Seattle Shouldn’t Be in the Wells Fargo Business


Jonathan Tasini at CNN does the impossible: he succinctly sums up the recent controversy over Wells Fargo’s specious business practices in a single sentence:

Wells Fargo engineered a widespread scam on its customers, opening up as many as 1.5 million bank accounts and hundreds of thousands of credit card accounts that their customers never authorized, partly to inflate the perceived value of the company.

Of course, once you stare at the scam a little more closely, you pick up all sorts of terrible little details. Just today we’ve learned that Wells Fargo has repossessed hundreds of cars owned by US service members, for instance. I bet we haven’t learned the last of the bank’s various acts of malfeasance.

In response to this news, Wells Fargo fired over five thousand ground-level employees. But the bank’s executives are still cashing in: the company’s head of community banking, Carrie Tolstedt, might be walking away from Wells Fargo with 77 million dollars.  And as a thank you for overseeing all this, Wells Fargo CEO John Stumpf—yes, his real name—could receive a $134.1 million payout.

This is, frankly, disgusting. It’s parasitic behavior. Normal Americans have suffered thanks to the bank’s callous exploitation of trust, and middle-class employees of the bank are the only ones who have been penalized to date. If every bank in America followed Wells Fargo’s nihilistic business model, the economy would collapse. Barring a few trolls and high-paid banking executives, nobody in America thinks Wells Fargo should get away with this kind of scheme.

So why, then, are we rewarding Wells Fargo’s behavior? Why would you keep an account at Wells Fargo, knowing that not only does the company screw over its workers in pursuit of a ballooning profit for a few high-level executives, but that they actively scammed their customers? I understand that inertia is a hell of a drug, and that it’s easier to believe your account is safe from these practices now that Wells Fargo has been publicly shamed than it is to go through the whole process of closing your account and taking your business to a reputable credit union, but the lack of real consequences for Wells Fargo executives indicates that this kind of behavior was not sufficiently discouraged.

Which brings me to my point: did you know that Wells Fargo serves as the City of Seattle’s depository bank? This means that the city’s money—your tax dollars—flows through Wells Fargo. They profit from this relationship. Which also means that Seattle is effectively endorsing Wells Fargo’s behavior by keeping a contract with the bank. I could perhaps understand a trickle-down government like Sam Brownback’s state of Kansas banking with Wells Fargo, but the bank has demonstrated time and again that it is entirely at odds with Seattle’s stated values.

Over the last few years, Seattle has dedicated itself to the belief that we all do better when we all do better. Through laws like the $15 minimum wage and secure scheduling, we have affirmed that we need everyone’s participation to build a robust economy. We have no time in this city for employers who exploit their employees for a quick payout, because we want our economy to be a race to the top, not a race to the bottom. Why, then, would we encourage a bank that knowingly cheats its customers out of money? A bank that has demonstrated time and again that artificially inflated bottom lines are its most important goal? A bank that didn’t pay its employees for time worked? Seattle stands against everything that Wells Fargo has become. So we need to stop rewarding them with Seattle’s money.

David Rolf, president of the local SEIU chapter, and Civic Ventures founder  (and my boss) Nick Hanauer have joined forces to launch a petition demanding that the city of Seattle pull its money from Wells Fargo. I’ve signed it. I suggest you sign it. And I suggest you share it with your friends and family. I know that petitions often seem ineffectual—some wags online tend to mock petition-signers as “armchair activists”—but I’ve talked to a lot of politicians and I can tell you that petitions matter—especially on a city level. A petition signed by many constituents carries real power with elected officials. It’s one of the simplest, most effective ways to make your voice heard.

Of course, signing a petition isn’t the only thing we need to do. Simply entering your information into a form is no replacement for talking to elected officials, keeping up on the news story as it develops, and letting your social circle know why this issue is important. But it is absolutely an important first step. As Seattleites, we already know that our politicians are committed to making the economy more inclusive. They’ve demonstrated this in the way they legislate. But a politician’s attention and resources are finite, and so we have to guide them to the issues that matter to us. This is one of those times. And the best part is that it won’t take much effort on their part; breaking ties with Wells Fargo won’t require months of crafting legislation or many hours of public appearances to debate this issue. They likely already agree with us—we just have to, as the old FDR anecdote goes, make them do it.

This the right thing to do, and it’s a great message for our city to send to the rest of the country. Seattle is open for business, but we won’t reward practices that hurt everyday Americans in order to benefit the wealthy few. Sign the petition to let the world know that our values are the bedrock on which the city is built, and there is no room for compromise.

Daily Clips: September 30th, 2016

Suburban woman wield election power: Now vote for Hillary Clinton. Ok? Thanks.

A liberal Supreme Court: “Any American under the age of 50 has no memory of living with a liberal Supreme Court.”

Politics and the stock market: Eddy Elfenbein has a great blog, Crossing Wall Street, that focuses on stocks and the economy in general. Today, he has a great bit on keeping politics out of your portfolio:

Let me be clear that government policy does impact the economy, and by extension, the stock market. But those policy decisions are usually well removed from the standard partisan debate. The government shutdown is a good example of a partisan effort that riled investors, but even that didn’t last long. Of course, what the Federal Reserve does is important, but that’s rarely an election issue. Plus, there’s no reason to think that a change at 1600 Pennsylvania Avenue will have a great impact on monetary policy.


Consumer confidence jumps to highest level since 2007

Tweet of the day:

The Free Market Knows How to Save Lives from Distracted Drivers. It Just Chooses Not to Act.


I want to make sure you didn’t miss Matt Richtel’s stunning New York Times story in the media juggernaut’s run-up to the debate. It’s about texting and distracted driving, and the first paragraph is horrifying:

The court filings paint a grisly picture: As Ashley Kubiak sped down a Texas highway in her Dodge Ram truck, she checked her iPhone for messages. Distracted, she crashed into a sport utility vehicle, killing its driver and a passenger and leaving a child paralyzed.

Richtel continues, “With driving fatalities rising at levels not seen in 50 years, the growing incidence of distracted driving is getting part of the blame.” In his report, AT&T admits that texting while driving “has addictive qualities, meaning drivers cannot help themselves.” As any pedestrian commuter in a major American city can tell you, the driving-while-distracted epidemic is out of hand. Spend more than five minutes a day on city sidewalks and you’ll soon have a story about nearly being killed in a crosswalk by a driver who was senselessly taking a corner while staring at his iPhone.

This is a problem that is not going away, and the free market will not solve it. In fact, the free market has already devised a solution. Richtel explains that Apple has already patented software which would identify when a phone user is driving and disable text messaging and other apps that ping drivers, who often can’t bring themselves to resist an alert sound. They’ve had this software for years. But they haven’t released it to the public. Why? Well, as road safety consultant David Teater says:

“If you’re at Apple or you’re at Samsung, do you want to be the first to block texting and driving?” he said. “A customer might say, ‘If Apple does it, then my next phone is a Samsung.’”

This is the free market at work.

But of course the libertarians over at are doing whatever they do when the free market fails to solve a problem: try to convince their readers there’s no problem at all. In a post titled “New Round of Fearmongering Over Texting and Driving” from earlier this month, Ed Krayewski argues with the sentiment that more people are dying. Krayewski points out that traffic deaths have declined since 1985. While he allows that “technological advancements…have made cars safer to drive” in the intervening 30 years, he concludes that “the numbers don’t support the idea that smartphones are contributing to a rise in traffic fatalities, nor the contention that catching so-called distracted drivers ought to be a high law enforcement priority.”

I wonder what Krayewski would consider to be a priority. Mahita Gajanan at Time noted back in August that…

…A new report from the National Safety Council, a nonprofit group devoted to using research and data to prevent deaths, found that fatalities from traffic incidents were 9% higher through the first six months of 2016 than during the same time period last year.

And Angie Schmidt wrote for Streetsblog USA that traffic fatalities “hit a seven-year high in 2015.” And while every method of transportation saw fatality increases in 2014, pedestrians and bicyclists saw the largest rise, according to this graph from the National Highway Traffic Safety Administration:



Now, of course we can’t attribute all of these fatalities to distracted driving, but it seems likely that distracted driving is responsible for some of them. Most of the year-to-year conditions—traffic laws, the technological advancements that Karayewski cites in his post—tend to lean toward fewer or similar results. There is no way to definitively prove a connection between distracted driving and the increases in fatalities two years ago with the data available now, but smartphone adoption has increased dramatically over the last four years. If I were investigating the rise in traffic fatalities, distracted driving would certainly be an issue I would want to examine.

But that’s not even my point. When you get into a pedantic argument with libertarians about statistics, you’ve already lost. At issue is the whole libertarian philosophy, which, as always, is predictably glib and doesn’t stand up to any sort of serious philosophical investigation. How many fatalities would Krayewski and his libertarian crowd consider to be too many? How many people would have to die before the free market finally steps in and corrects the situation?

The goal should always be zero fatalities, even as we keep in mind that accidents, realistically, can and will happen. (There is an organization devoted to the idea of zero traffic fatalities, and they do excellent work.) The whole concept of a functioning society is that it operates with the public good in mind; the moment when governments decide to willfully abandon citizens to die is the moment when you see the social contract begin to break down. Yes, people die. No, we don’t always get it right. But to give up trying? That’s downright monstrous.

Let’s be clear that I don’t love every regulation. To point out a recent example, this new California law about collectible autographs, for example, was undoubtedly created with good intentions in mind—an attempt to curb forgery—but it seems to create unintended consequences that would hurt small businesses like bookstores, collectors, and antiques dealers. But to look at a clear and obvious public health risk like distracted driving and then to use it as an example of why the market should be allowed to run free strikes me as dangerous and poorly considered. It’s obvious that the free market isn’t going to save the lives of pedestrians from distracted drivers; the businesses in question have a solution to the problem and they just choose not to employ it. Moments like this one are when the government should intercede on behalf of the public good.


Daily Clips: September 29th, 2016

Donald Trump’s experts are basing his trade policy on a remarkably silly mistake: Yglesias proves once again that he is the King of Vox.

Because political life is full of dreary reductive binaries, many left-of-center people who are generally strongly critical of Trump have been inclined to praise his criticisms of US trade policy. It is important, however, to understand that Trump is not in any way offering any version of the most sophisticated criticisms of America’s approach to global trade. Not just in his rallies and off-the-cuff remarks but in his policy papers prepared by PhD economists, he is appealing to the idea that arbitrary restrictions on the sale of foreign-made goods will mechanically boost the American economy.

US economy less sluggish in second quarter; companies investing more: Also, consumer spending (which accounts for more than two-thirds of economic activity) “was robust in the second quarter, rising at a 4.3 percent annual rate.”

Underemployment among 20-somethings: A great piece in the Atlantic looks at how the underemployment rate for recent college grads “is still higher today than it was in 2010.”

Progressive politics after Bernie:

If the Sanders revolution is to realize its transformative potential, its adherents will have to recognize that its radical program can advance only if it wins the backing of the broader progressive universe—not just the Sanders-faithful arrayed in the rearview mirror. Its ability to move forward depends on its own strategic decisions and on the political space that a Clinton victory would create for the left, or, conversely, that a Trump victory would close off.

Tweet of the day:

Daily Clips: September 28th, 2016

Complexity theory and evolutionary economics: Complexity economics has a profound influence on the economic theory we espouse here at Civic Skunk Works (seriously – if you ever see Goldy around, ask him about it).

What exactly is complexity economics? Here’s a good primer:

In an evolutionary view, an economy is an “organism” that is constantly developing new industries, technologies, organizations, occupations, and capabilities while at the same time shedding older ones that new technologies and other evolutionary changes make redundant.

Obama nominates first Cuban ambassador in 55 years

Is this the year Arizona turns blue? Great headline, but I say no. For what it’s worth, The Upshot says Trump has a 77% chance of winning AZ.

Thomas Friedman asks great questions:

How do we put in the Oval Office a man who boasts that he tries to pay zero federal taxes but then complains that our airports and roads are falling apart and there is not enough money for our veterans?

Tweet of the day:

Daily Clips: September 27th, 2016

Solar power cost down 25% in five months – “There’s no reason why the cost of solar will ever increase again”

Gun responsibility took center stage in last night’s debate: Hillary Clinton displayed a nuanced understanding of gun violence that compared favorably to Donald Trump’s mumblings about the “hell” of inner cities.

Early polls and focus groups suggest Hillary Clinton won the first debate:

This initial evidence will confirm those spot judgments, and that could matter. As I wrote earlier this month, political science research indicates that media judgments about who “won” a debate could help influence voters’ perceptions of who won.

Great graphic:


Tweet of the day: So presidential. Such a great temperament.

Daily Clips: September 26th, 2016


Progressive family values: A strong column from Mr. Krugman. You can see that he is wrestling with the absurdity of this election quite openly. Here, he is frustrated that there is no discussion about policies that will aid the average American. Join the queue.

US new home sales fall in August: The trend is still positive, however.

Economics has a major blind spot:

Not all economists need to take politics into account, but the ones who give policy advice definitely do. All policy is political as well as technocratic, so econ and political science aren’t really the separate fields you might think from looking at academic departments.

The income gap began to narrow under Obama:

The CEA report argues that Obama has fought inequality in three main ways. First, the administration’s actions during the recession — extending unemployment benefits, temporarily cutting payroll taxes to stimulate growth and bailing out the auto industry, among others — kept unemployment lower than it would otherwise have been. Since recessions tend to hit the lowest-earning workers hardest, policies that mitigate their impact will tend to reduce inequality. Second, the CEA argues that the Affordable Care Act, by making health insurance more affordable for and accessible to low-income workers, has greatly reduced disparities in health care. And third, the CEA argues that the administration’s tax policies — which raised taxes on the rich, cut them for the middle class and expanded programs such as the Earned Income Tax Credit that help poor families — made the tax code more progressive. All told, the CEA estimates that the poorest fifth of American households will earn 18 percent more in 2017 than they would have without the administration’s policies.

How to watch the first presidential debate online: Democracy! Yay!

Tweet of the day:

Daily Clips: September 23rd, 2016

Can a modest proposal to keep guns from troubled family members pass? An initiative aims to find out: Initiative 1491 will be on the ballot in Washington State this November and it concerns Extreme Risk Protection Orders. As this well-written piece from Spokane points out, “Might extreme risk protection orders be on more hurdle between the plotting and the shooting? it’s hard to see a reason – a real one, anyway – that we wouldn’t try.”

Why isn’t the growth of the top 1% helping everyone else?

It’s probably not surprising, then, that the 10 states with the biggest jumps in the top 1 percent share from 1979 to 2007 were the states with the largest financial service sectors, according to the Economic Policy Institute analysis.

David Brooks should, once again, be ashamed of his column: He bitches about Clinton (again), making the point that she is not in-tune with today’s world. He claims, “Trump is egregious, but at least he’s living in the 21st century…”

Try telling that to African Americans or women or immigrants, David.

Companies that discriminate eventually fail:

Conclusion: Discrimination doesn’t pay. Although Becker wasn’t right when he claimed that competition would quickly drive all discrimination out of the market, he was right that bigotry represents an albatross around a company’s neck. Businesses can’t afford to let their gender and racial prejudices get in the way of rational economic decisions.

Tweet of the day: