When US senator Elizabeth Warren tore into Wells Fargo CEO John Stumpf this week, lots of people cheered. Here was the handsomely paid executive of a dishonest bank getting his comeuppance. Here was justice.
One day after Warren and her colleagues in the Senate were done whacking Stumpf like he was a well-dressed piñata, Mylan CEO Heather Bresch, dragged before Congress for the EpiPen pricing controversy, took her lumps from the US House of Representatives.
In an election year, even normally business-friendly Republicans aren’t above indulging in a little populism. And Stump and Bresch, with their easily understood scandals, are appealing targets.
But all the tough questioning ultimately means very little. CEOs like Stumpf and Bresch, who are paid for performance, have many incentives to push corporate behavior up to the limits of legality. Getting dragged before Congress may be inconvenient, but increasingly, it’s just another cost of doing business.
Warren and the other politicians know how little effect they have. Congress can draw attention and headlines, but since it’s hopelessly gridlocked, there’s very little its members can do to punish corporate malefactors like Wells Fargo and Mylan if they can’t pass laws. Meanwhile, the public’s opinion of Congress, while never high, has plunged lower than ever. In a Gallup poll this summer, just 13% of Americans approved of the way it was handling its job. Congress has no moral authority it can summon.
When Martin Shkreli, the former CEO of Turing Pharmaceutical, was called to testify about huge price increases, he smugly refused to answer questions, citing his Fifth Amendment rights, then tweeted his opinion about his interlocutors.
Most CEOs aren’t as public with their contempt of Congress as Shkreli, but many of them probably share it. They also know the legislators castigating them are often the same ones asking for donations. Wells Fargo has given almost $2 million to politicians and parties this election cycle, including $168,595 to members of the Senate banking committee. It’s hard to be feared when you have your palm out.
This doesn’t mean we can’t enjoy watching a good grilling on Capitol Hill. But we should be cognizant that it is just a performance, part of the theater of outrage and contrition that passes for corporate accountability today.