Why prosecuting Wells Fargo executives won’t solve anything.

A thoughtful assessment of the difficulty in prosecuting corporate executives from Samuel W. Buell:

As is almost always true with the big corporate scandals, the problem at Wells Fargo was not bad apples but a diseased orchard. Too often, as in this case, the owners and managers of the orchard can’t be prosecuted because, while creating an environment of high rewards and low or no penalties, they didn’t break laws themselves or, in all likelihood, even know laws were being broken.

It is tempting to think we should make a crime of this kind of bad management. But it is questionable whether such a law could pass constitutional muster. Consider the vagueness, especially in the context of the largest corporations, of things like managing too aggressively, incentivizing employees too strongly, or monitoring legal compliance too loosely. Constitutional questions aside, we ought to hesitate to condemn with the harshest of sanctions the very risk-taking behaviors corporations and capitalism are by definition designed to promote in the first place.The problem is the large corporation, not the people inside it—who turn over and over across scandal after scandal. It is time to put aside fixation with prosecutions as the cure-all for America’s corporate ills. The brilliant American innovation of the large, modern public company has had a major role in bringing our nation historically unprecedented wealth. But these corporations are plainly out of the control of those tasked with managing and regulating them. The corporate institution itself—its scale and the rules for how it operates—is what needs a hard and deep new look.

Source: Why prosecuting Wells Fargo executives won’t solve anything.

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