A new bill from Senator Elizabeth Warren proposes personal, criminal liability for top executives of companies turning over more than $1B/year when those companies experience data breaches and scams due to negligence (many of the recent high-profile breaches would qualify, including the Equifax giga-breach, as well as many of Wells Fargo's string of scams and scandals).
It is part of a raft of excellent policy proposals that Warren has introduced in conjunction with her bid for the 2020 Democratic presidential nomination (I am a donor to her campaign, as well as the Bernie Sanders campaign): lowering drug prices with federally commissioned generics, an annual wealth tax on family fortunes over $50m, antitrust breakups of Big Tech, an end to the Electoral College and a national Right to Repair law for farm equipment.
I believe that the major distinction between Warren and Sanders is that Warren believes that a market-based distribution system will work so long as the state corrects its failures, while Sanders believes that at best, markets are tools to solve the odd allocation problem.
My sympathies are more with Sanders than Warren, but I'm consistently impressed with Warren's extensive, specific policies.
I also think that Warren is laying a trap here. Plenty of people will say that no CEO can possibly oversee the operations of a billion dollar company well enough to prevent it from engaging in widespread fraud or suffering catastrophic breaches, but of course, the natural rejoinder is that this means that we shouldn't have companies that are too big to effectively oversee (let alone too big to fail).
In 2016, after the Wells Fargo fake-accounts scam came to light, I called out then-chief executive John Stumpf for gutlessly throwing workers at the bank under the bus — and told him he should resign. Weeks later, he did. When Wells Fargo elevated longtime senior executive Tim Sloan to replace Stumpf, I told Sloan he should be fired for his role in enabling and covering up the fake-accounts scam. For years, I pressured federal regulators, urging Sloan’s dismissal, and last week Sloan “retired.”
Don’t get me wrong. I’m glad Sloan and Stumpf aren’t in charge anymore. But this isn’t real accountability. When a criminal on the street steals money from your wallet, they go to jail. When small-business owners cheat their customers, they go to jail. But when corporate executives at big companies oversee huge frauds that hurt tens of thousands of people, they often get to walk away with multimillion-dollar payouts.
Elizabeth Warren: Corporate executives must face jail time for overseeing massive scams [Elizabeth Warren/Washington Post]