Editorial: Abusive banking and drug-maker practices elevate need for effective regulation to protect consumers
Posted September 30, 2016
A CBC Editorial: Friday, Sept. 30. 2016; Editorial# 8061
The following is the opinion of Capitol Broadcasting Company
“You have regulations on top of regulations, and new companies cannot form and old companies are going out of business. And you (Hillary Clinton) want to increase the regulations and make them even worse. I’m going to cut regulations.”
Even as Donald Trump’s words were echoing in the Hofstra University auditorium Monday night, outraged members of Congress – Democrats and Republicans -- had been grilling pharmaceutical and banking executives over bilking American consumers.
Mylan inflated profits for lifesaving drugs with sky-high pricing and Wells Fargo Bank set up phony consumer banking accounts, without customers’ knowledge or permission. On the state level, the failure of Duke Energy – the nation’s largest investor-owned electric utility -- to adequately monitor and handle coal ash waste at power generation sites has been the subject of hearings, lawsuits and paltry fines.
These high profile examples of corporate excess make it more obvious than ever why necessary regulatory oversight of these institutions and businesses is so fundamental to our economy and public health.
How is it that pharmaceutical maker Mylan can charge $600 for two EpiPens in the United States while in the United Kingdom a similar set costs $69?
How can one of the nation’s largest banks, Wells Fargo, set up more than 2 million phony and unauthorized accounts, fire 5,300 low-level employees and be fined $185 million, but not a single top executive be held accountable ?
It was only after a verbal pummeling that James Stumpf, the CEO of Wells Fargo Bank, endured in the U.S. Senate last week that he was forced to forfeit $41 million in stock options and go without his 2016 bonus over the phony account mess.
And Thursday, when he appeared before the House Financial Services Committee, Jeb Hensarling, the Republican committee chair told him: “Fraud is fraud and theft is theft. What happened at Wells Fargo … cannot be described in any other way.”
Other members of Congress got some good licks too. “Do you think what you did was criminal?” said Rep. David Scott, D-Georgia. “Why shouldn’t you be in jail?” asked Michael Capuano, D-Mass.
During a Senate Banking Committee hearing, Sen. Elizabeth Warren grilled Stumpf on accountability for the scandal. She called on the U.S. Justice Department and the Securities and Exchange Commission to investigate Stumpf and other top Wells Fargo execs. “You make it clear that Wall Street won’t change until we make it change,” Warren said to Stumpf.
Change is needed but regulation, despite Donald Trump’s assertions, is certainly not the problem holding Wells Fargo back.
No doubt the pressures for profits and stock growth are immense. Short cuts – even illegal ones – can be very tempting.
That is exactly why regulation and supervision, on a federal and state level, must be high priority.
Slap-on-the-wrist fines and tongue-lashings before congressional committees aren’t going to change bad behavior themselves. Regulators need to be positioned and have the authority to protect consumers and prevent companies from profiting from inappropriate and illegal schemes and scams.
Strong regulation coupled with attentive oversight won’t hinder growth of well run companies that play by the rules. It will, however, provide a better shot at stopping consumer abuse, illegal activities and dangerous shortcuts before the damage is so widespread that the financial security of the nation and its well-being are damaged.