A recent proposal by a new state senator from San Francisco captures both of these concepts in one measure. In late February, Sen. Scott Wiener, D-San Francisco, introduced Senate Bill 726, a direct response to a proposal by President Donald Trump. (Ironically, Wiener has been viewed as a “pro-business” Democrat, at least by Bay Area standards.)

The president wants to eliminate the federal estate tax, which imposes a 40 percent income tax on estates valued at $5.5 million or more. A couple of Republican-backed bills to repeal the tax are currently making their way through Congress. Wiener’s measure would institute a California estate tax that’s identical to the federal estate tax. Under Wiener’s bill, the state tax would only go into effect if Congress does away with the federal version.

Such estate taxes, often referred to as “death” taxes, don’t apply to a huge number of estates given the exemption, but they have earned the wrath of the president and many Republicans. Trump called the tax “just plain wrong.” President Barack Obama had proposed eliminating an estate-tax “loophole.” And Hillary Clinton had proposed raising the estate tax to an unprecedented 65 percent, according to a Forbes analysis.

Republicans dislike such taxes on grounds of “fairness” since many of these estates often are taxed twice and even three times. Such taxes can have a negative effect on small businesses, especially farms, which often struggle to stay afloat after the passing of the owner. Democrats see the tax as a way to find government revenue. They also make social-justice arguments for taxing larger shares of inherited wealth, which they view as exacerbating inequality.

“If Donald Trump and congressional Republicans are hell-bent on cutting taxes for our wealthiest residents, we should counter-balance those tax cuts by recapturing the lost funds and investing them here at home in our schools, our health care system, and our roads and public-transportation systems,” Sen. Wiener said in a statement.

Even if his bill passes both houses of the Legislature and is signed into law by Gov. Jerry Brown, it still faces a large hurdle: It would need to be approved by voters on a statewide ballot. That’s because voters in 1982 approved two slightly different statewide ballot initiatives (Propositions 5 and 6) that repealed the state’s then-existing inheritance and gift taxes and prohibited state or local governments from imposing them in the future.

If Congress repeals the estate tax and Californians impose a new estate tax at the ballot box, then the “death” taxes currently flowing to Washington, D.C., would head to Sacramento instead – to the tune of around $4.5 billion annually. Californians pay 26 percent of the nation’s total estate and inheritance taxes, according to Wiener’s statements. “Considering that California is generally a donor state to the federal government, that would mean significantly more money would remain in California for critical investments,” his office explained.

“A foolish, unnecessary tax,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “At least they have to go to the voters to do this and I suspect citizens will be skeptical.”

Wiener’s approach, Republicans say, would leave California, which already has among the highest income-tax rates in the nation, at an even greater competitive disadvantage. California already has high tax rates that drive many businesses to other states. If the estate tax is gone nationwide, some believe it could spark an exodus of wealthy citizens to neighboring states given few state legislatures are likely to follow California’s approach.

Wiener defends his idea as a means to protect California’s progressive tax system, by which wealthier people are taxed at a much higher rate than middle-income and low-income people. “The #Resistance to Donald Trump takes many forms,” he wrote in a recent column. “Salvaging a highly progressive form of taxation, keeping the proceeds here in California, and using the funds to repair the damage caused by Trump and company certainly qualify.”

But it’s not only conservatives pointing to the perverse outcomes of our tax system. Gov. Jerry Brown has repeatedly noted the system’s design leads to budget volatility given such progressivity leaves California’s government dependent on a relatively small number of successful firms.

“In years when the state receives an unexpectedly large amount of tax revenue, state legislators tend to increase spending on programs and employee compensation significantly, believing the high revenues reflect a new normal,” wrote Autumn Carter, of US Common Sense. Then after revenues fall, legislators make “sudden” cuts to programs to balance the budget, she added.

Re-imposing a California estate tax would only make the state budget much more volatile. And it won’t reduce California’s income-inequality chasm. Research by the Tax Foundation finds states with steeply progressive tax rates do not typically have lower income inequality than states with more regressive tax systems.

As critics note, high net-worth people often move elsewhere when tax environments become too onerous. Furthermore, progressive tax rates may create an inordinately high demand for government spending. Voting majorities don’t pay a large share of the new spending, so there’s little personal financial downside for them by backing tax hikes and new programs.

A House Republican tax-reform task force last year called for eliminating the estate tax and a type of gift tax that penalizes people for giving money to their grandkids: “The elimination of the estate and generation-skipping transfer taxes will allow family-owned businesses to transition smoothly from generation to generation, without the burden of the estate tax that today can leave grieving families with no choice but to liquidate the family business to satisfy the estate tax obligation owed to the government upon the death of their loved one.”

Republicans say eliminating such taxes will also reduce an owner’s lifetime accounting costs. Some supporters of the estate tax downplay its punitive nature by noting most companies are able to minimize the tax bite through myriad accounting and tax-avoidance measures. They argue the administration ought to leave the estate and gift taxes as they are – rather than complicate an already complex system. But the tax still hits a lot of businesses, or else there wouldn’t be so much concern over tapping the revenue source.

California Democrats are sure they are channeling the public’s anti-Trump sentiments with many of their recent proposals. But are California voters willing to raise their own taxes – or at least the taxes of their deceased neighbors – to make a point to the new administration? We soon may see whether this is a serious measure or just the latest example of anti-Trump venting.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

The popular Democratic governor echoed other Democratic leaders in the state by taking shots at Republican President Donald Trump and congressional Republicans and their proposed, yet sometimes vague, agenda.

On the day Trump pushed through two controversial oil projects opposed by environmentalists, with a repeal of the Affordable Care Act slowly working through Congress and with federal action on immigration looming on the horizon, Brown pointed to the battle lines drawn between the state and the federal government.

“While no one knows what the new leaders will actually do, there are signs that are disturbing,” Brown said. “We have seen the bald assertion of ‘alternative facts.’ We have heard the blatant attacks on science. Familiar signposts of our democracy – truth, civility, working together – have been obscured or swept aside.”

Yet the tone wasn’t entirely combative, compared to legislative leaders. Brown lauded Trump’s plans for massive investment in infrastructure (“Amen to that, brother”) and highlighted bipartisan accomplishments in the state, like the creation of the rainy-day fund and the water bond.

Brown also drew a stark contrast with Hillary Clinton, who, during the campaign season, referred to half of Trump’s supporters as a “basket of deplorables.” 

“Democrats are in the majority, but Republicans represent real Californians too,” Brown said. “We went beyond party when we reformed workers’ compensation, when we created a rainy-day fund and when we passed the water bond.”

Brown lauded accomplishments during his governorship, which included increasing education funding, passing climate-change legislation, removing a substantial budget deficit and adding millions of people to insurance plans through both Medi-Cal and private policies.

A significant portion of the speech was devoted to immigration, noting immigrants are “an integral part of who we are and what we’ve become.” Brown called attention to some of the state’s immigration initiatives, like the Trust Act and a measure issuing driver licenses to undocumented immigrants, saying “we may be called to defend those laws and defend we will.”

“Whether it’s the threat to our budget, or to undocumented Californians, or to our efforts to combat climate change – or even more global threats such as a financial meltdown or a nuclear incident or terrorist attack – this is a time which calls out for courage and for perseverance,” Brown said. “I promise you both.”

“That the Senate hopes for the peaceful transition of power in the United States, that the incoming presidency will be a success, and that the president-elect will take his responsibilities seriously to ensure a strong and unified America,” according the resolution authored by Sen. John Moorlach, R-Costa Mesa.

Of course, California’s electors will chose Hillary Clinton, who won the state in a landslide in a winner-take-all contest, but the majority of electors in the country will choose Donald Trump to be the next president.

Since the November election, top California Democrats have pledged to fight the Trump administration, particularly on climate change and immigration. A few weeks ago, the  Legislature passed a resolution calling on Trump to back away from tough stances on immigration taken during the campaign.

Moorlach’s resolution, however, calls on the Senate to work with Trump “to ensure that the United States remains a world leader in economics, trade and freedom.”

“The work of forming a more perfect union is neither easy nor trivial,” Moorlach said in a statement. “In a republican form of government, it requires cooperation between duly elected officials. At a time of unparalleled polarization, California now finds itself in the position of being one of the bluest states in a very red nation.”

Even as a few voices nationally have called for electors to not vote for Trump, the California Legislature’s recent resolutions acknowledge Trump as the president-elect. Moorlach said he is “pleased” by the acknowledgement and, while he expects Trump to be challenged by elected officials in California, he hopes everyone will ultimately wish for Trump’s success “for the sake of our country.”

“This peaceful transition is a hallmark of our democracy,” Moorlach said. “President Barrack Obama has called on Americans to move forward and reminded the country that we are all on the same team and reiterating the sentiments of his forbearers, that we are not enemies, but friends.”

But down the ballot, 10 things stood out.

• Nearly 50,000 people voted for Roger Hernandez, a termed-out Democratic assemblyman from West Covina who had been running for Congress until he suspended his campaign after he was placed under a domestic violence restraining order and was stripped of his committee assignments.

• Congressman Darrell Issa seems to have won re-election. Although it’s still close and the Los Angeles Times had not yet called the race, Issa maintains a nearly 4,000-vote lead over Democrat Doug Applegate. This isn’t noteworthy because Issa was vulnerable and squeaked out a win. It was noteworthy because Issa, the richest member of Congress, wasn’t seen as vulnerable. The Vista Republican, in his 15th year in Congress, has been one of the most high-profile Republicans over the last few years as a constant thorn in the side of the Obama administration. But as national money started flowing to Applegate and an endorsement of Donald Trump appeared to be weighing Issa down, the race tightened.  

• As long as these results hold, Rep. Mike Honda, D-San Jose, will be the only incumbent in California’s 53-person congressional delegation to lose. Fellow Democrat, Ro Khanna of Fremont, finished what he started in 2014, when he first challenged Honda.

• A reminder that California is not as uniformly progressive as it often seems: Voters upheld the death penalty as the maximum sentence for murder. Even more surprising is that a measure to speed up death penalty appeals is clinging to a two-point lead in the returns.

• Republicans appear to have held their seats in the state Senate, beating back a Democratic supermajority. Everything hinges on a Southern California district that extends from Cypress to West Covina to Chino Hills, where Republican Ling Ling Chang, a sitting assemblywoman, is holding an almost two-point lead over Democrat Josh Newman. 

• But in the Assembly, Republicans lost three seats, dipping below one-third of the chamber. In the Los Angeles South Bay, David Hadley was knocked out by former Democratic Assemblyman Al Muratsuchi. In Orange County, Young Kim trails former Democratic Assemblywoman Sharon Quirk-Silva. And in the Inland Empire, Eric Linder is losing to Sabrina Cervantes.

• While no Senate incumbents of either party were defeated, five incumbent Assembly members either lost or trail. That includes the Republicans, Linder, Kim and Quirk-Silva, along with two Democrats who lost intraparty challenges. Cheryl Brown, the Inland Empire incumbent, lost to Eloise Reyes in a proxy war between environmentalists and unions that opposed Brown and Big Oil and charter schools that supported her. In the San Fernando Valley, Patty Lopez was ousted after the Democratic Party endorsed her challenger, former Democratic Assemblyman Raul Bocanegra, who also had major support from outside business interests.

• Orange County, the traditional Republican stronghold, voted for Hillary Clinton for president. According to The Orange County Register, the county hadn’t supported a Democrat for president since the Great Depression. That result reflects a consistent slide in Republican registration in the county, which has persisted for decades.

• Speaking of Orange County, Democratic Congresswoman Loretta Sanchez lost her home county in the U.S. Senate race by 9.6 points. Sanchez has represented Orange County in Congress since she was first elected in 1996.

• And speaking of the U.S. Senate race, more that 1.1 million people sat it out. The race made headlines after the June primary, when no Republicans advanced to the general election — a byproduct of the state’s relatively new primary system where the top two candidates advance regardless of party. Sanchez lost to Attorney General Kamala Harris, a fellow Democrat.

The shifts and splits that have long beleaguered the California Republican Party have culminated in historic unpopularity this election year, presenting officials with an open question as to how the party can best retool in the wake of Donald Trump’s run for the White House.

Despite a dogged performance two years ago that held the line against further losses, state Republicans did not anticipate the rise of a candidate that would galvanize their smaller and increasingly populist base. “Of the state’s likely voters, 72 percent have an unfavorable opinion of the GOP,” John Myers noted at the Los Angeles Times, citing a new poll from the Public Policy Institute of California. “That’s eight points higher than two years ago, 14 points worse than four years ago and a massive 21 points above the party’s unfavorable rating six years ago. And then there’s this: 50 percent of registered Republicans have an unfavorable opinion of their party.”

Souring mood

Although Trump has openly declared political war on Republicans he sees as unsupportive, Californian dissatisfaction with the GOP has not helped his candidacy. In a joint poll by Stanford University’s Hoover Institution and the Bill Lane Center for the American West, respondents suggested the Trump who once encouraged buzz around a bid for California votes has been eclipsed by public opinion. “You have to go all the way back to Alf Landon in 1936 to find a Republican presidential nominee doing as badly as Donald Trump is in California. Even Landon got 31.7 percent of the vote, while Trump is polling at 30 percent, according to the poll of 1,250 likely voters,” the San Francisco Chronicle reported.

The paltry percentage implied a so-called down-ballot effect “on three vulnerable House GOP incumbents: Darrell Issa in northern San Diego County, Steve Knight in northeastern Los Angeles County and Jeff Denham in the Central Valley’s Stanislaus County,” the paper added. 

October twist

But down-ballot Democrats have not been immune to the twists and turns of fortune in the election’s closing days. Analysts have tended to agree that although Hillary Clinton probably won’t be hurt by late developments in the FBI’s investigation of emails surrounding her practices and associates, the ongoing ordeal might pose bad news for vulnerable party-mates in competitive legislative races. “Democrats say they haven’t seen slippage yet and they hope that the email story won’t move the needle in a half-dozen or so Senate races that are either tied or within the polling margin of error,” according to NBC Los Angeles, but Republican moneymen, the network noted, have sought to capitalize on the possibility. 

Meanwhile, in a move designed to aid candidates like Issa, California veterans of Ted Cruz’s campaign have trained their organizational guns on a last-minute push. “Ron Nehring, the former state GOP chairman who was a top Cruz booster, said the focus will be on turning out Republican voters and recruiting volunteers to work on a list of hotly contested congressional and legislative races selected by the California Republican Party,” according to the Times.

An uneven wave

Nevertheless, in some parts of California, Republicans have not faced a down-ballot problem for the reason that no Republicans exist down ballot. “When 818,000 voters in Los Angeles County fill out their ballots this election, they will find themselves in strange political territory: The only Republican names they’ll see will be presidential nominee Donald Trump and his running mate Mike Pence,” as the Times reported. “In this GOP ‘dead zone’ — spanning parts of five congressional districts, five state Assembly districts and one state Senate district — not a single Republican candidate made it on to the November ballot.”

Despite their dominance, California Democrats may still not succeed in seizing a supermajority in the state Legislature on Election Day. “While Democrats would have to run the table in several competitive districts to gain a supermajority in the state Senate, an unlikely outcome even in an advantageous election year, their prospects in the state Assembly run higher,” Politico observed. “In the lower house, Democrats need to pick up only two seats, and early turnout in targeted districts is moving in their favor.”

Clinton leads CA by a mile

Good morning. It’s Thursday and in the spirit of getting through to the weekend, we’ll give a quick rundown of today’s news and happenings.

Here’s something that should come as no surprise: Hillary Clinton has twice as much support as Donald Trump in California, according to a new poll. A 26-point lead. The San Francisco Chronicle has more.

But here’s something you may not have known: Hollywood’s stars are often quick to lend their name to causes, but not always so quick to give their money. Of course, some open their wallets. Robert Downey Jr. and his wife each gave $35,000 to Prop. 57, Gov. Jerry Brown’s parole measure. The Sacramento Bee has more.  

One of the most endangered legislative incumbents, Assemblyman David Hadley, R-Torrance, has been ordered by a Sacramento judge to explain why he hasn’t fully cooperated with a political ethics investigation. This South Bay seat is one of a handful that will decide if Democrats get a two-thirds “supermajority” in the legislature. Capital Public Radio has more. 

Speaking of donors, the Bay Area’s Tom Steyer — the largest donor in the country — is now the largest donor to the $2-per-pack tobacco-tax increase after giving $3.5 million to the cause on Tuesday. The potential gubernatorial candidate has now spent $11.3 million on Prop. 56, including in the primary. The Los Angeles Times has more.

And totally unrelated to the election, San Diego’s City Council will consider banning Airbnb and other short-term rentals, reports The San Diego Union-Tribune.

Legislature:

• Gone till December.

Gov. Brown: 

• No public events announced.

Tips: matt@calwatchdog.com

Follow us: @calwatchdog @mflemingterp

New follower: @mamaloney 

In December 2014, prior to Clinton announcing her candidacy, Robby Mook and John Podesta (who would become Clinton’s campaign manager and campaign chairman, respectively) discussed their preference to keep blue stats like California late in the primary process.

Mook had been contacted by another Democratic strategist, Chris Lehane, who served in Bill Clinton’s administration. According to the email, Lehane had called Mook about the California primary after speaking with Podesta, who had given Lehane the impression that he wanted to move the date.

Mook sought clarification, as he believed there was already a strategy in place to keep reliably Democratic states late in the primary process.

“FYI–Lehane called me about CA primary and I told him that the operating strategy is to keep blue states late (i.e. don’t move CA),” Mook wrote to Podesta. “He said he was at dinner with you and was under the impression that you wanted to move it earlier. He’s wondering how to proceed and I said I’d try to get us on the same page and go back with an answer. Are you ok with me saying that we both want CA to stay where it is?”

There was no reply from Podesta in the email dump. But an email from March 2015 — just weeks before Clinton officially announced her candidacy — showed Mook hoping California Senate President Pro Tempore Kevin de Leon would weigh in on the timing of the primary. 

“I met with Cal State Senate President. Super enthusiastic,” Podesta wrote to Mook in an email with the Los Angeles Democrat’s name in the subject line. “Do anything including travel to other states. Also volunteered to line up other state senators.”

“Fantastic,” Mook exclaimed. “Did he mention moving the primary date at all?”

A spokesman for de Leon did not immediately return requests for comment. Clinton’s campaign did not immediately respond as well.

Complaints of a rigged process

This election cycle has been rife with complaints and conspiracy theories that the Democratic nomination process was skewed toward Clinton.

Former Maryland Governor Martin O’Malley complained the Democratic National Committee scheduled the debates to favor Clinton. Vermont Senator Bernie Sanders had his own concerns. 

Indeed, the complaints of a rigged process from the public and Clinton’s primary opponents and their supporters — some of the complaints were supported by other Wikileaks dumps — were so great that Congresswoman Debbie Wasserman Schultz was ousted from her perch atop the DNC.

No biggie?

As voters know, the date of California’s primary did not change. And Clinton won handily in June, as well as in 2008 against Barack Obama.

According to John J. Pitney, Jr., a Roy P. Crocker professor of politics at Claremont McKenna College, those two facts should quiet concerns of a “rigged” election in a “Clinton-friendly state.”

“Conspiracy-minded Democrats might pounce on the staff chatter, but it’s not the kind of thing that makes a difference to voters,” Pitney said. “The issue might get more traction if there are revelations that states did shift dates in a deliberate effort to help Clinton, or if Clinton herself was involved in the effort.”

Very brief debate recap

Good morning. Quite the debate last night. Democrats have largely united behind Hillary Clinton, but many Republicans are still wrestling with what to do, writes the Orange County Register. Fortunately for everyone, the election will be over soon. 

And while many media outlets are focused on GOP nominee Donald Trump’s refusal to say he’d support the results of the election (assuming he loses, since he’d likely have no problem supporting the results if he wins), Joe Scarborough, the co-host of MSNBC’s Morning Joe, had an interesting take on political hypocrisy and the parsing of words.

MSNBC has more.

And that’s enough about the presidential race. Back in California, the state government’s largest union, SEIU Local 1000, is “edging closer to a strike” over the size of its raise, reports The Sacramento Bee.

California’s attorney general, Kamala Harris, who is running for U.S. Senate, has “launched a criminal probe into allegations of criminal identity theft linked to the Wells Fargo unauthorized accounts scandal, the latest sign the embattled bank’s troubles are far from over.” The San Jose Mercury News has more. 

Observers say a new attack ad from Congressman David Valadao, the perpetually vulnerable Hanford Republican, suggests the race is close. The Bakersfield Californian has more. 

Notice anything strange about campaigns against ballot measures proposing an increase in the tobacco tax and an extension of a tax on the highest incomes? Business groups aren’t fighting very hard. The Los Angeles Times explains why. 

Legislature:

• Gone till December.

Gov. Brown: 

• No public events announced, but we do know he left the state. That is all. 

Tips: matt@calwatchdog.com

Follow us: @calwatchdog @mflemingterp

New follower: @JeffGorell

John Stumpf abruptly resigned Wednesday as CEO and chairman of the scandal-torn San Francisco-based banking giant Wells Fargo.

But much more fallout is expected over the revelation last month that Wells Fargo had fired 5,300 employees for fraudulently signing up customers for 2 million new services and accounts. The bank’s agreement to pay $185 million to the Consumer Financial Protection Bureau hasn’t remotely satisfied its critics.

In Calabasas on Tuesday, the state Assembly Banking Committee held a hearing in which witnesses denounced Wells Fargo for its actions. The criticism continued even after Wells Fargo executive David Galasso told the committee that Wells Fargo would go beyond the $185 million settlement in compensating customers who were victims.

Banking Committee Chairman Matt Dababneh, D-Encino, said he was considering introducing a bill in the Assembly targeting laws and regulations that allow banks to compel disgruntled customers to go to arbitration in just about every circumstance.

Wells Fargo has already used such state and federal laws to get several related individual lawsuits thrown out and sees the rules as a potent tool against expected class-action lawsuits in which former Wells Fargo customers say their credit ratings were damaged by the bogus accounts and services established in their names.

In Washington, meanwhile, senators of both parties have been pressuring the Justice Department to open a full-blown criminal investigation of the company and its top executives — and not settle for a large fine.

Under formal Justice Department policy, the decision to start such a criminal probe partly depends on ”the pervasiveness of wrongdoing within the corporation, including the complicity in, or the condoning of, the wrongdoing by corporate management.” Given that the 2 million phony accounts were being set up from 2009 to earlier this year — and that executives were aware of the problem for at least three years — the pervasiveness standard is seen as highly relevant to the Wells Fargo case. Under federal law, corporations bear responsibility for the criminal behavior of their employees if it arises in the workplace.

“If it was one person or even 100, you might argue that it’s a rogue contingent,” University of Virginia law process Brandon L. Garrett, author of ”Too Big to Jail,” told The New York Times. ”But you can’t seriously argue that 5,000 people have gone rogue. That’s systemic behavior. People above them had to have noticed. … Fines aren’t working. We’re not going to see deterrence until we see some high-­level individual cases.”

Wells Fargo scandal an issue in presidential campaign

The Wells Fargo scandal has also become an issue on the presidential campaign trail. Like Dababneh, Democratic nominee Hillary Clinton has denounced laws that compel arbitration in banking disputes.

There is also additional fallout at the state and local level. California Treasurer John Chiang and Illinois Treasurer Michael Frerichs separately announced that their states would limit use of Wells Fargo on an interim basis.

In Chicago, Mayor Rahm Emanuel’s administration announced that it was selling all its Wells Fargo securities — about $25 million worth. Last week, the Chicago City Council took a first step toward banning any city dealings with the California bank.

These lost customers don’t mean much to a company with $90 billion in sales and $23 billion in net profits in 2015. But in an era of anger over the perception that big banks paid a small price for their role in creating the Great Recession, disinvesting in and banning Wells Fargo could become a proxy way for elected officials to take a stand against Wall Street — even if the company is based in California.

In the wake of California’s unprecedented punishment of San Francisco-based Wells Fargo for bogus lending practices, legal sanctions spread eastward, with other state officials and Hillary Clinton herself going after the bank.

Already, in Washington, members of the House Financial Services Committee have demanded “that Federal Reserve Chairwoman Janet L. Yellen punish Wells Fargo for creating as many as 2 millions accounts without customers’ permission,” according to the Los Angeles Times. Although Yellen has so far declined, California Treasurer John Chiang’s swift action has created what could be enough momentum to send federal sanctions the bank’s way. In a recent news conference, Chiang “outlined specific sanctions that will remain in place for a year and target Wells Fargo’s ‘most highly profitable’ relationships with his office,” the Times added. In a letter to CEO and Chairman John Stumpf, Chiang asked how he could trust the bank going forward. 

“Chiang also said he will work with the state’s pension funds, which collectively own about $2.3 billion in Wells Fargo stock and bonds, to push for reforms to Wells Fargo’s corporate governance. Chiang sits on the governing board of the nation’s two largest public pension funds — the California Public Employees’ Retirement System and the California State Teachers’ Retirement System. He said he will push for the separation of the bank’s chairman and chief executive roles … and for the bank to review its compensation policies and possibly rescind more pay from executives linked to the fake-accounts scandal.”

Spreading criticism

On the heels of Chiang’s move, Wells Fargo also lost support among officials based in the other most significant financial center west of the eastern seaboard, Chicago. “Illinois is joining California in suspending Wells Fargo & Co. from handling ‘billions’ of dollars in investment work and the underwriting of state debt,” Bloomberg reported. “Treasurer Michael Frerichs said in a statement that he will announce details of the ban during a news conference in Chicago on Monday. The suspension includes municipal-bond underwriting, according to Greg Rivara, a spokesman for the treasurer.” Although some states, including Alaska and Oregon, have said their relationships with the bank are unchanged, “Connecticut decided last week to add Morgan Stanley to serve as lead underwriter with Wells Fargo on a state bond issue planned for next month to help ensure a successful sale,” the site noted. 

Now, Hillary Clinton has seized on the opportunity to make some political hay as well. At a campaign stop in Toledo, Ohio, Clinton described the situation as “[o]ne of the nation’s biggest banks bullying thousands of employees into committing fraud against unsuspecting customers. Secretly opening up millions of accounts without their consent, even their knowledge, misusing personal information, and then sticking customers with hidden fees,” according to Business Insider. “It is outrageous that eight years after a cowboy culture on Wall Street wrecked our economy that we are still seeing a powerful banker playing fast and loose with the law,” she said, introducing a proposal that would give consumers a right to sue instead of enter arbitration under circumstances like those created by the bank. 

Wells Fargo has scrambled to stanch criticism and maintain a firewall with federal officials. “Under fire over the unauthorized accounts, Wells Fargo’s board announced … it was stripping Mr. Stumpf of unvested stock awards valued at $41 million. He will also forgo his bonus this year and a portion of his $2.8 million base salary,” the New York Times observed. But “the move to retract a portion of Mr. Stumpf’s lavish compensation — at the time of Wells Fargo’s latest annual disclosure, he held shares and options valued at around $247 million — has not appeased some senators who criticized Mr. Stumpf,” including Elizabeth Warren, D-Mass., who has flexed her muscle as a financial hawk throughout her tenure. 

Systemic questions

As Wells writhes, questions have arisen as to whether their misdeeds were merely the first to be caught. At media outlets where financial reform has long driven coverage of the big banks, incensed reporters have been stonewalled in their efforts to find out. “Representatives from Bank of America, Citigroup, JPMorgan Chase and US Bank declined to respond when The Huffington Post asked them if they use the same high-pressure, lofty sales quotas that pushed underpaid Wells Fargo employees to rip off customers in an effort to keep their jobs or earn bonuses to enhance their low hourly pay,” the website reported. “Along with Wells Fargo, these banks are the five largest in the country, ranked by total assets.”