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**MARCH 20, 2023**

Kuttner on TAP

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**** Former Wells Fargo Exec Could Do Prison Time

Does the plea bargain by Carrie Tolstedt, who led Wells's corrupt
fleecing of customers, suggest a belated criminal crackdown on corporate
crooks?

Last week, a small but significant story almost got lost amid the larger
revelations about several bank collapses. Carrie Tolstedt, the former
senior executive at Wells Fargo in charge of that bank's systematic
looting of its customers via fake accounts and spurious extraction of
fees, agreed to a plea bargain
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that could give her a prison sentence of up to 16 months. Sentencing
will be delayed until April.

This case is significant because it is an exception to the
government's abject failure over two decades to bring individual
corporate criminals to justice. After the 2008 financial collapse, the
deeper scandal was that all the senior banking executives, who were
responsible for gross frauds that pulverized the economy and put
millions out of work and into foreclosure, escaped criminal prosecution.
(Bernie Madoff did time for an old-fashioned Ponzi scheme that was
unrelated to the systemic scams that crashed the system in 2008.)
Instead, the government agreed to settlements that fined banks, without
prosecutions of the executives responsible.

So if the Justice Department has opened the door to criminal
prosecutions of individual bankers, that is a major and welcome change.

"Until bank executives are held personally accountable for their
criminal actions, including the prospect of prison time, working people
will continue to pay the price," Sen. Elizabeth Warren (D-MA) told me.
"We will better protect consumers in the future with Wells Fargo's
executives facing justice for one of the largest financial frauds in
American history."

The prosecution is very timely, given that several top executives at the
large regional banks currently in the headlines used their privileged
insider information to sell bank stock, well before their banks'
precarious condition became generally known. That is criminal behavior,
and it cries out for criminal prosecution.

Specifically, Greg Becker, CEO of Silicon Valley Bank, sold $3.6 million
worth of shares
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in the bank on February 27, 11 days before SVB was shut down by the FDIC
as insolvent. And several top executives at First Republic Bank, another
collapsed bank, sold almost $12 million
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worth of their stock in the two months before the crash.

But one jailed banker does not translate into a reversal of the
long-standing lack of accountability for corporate crime. The Biden
administration has an opportunity, amid the bank turmoil, to show a
sustained commitment to executive prosecutions. So far, there's scant
evidence that they will do so.

>>
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the full story at prospect.org
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~ ROBERT KUTTNER

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Democracy Is in the Streets
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In France, Israel, and just maybe, here, assaults on social rights by
flawed governmental structures create the need for
government-by-protest. BY HAROLD MEYERSON

The Real Goal Behind the Frenzy Against 'Wokeness'
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Get rich by getting the rubes mad. BY RYAN COOPER

If at First You Don't Succeed on Executive Compensation...
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Try, try again. Here's the epic saga the Biden administration wants to
add to. BY DAVID DAYEN

 

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