarchy will result and both security and progress disappear

This is a clear repudiation of the idea of unregulated markets, an idea that came to dominate the world and the Liberal Party a decade or two later.

I have not been able to find the source of Boswell’s quote, and as Boswell may not have been the most reliable of witnesses I wondered if the quote was accurate. I have my father’s copy of Menzies’ memoir Afternoon Light, published in 1967 (my father held a life-long resentment of Menzies, I hasten to add). Although I have not found those exact words, there are other statements that lend them clear credibility.

Menzies recounts a brief history of the formation of the Liberal Party, of which he was the prime mover. At a gathering of disparate non-Labor forces late in 1944 Menzies laid out a proposed philosophy and principles for the proposed new party. This centred on private enterprise and individual initiative, as we would expect. He comments

I recognized, of course, that the State had its part to play, in major public works, in fiscal policy, in the provision of basic services, in the providing of national research and leadership. But it was not to be the Master.

After another quote from his 1944 speech he comments further

These views did not represent a belief that private enterprise should have an ‘open go’. Not at all. My friends and I recognized the economic responsibilities of the State to assist in preventing the recurrence of large-scale unemployment …

and, paraphrasing, to secure economic security for all responsible citizens.

Early in 1946 the new Liberal Party adopted a platform that included the following

Favouring the principles that wages should be the highest and conditions the best that the industry concerned can provide, and that good work is the essential condition of good pay, we shall conduct a constant educational campaign against the doctrine that the interests of the employer and employee are opposed … Cheap production depends on effort and efficiency, not upon wage-slashing. We believe that high wages and high production are natural and inevitable allies. [Emphasis added.]

Although Menzies’ main target at the time was State Socialism, the latter assertions are just as much a rejection of current views espoused by the Business Council of Australia, for example, that find great sympathy within the Parliamentary Liberal Party.

Menzies won power in 1949. Although there was serious dispute about possible further socialisation of the economy, Menzies nevertheless inherited an economy that was already well structured by the Curtin and Chifley governments to provide for broad prosperity of all Australians, according to newly adopted Keynesian principles.

The success of that postwar economy needs to be reiterated for the benefit of the modern political cohort who seem to think the world began in 1983 with the Hawke-Keating deregulations:

Annual growth of the Gross Domestic Product averaged over 5% between 1960 and 1974. Average unemployment, 1953-1974, averaged a minuscule 1.3%. Inflation averaged a moderate 3.3%, 1953-1974 – Steven Bell Ungoverning the Economy, 1997

The economy has never come close to that performance in the much-vaunted neoliberal era that began in 1983.

It may not always be remembered that Malcolm Fraser resisted calls for broad deregulation from the growing market-fundamentalist right wing in the Liberal Party, including from his Treasurer John Howard. A great irony is that it was Hawke and Keating who took up the neoliberal agenda. Another is that Fraser actually resigned from the Liberal Party in 2009. The occasion was the ousting of Malcolm Turnbull as leader in favour of Tony Abbott, but this event was just the last straw. Fraser had been disgusted by Howard’s failure to condemn the xenophobic views of Pauline Hanson in the 1990s, and by Howard’s co-opting of Hanson’s ideas in the blocking of the Tampa and subsequent treatment of asylum seekers. Over a longer period Fraser had been disturbed by the party’s shift towards market fundamentalism and libertarianism.

The attitude of the modern Party seemed to be ‘good riddance’ to Fraser. If he was no longer welcome, then surely the Party’s founder, Menzies, would long-since have been hounded out. Menzies, in his time, ran up government debt to finance such things as the Snowy Mountains Scheme and universities; he presided over considerable ‘intervention’ in the economy; he not only tolerated strong unions prone to frequent strike action but also believed in legislated protection for collective bargaining; he maintained relatively high taxes on high income earners; and he allowed the continuation of government ownership of many enterprises including a major bank, two airlines, communications and much infrastructure. He was, from the current perspective, as much a moderate social democrat as a conservative, though he was always a friend of big business.

Throughout the 1980s the Liberal Party was riven by a contest between so-called ‘wets’, represented by Andrew Peacock, and ‘dries’, represented by John Howard. Peacock was of the old liberal tradition. Howard was of the new ideological right, the market fundamentalists, later known as neoliberals. The dries ultimately prevailed.

The modern Liberal Party has changed again, with several distinct strands. The market-fundamentalist right has moved more explicitly into libertarianism, represented by the Institute for Public Affairs. The IPA, sponsored by the very wealthy, has been extraordinarily successful in infiltrating both the Liberal Party and the mainstream media, where its members are liberally sprinkled among editors and commentators. The most visible manifestation of their influence was the Abbott-Hockey budget of 2014. Its overt attacks on the poor and boosting of the rich were well outside most Australians’ vision of themselves, and the budget measures faired poorly in the political outcry it generated, at least in the short term.

Another strand, more evident perhaps in their Coalition partners the National (formerly Country) Party, comprises social reactionaries of meagre moral and intellectual pretense, personified best by Barnaby Joyce. Consistency is not a requirement, and this is the mentality of people like Boris Johnson and Donald Trump.

More recently it is revealed by Michael West Media that many Liberal members of parliament, including Ministers, and many senior Liberal staffers, are strongly connected with the mining industry, including being former senior executives in mining organisations. Comparable, slightly less numerous connections with defence industries are also documented. Connections with the gambling industry and, more through the Nationals, with big irrigators are evident or strongly suggested.

A pervasive corruption of our parliament, on both sides, has been evident for some time. This consists of receiving party funding from major industries and imposing policies that favour those industries against the known wishes of voters. This is most obvious in the Coalition’s boosting of the coal industry, against the people’s wish for a more rapid transition to clean energy and against all objective reason. State parliaments are also heavily complicit.

It is reasonable to say the Liberal Party was hijacked by the ideological right. It is reasonable to say that it is flagrantly corrupt. It seems now we must also conclude that the Liberal Party has been captured by the mining industry, in particular, and that the two are hardly distinguishable. The Government is the mining industry. We have government of the people by the miners for the miners.

Sir Robert Menzies’ vision for the Liberal Party was betrayed in the 1990s by the ideological right, most prominently by John Howard, who abandoned Menzies’ liberalism for market fundamentalism, social conservatism and xenophobia. It has been betrayed again by corruption, and again by outright capture by outside interests.

The coronavirus has required the Coalition to actually govern. Until the virus came, and even through the summer of fires, the Coalition seemed content to let the country drift, and to leave the economy to the wolves and warlords.

The result of the ‘open go’, as Menzies foresaw, is anarchy, and the loss of both security and progress.

Grant Shapps: a minister without any sense of responsibility

Published by Anonymous (not verified) on Fri, 01/05/2020 - 5:10pm in

The Guardian has noted that:

The transport secretary, Grant Shapps, promised EasyJet that green taxes would not be levied on airlines six months before the company was given a £600m coronavirus crisis loan with no environmental conditions attached, newly released documents show.

Direct lobbying against environmental taxes by Britain’s biggest airline are revealed in Freedom of Information Act responses obtained by Unearthed, Greenpeace’s investigations unit.

Evidence of the lobbying came as airlines across Europe were set to receive more than €26bn (£22.7bn) in taxpayers’ money for coronavirus bailouts with no binding environmental conditions attached, according to data compiled by Transport & Environment, Carbon Market Watch and Greenpeace.

I will not be alone in finding this staggering, I know.

And this further report by them is as shocking:

The meeting with Johan Lundgren, the boss of EasyJet, took place shortly after Shapps’s appointment as transport secretary last year. During the meeting, Shapps reassured the CEO he wanted the Department for Transport to be pro-aviation.

We know that flying is massively polluting.

We also know that most flying is by a fairly small part of the population - maybe 15% at most.

And we know that 92% of air travel is for leisure.

And we know that if we are to meet climate change targets - or even come close to meeting them - then massive change in the volume of air travel is required, where 'massive' means that most of it should not happen now.

What is more, we know that EasyJet paid a dividend of £171 million before applying for this state aid, at a time when it was obvious that the lockdown was inevitable.

So what we have is a minister promising state aid, regardless of the environmental consequences, to a company that is recklessly irresponsible in the face of the risks that it is exposed to, and who says that he will attach no conditions of any sort to it, whilst seeking to promote an industry that all available evidence says is now profoundly harmful.

And this government wants us to believe in its good intent? On this issue? On COP 26? On anything, come to that?

That's very hard when the evidence is that this government is completing failing to uphold its public duties.

We'll probably come out of the Covid-19 crisis deeply scarred. Many more alive now will not make it through it. That should sadden us all.But there will be another side. We cannot say that for sure of the coming climate crisis. There is absolutely no guarantee, and very little hope, of coming out the other side of that without radical action. But the government is in denial on that.

I'm not shocked by this behaviour. It is, despite my best hopes, what I expected. But I am angered by it.

I was working with others on a frequent flying levy before the project got side tracked by this crisis. We need one, very badly.

But most of all we need ministers who take their responsibilities seriously.

How CEOs Are Ruining AmericaToday, America’s wealthiest business...

Published by Anonymous (not verified) on Wed, 08/04/2020 - 1:58am in

How CEOs Are Ruining America

Today, America’s wealthiest business moguls – like Jamie Dimon, head of JPMorgan Chase – claim that they are “patriots before CEOs” because they employ large numbers of workers or engage in corporate philanthropy.

Rubbish.

CEOs are in business to make a profit and maximize their share prices, not to serve America. And yet these CEOs dominate American politics and essentially run the system. 

Therein lies the problem: They cannot be advocates for their corporations and simultaneously national leaders responsible for the wellbeing of the country. This is the biggest contradiction at the core of our broken system.

A frequent argument made by CEOs is that so-called “American competitiveness” should not be hobbled by regulations and taxes. Jamie Dimon often warns that tight banking regulations will cause Wall Street to lose financial business to banks in nations with weaker regulations. Under Dimon’s convenient logic, JPMorgan is America. 

Dimon used the same faulty logic about American competitiveness to support the Trump tax cut. “We don’t have a competitive tax system here,” he warned.

But when Dimon talks about “competitiveness” he’s really talking about the competitiveness of JPMorgan, its shareholders, and billionaire executives like himself.

The concept of “American competitiveness” is meaningless when it comes to a giant financial enterprise like JPMorgan that moves money all over the world. JPMorgan doesn’t care where it makes money. Its profits don’t directly depend on the wellbeing of Americans.

“American competitiveness” is just as meaningless when it comes to big American-based corporations that make and buy things all over the world. 

Consider a mainstay of corporate America, General Electric. Two decades ago, most GE workers were American. Today the majority are non-American. In 2017, GE announced it was increasing its investments in advanced manufacturing and robotics in China, which it termed “an important and critical market for GE.” In 2018, over half of GE’s revenue came from abroad. Its once core allegiance to American workers and consumers is gone.

Google has opened an Artificial Intelligence lab in Beijing. Until its employees forced the company to stop, Google was even building China a prototype search engine designed to be compatible with China’s censors.

Apple employs 90,000 people in the United States but contracts with roughly a million workers abroad. An Apple executive told The New York Times, “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible” – and showing profits big enough to continually increase Apple’s share price.

American corporations will do and make things wherever around the world they can boost their profits the most, and invest in research and development wherever it will deliver the largest returns. 

The truth is that America’s real competitiveness doesn’t depend on profit-seeking shareholders or increasingly global corporations. The real competitiveness of the United States depends on only one thing: the productivity of Americans. 

That in turn depends on our education, our health, and the infrastructure that connects us. Yet today, American workers are hobbled by deteriorating schools, unaffordable college tuition, decaying infrastructure, and soaring health-care costs. 

And truth be told, big American corporations and the CEOs that head them – wielding outsized political influence – couldn’t care less. They want tax cuts and rollbacks of regulations so they can make even fatter profits. All of which is putting Americans on a glide path toward lousier jobs and lower wages. How’s that for patriotism?

The first step toward fixing this broken system is to stop buying CEOs’ lies. How can we believe that Jamie Dimon’s initiatives on corporate philanthropy are anything other than public relations? Why should we think that he or his fellow CEOs seek any goal other than making more money for themselves and their firms? We can’t and we shouldn’t. They don’t have America’s best interests at heart — they’re making millions to be CEOs, not patriots.

Big American corporations aren’t organized to promote the wellbeing of Americans, and Americans cannot thrive within a system run largely by corporations. Fundamental reform will be led only by concerned and active citizens.

LA Times’ Billionaire Owner Buys a Hospital. Next Day, CA Supreme Court Tosses My Case.

Published by Anonymous (not verified) on Thu, 02/04/2020 - 11:01am in

Am I a victim of the COVID-19 pandemic? Legally, maybe.

Reversing direction unexpectedly, the California Supreme Court has decided NOT to hear my defamation and wrongful termination lawsuit against the Los Angeles Times,  billionaire publisher Austin Beutner, and parent company Tribune Publishing, which at the time of my firing was owned in large part by the Los Angeles Police Department pension fund.

Adding to the confusion, the Court decertified the Court of Appeals ruling against me. This means that, while I will soon be ordered to pay close to $1 million to the LA Times for their legal bills defending themselves from lying about me in two articles, I can take comfort in the fact that Rall v. LA Times will not be used to screw over other journalists under California’s anti-SLAPP statute. My case cannot be used as a precedent. It’s sort of like Bush v. Gore.

You are welcome, California journalists. You are safe.

Why did the court make the decision they made? There’s no way to tell. They issued a pair of trite phrases: “Petition for review denied; CA opinion decertified.” After five years and thousands of pages of opinions and blood and sweat and tears, that’s all she wrote.

It is possible that, as a friend of mine speculated this evening, the court didn’t want to sanction a disruptive decision against a major newspaper at a time when dozens of newspapers are going out of business every day.

What is interesting is the timing.

A few weeks ago, the California Supreme Court signaled to my attorneys that it planned to kick my case down the road for at least several months due to the COVID-19 epidemic and the closure of California courts.

Then, yesterday, the current owner of the LA Times, biotech billionaire Dr. Pat Soon-Shiong, made headlines by announcing his intention to buy a closed Los Angeles hospital for the purpose of treating coronavirus patients. $135 million dollars buys a lot of good will at a time like this.

The very next day, my case went away. Coincidence? Perhaps. Perhaps not. Who knows?

My attorneys and I are exploring next steps. I will keep you posted.

Sugar and Spice and Everything Vice: the Empire’s Sin City of London

Published by Anonymous (not verified) on Sun, 15/03/2020 - 12:00am in

Cynthia Chung The over 1000 point plunge of the stock market on Feb 27th and broader ruptures of the financial system last week have been yet another wake up call for those who have been contented so far to “live in the moment” of fast money. Since the 2008 financial crisis, which is considered the …

MPs Told that Russia Has Infiltrated Britain

Published by Anonymous (not verified) on Fri, 13/03/2020 - 9:26pm in

Boris Johnson still hasn’t published the report into Russian influence in the UK, probably because it would be highly embarrassing for his party. He and many of the other leading Tories have very close relationships with Russian oligarchs from whom they have received very handsome donations. Mike and Zelo Street have blogged about the strange non-appearance of the report. However, according to the I, MPs were told that Putin had extended his influence into this country. The article by David Connett, ‘Kremlin has infiltrated Britain, MPs told’, in this Tuesday’s I for 10th March 2020, runs

MPs have been told that Russia hired British politicians and consultants to help advance its criminal interests and to “go after” Vladimir Putin’s enemies in London, it was reported last night.

MPs on the parliamentary intelligence and security committee were told by businessmen and anti-corruption campaigner Bill Browder that Moscow had “infiltrated” Britain by using well-rewarded “British intermediaries”.

The information was submitted to MPs who drew up the Russia report suppressed by Boris Johnson, The Guardian newspaper reported.

The Browder evidence was submitted in secret to the committee which carried out a two-year investigation into how the Kremlin is seeking to influence UK politics. Its 50-page report was ready for release last November, before the election. No 10 cleared the document after the election but it is not clear when it will be published.

Clearly it’s very embarrassing for Tories. But remember – they’re the party of patriotic Brits, and it’s Corbyn and the Labour Party who were selling out this country to the Russians. Or the Czechs. Or Hamas, and indeed anyone else they could use to smear him.

Despite Consumer Scandals and Bank Mismanagement, Wells Fargo Continues to Spend Billions Rewarding Shareholders

Published by Anonymous (not verified) on Tue, 10/03/2020 - 5:32am in

Following a year-long congressional investigation into Wells Fargo’s egregious consumer abuses, lax corporate management, and toxic corporate culture, CEO Charles Scharf and Well Fargo’s board members will testify before the House Financial Service Committee this week. This hearing comes in the wake of a detailed report, written by the Financial Services Committee staff, exposing the ways in which Wells Fargo’s board and management failed to oversee an adequate regulatory response to multiple consumer scandals since 2016. What this report does not question is why the CEO and the board authorized billions of dollars in stock buyback and dividend spending—enriching shareholders and the highest paid executives—rather than making consumers whole. The committee should interrogate CEO Scharf and the corporate board on these activities. 

Through an analysis of Wells Fargo’s recent 10-K filings,[1] we found that the bank’s spending on shareholders (in buybacks and dividends combined) increased from $12.5 billion in 2016 to $30.2 billion in 2019. Instead of following through with “building a better bank,” Wells Fargo’s board of directors and CEO chose to direct corporate resources toward shareholder wealth, deciding to increase buyback and dividend spending two and a half times (142 percent) since the consumer abuses came to light. 

Corporate spending on stock buybacks has exploded in recent years across many companies and industries—including at Wells Fargo as this analysis shows—illuminating a key symptom of today’s extractive shareholder-first economy. But what does this illuminate about today’s economy? Known as “open-market share repurchases,” buybacks occur when a company buys back its own shares on the open market. This reduces the number of shares available, thus resulting in an increase in the price per share. In essence, stock buybacks raise share prices artificially. In other words, the value of a stock goes up as a result of a buyback, but without companies making the kinds of changes that would improve the actual value of the company—through more efficient production, new products, higher compensation for workers, or better customer experience.[2] In short, when corporations or banks spend more resources toward enriching shareholders, this comes at the expense of productive investments. 

Wells Fargo’s board not only agreed to reward shareholders at the expense of its workers and consumers, but the annual CEO compensation at Wells Fargo rose dramatically at the same time, from $13 million in 2016 to $18.4 million in 2018—despite the ongoing scandals and failure to address the bank’s mismanagement.[3] Though Wells Fargo has failed to root out bad management practices, its CEO pay rose over 40 percent from 2016 to 2018—making 300 times the pay of Wells Fargo’s median worker. 

These statistics are jarring on their own but especially so given the fact that Wells Fargo has changed its CEO three times in the three years since the scandals broke. John Stumpf resigned in 2016 and is now barred from the industry. Timothy Sloan then took the job but abruptly resigned in 2019—leaving Charles Scharf to take the reins of the scandal-ridden company just last year. One of the major problems with stock buybacks is that corporate executives often hold large amounts of stock themselves, and their compensation is often tied to an increase in the company’s earnings-per-share metric. This gives executives a personal incentive to time buybacks so that they can profit off of a rising share price, especially because the decision of whether and when to execute a buyback can affect a CEO’s compensation by millions of dollars. In fact, SEC Commissioner Robert Jackson found that corporate executives use buybacks to exploit their insider status and grossly inflate returns on their own stock holdings. Over the last few years, the majority of Wells Fargo CEO compensation—upwards of 80 percent—was paid in the form of stock awards or other annual incentive awards.[4]

To build better banks, a better financial sector, and a better economy, we need better rules that encourage productive—not extractive—corporate behavior. Reshaping decision-making (and power) within corporate America, including at Wells Fargo, will help us foster the shared prosperity that US companies can clearly afford to provide. 

[1] These are comprehensive reports filed annually by publicly traded companies about their financial performance as required by the US Securities and Exchange Commission (SEC).

[2] See “Stock Buybacks Are a Key Example of Extractive Corporate Power” for a detailed factsheet.

[3] 2019 executive compensation is not yet publicly available, but it will be available when Wells Fargo releases the 2019 Proxy Statement.

[4] As of Fiscal Year 2017, public companies were required to disclose the ratio of the compensation of its chief executive to the median compensation of its employees in SEC filings. The SEC rule was mandated under the 2010 Dodd-Frank financial reform.

The post Despite Consumer Scandals and Bank Mismanagement, Wells Fargo Continues to Spend Billions Rewarding Shareholders appeared first on Roosevelt Institute.

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