Trusted local news leader for Prescott area communities since 1882
Mon, Oct. 14

Cantlon Column: Who knew regulators could do this

The Fed's sanctions on Well Fargo

Past reporting on bank crimes

Comparison of cost of street crime and white collar crime

Regulators have just forced Wells Fargo to replace four of its board members because of the bank’s repeated criminal behavior. The revelation that regulators can do that screams a question -- why hasn’t this been done all along?

One of the roles that the Federal Reserve plays is regulating banks. Under chair Janet Yellen, whose tenure just ended and was not renewed, the Fed announced that -- because Wells Fargo has had a consistent pattern of crimes (charging customers for fake accounts, games with mutual funds that cost clients, securities fraud, misleading mortgage deals, municipal bond rigging, foreclosure abuse, student loan abuse, to name a few) and has been weak in terms of correcting those patterns of wrongdoing -- the bank will be forced to replace the board members and will not be allowed to grow beyond its current size, at least not until it proves substantial changes to prevent more of the same.

As The Wall Street Journal has noted, previous revelations and pressure from regulators led to the resignation in 2016 of the Wells Fargo CEO at that time, John Stumpf, and clawing back of over $100 million of his compensation.

Wait. The option – of forcing corrupt board members out – was available all along, but wasn’t used until now? There could be no better tool. Even where weak laws make it difficult to convict bank leaders, booting them out of their stratospherically high paid positions is the next best thing. If they understand that they’ll lose their position if their bank regularly breaks the law, they’ll pay attention.

(At many companies, board members aren’t paid much. But for the biggest banks, board members are paid millions and also benefit from a boost to their career due to their prestigious and influential position.)

As one finance analyst put it in the news piece, “The Fed just put the fear of God into bank boardrooms across the country.” Good. But what stands out to me as the word, “just.” Regulators just did that. Not 10 years ago. Not any time in the long list of bank crimes.

Some poor, dumb schmuck in Poughkeepsie is smoking a little pot, and the U.S. Justice Department wants to create a crusade against him, but the biggest banks continually engage in crimes that make breaking-and-entering crimes pale in comparison. Even so, regulators “just” sent them to bed without their dessert.

We could have been doing that all along? Back when weak Attorney General Eric Holder said he was afraid to prosecute financial leaders because it might shake the economy, we had this alternative? Throughout the aftermath of the crash, throughout the years since -- in which most of the biggest banks relentlessly, and often flagrantly, committed crimes -- we had the power to boot those bank leaders?

HSBC repeatedly laundered money of crime syndicates and terrorists, even while under review for doing just that. A dozen of the biggest banks were fined for helping clients cheat on taxes. Foreclosure crimes were perpetrated against people suffering due to the recession. The biggest players were gaming the Libor number, the London Inter-bank Offered Rate, used throughout finance. The Mellon bank was skimming pension funds. Bank of America and JPMorgan were overcharging veterans. Through all of that, the option of removing banks’ board members was never used?

They could have been doing this booting out of corrupt bank leaders all along and just ... didn’t? Arrrggghhh!

Tom Cantlon is a local business owner and writer and can be reached at comments at

Event Calendar
Event Calendar link
Submit Event

This Week's Circulars

To view money-saving ads...