It Sounds Like a Lot, But Wells Fargo’s $3 Billion Settlement in Fraud Case Assailed as “Slap on the Wrist”

$3-billion slap: Wells Fargo has agreed to a $3 billion settlement with federal prosecutors and the Securities and Exchange Commission to resolve federal criminal and civil charges over consumer abuses. Wells Fargo admitted that bank leaders knew for well over a decade that employees, under pressure to meet unrealistic sales goals, were misusing customer information to open fraudulent accounts. Ohio Sen. Sherrod Brown, the top Democrat on the Senate Banking Committee, described the $3 billion fine, which is about 15 percent of Wells Fargo’s $19.5 billion in profits last year, as “a slap on the wrist.” Fellow Democrats are continuing to investigate, including California Rep. Maxine Waters, chair of the House Financial Services Committee, who announced three hearings on Wells Fargo in March.

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CEO salary bloat: As You Sow, a Berkeley-based nonprofit that promotes corporate social responsibility through shareholder advocacy campaigns, has released its sixth annual report ranking the 100 most overpaid CEOs among S&P 500 companies. The rankings are based on a formula that takes into consideration such things as the company’s earnings performance and the ratio between CEO compensation and median worker pay. Many on the list of those most overpaid lead companies that are household names, including Walt Disney, PayPal, The Gap, Chipotle, and Netflix. At the top of the list are Mark Hurd and Safra Catz, who jointly lead Oracle and pull in more than $216 million a year—or about $204 million more than As You Sow calculates they deserve. Among CEOs who made the list, the ratio of their pay to the salary of the median employee ranges from a low of 113-to-1, to a high of 3,566-to-1, at The Gap.

  • Also: Dennis A. Muilenburg, recently forced out as CEO of Boeing, only just made the list, at spot number 99. Under his leadership, Boeing rushed the 737 Max to market, resulting in two plane crashes and the loss of hundreds of lives, but he received $23.4 million in 2018, and a whopping $62 million payout upon his departure.

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Boeing under the microscope: Federal prosecutors investigating Boeing are focused on who knew what about the flight control software known as MCAS  that played a role in two crashes that killed 346 people, and whether the company intentionally misled the Federal Aviation Administration. The New York Times reports that in grand jury proceedings, prosecutors have homed in on a top pilot, Mark Forkner, who wrote in an instant message to a colleague in 2016, before the 737 Max jet was approved, “I basically lied to the regulators (unknowingly).” Lawyers for Forkner have denied he ever lied to anyone. Boeing has now placed three employees who worked with Forkner on administrative leave, according to Bloomberg. The new Chief Executive Officer Dave Calhoun, who replaced Muilenburg last month, described email messages suggesting a cavalier view of safety as a “micro-culture” that doesn’t reflect the company’s values.

  • Also: Boeing has found debris in the fuel tanks of about 35 new 737 Max jets, or about two-thirds of the undelivered planes inspected so far, The Wall Street Journal reports. The debris found includes tools, rags and boot coverings left behind by assembly-line workers.

The shrinking Colorado: The flow of the Colorado River is down 20 percent compared to the last century, and scientists say the climate crisis is to blame, Drew Kann writes for CNN. More than half of the decline in flow is due to rising temperatures, according to a new study published in Science by US Geological Survey scientists Chris Milly and Krista A. Dunne. The Colorado provides water to more than 40 million people from Denver to Los Angeles, and as the volume decreases, the risk of severe water shortages increases. The river’s water losses will likely continue, if not accelerate, by 14 to 31 percent over the next 30 years as temperatures keep warming, according to the researchers. That would be a much larger drop than the 9 percent decline that a U.S. Bureau of Reclamation study predicted in 2012 over the same time period, Tony Davis points out in the Arizona Daily Star. “Without this river, American cities in the Southwest would dry up and blow away,” said Brad Udall, a senior climate scientist at Colorado State University.

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The cost of cleanliness: A new study that followed 2,022 Canadian children from infancy has found that babies frequently exposed to common household cleaners were more likely to develop asthma by age three than other children, the CBC reports. “The risks of recurrent wheeze and asthma were notably higher in homes with frequent use of certain products, such as liquid or solid air fresheners, plug-in deodorizers, dusting sprays, antimicrobial hand sanitizers and oven cleaners,” the paper’s lead author, Jaclyn Parks of Simon Fraser University, said in a press release. “It may be important for people to consider removing scented spray cleaning products from their cleaning routine. We believe that the smell of a healthy home is no smell at all.” Some easy, inexpensive alternative cleaners include hydrogen peroxide or vodka for disinfecting, and vinegar and baking soda in lieu of soap or sprays.

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Pandemic fears: New outbreaks of the coronavirus in Europe, Asia and the Middle East have stoked fears of a potential global pandemic. South Korea has confirmed nearly 1,000 cases. Experts are particularly worried about an outbreak in Iran, where almost 100 people have tested positive for the virus, including Iran’s deputy health minister, Iraj Harirchi, and 15 have died. Cases in Iraq, Afghanistan, Bahrain, Kuwait, Oman, Lebanon, and the United Arab Emirates have been traced to Iran. “It is a recipe for a massive viral outbreak,” Peter Piot, director of the London School of Hygiene and Tropical Medicine, told The New York Times. Italy has reported a total of 283 coronavirus cases, the biggest number of confirmed cases outside Asia. So far there have been seven deaths in that country.  Worldwide, the death toll exceeds 2,700 with more than 80,000 cases, the vast majority in mainland China, according to CNN.

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Repeat offenders: The Labor Department’s Occupational Safety and Health Administration has cited Dana Rail Care for workplace safety and health hazards at its rail car maintenance and cleaning site in Wilmington, Delaware. It’s the second time in six months that OSHA has cited the company, which it accused of willful and serious violations following the death of a worker in Pittston, Pennsylvania, in May 2019. Dana Rail Care faces $550,000 in proposed penalties for the first citation and $371,276 in penalties for the second, but the company has contested the proposed penalties. The agency also cited DB Custom Carpentry LLC in Aurora, Illinois, for willful and repeat violations for exposing employees to falls. “This employer has an extensive history of OSHA violations, and continues to demonstrate a disregard for the safety of workers by allowing them to work at heights without fall protection,” according to OSHA Chicago South Area Office Director Kathy Webb. The homebuilder faces penalties of $333,968. Finally, OSHA cited Jaime Martinez Hernandez, a residential framing contractor in Phenix City, Alabama, for exposing employees to falls and other hazards at two worksites. OSHA has inspected Hernandez six times in the past five years, citing him for willful, repeat and serious violations for lack of eye and fall protection, and other hazards. He faces $240,880 in proposed penalties.

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Paying up in the Carolinas: Time Warner Cable will pay $745,000 in back wages to nearly 3,000 people to settle allegations of hiring discrimination in Charlotte and Morrisville, North Carolina, and West Columbia, South Carolina, Hannah Smoot reports for The Charlotte Observer. After a routine compliance evaluation by the Labor Department’s Office of Federal Contract Compliance Programs, preliminary findings showed Time Warner Cable discriminated against African Americans and women applying for sales representative and other positions. Time Warner Cable did not admit wrongdoing as part of the settlement.

Jessica McKenzie is an independent journalist. Find more of her work at jessicastarmckenzie.com.

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