Wells Fargo CEO takes early retirement, and 5300 employees are fired, because of scandal involving 2 million accounts opened without customers’ knowledge, as well as fraudulent selling of insurance policies.
– News report

The image on the left shows Wells Fargo approximately 150 years ago; the image on the right shows Wells Fargo today. It is impossible to avoid the conclusion that as technology improved, ethics deteriorated.
My mother had four brothers. They never attended business school. They never attended a university. I don’t think they finished high school. But they worked until they pooled their money and opened a small clothing store. They served working people, selling overalls, work shirts. and boots, plus a few ready-made suits for Sunday wear. Slowly they accumulated enough to open a second store. They bought homes for their families, and put all their children through college.
Without benefit of business school, they learned all they needed for success: show up, work hard, be reliable, and keep your word.
I grew up in San Francisco. My idea of a bank was the Bank of America. Early in the 20th century, a businessman named A. P. Giannini found that Italian Americans had trouble getting loans for opening businesses or buying homes. Banks catered to people who already had money. So he opened a bank for “little fellows,” hard-working immigrants with calluses on their hands. He stayed open past the usual closing time, so working people could do their banking. He opened neighborhood branches.
I didn’t know what “A. P.” stood for, but I knew what he stood for. The branch where my parents banked still had a copy of the original charter on the wall. It read, “Bank of Italy,” the original name. To my childish eyes, this exemplified what America is all about − giving immigrants the opportunity to succeed by hard work, thereby turning the Bank of Italy into the Bank of America. It became the sixth largest bank in the world, even though the law at that time limited it to California.

When my wife and I tired of apartment living and decided to buy a home, we applied to the bank my parents and I used. But the B of A turned us down. They explained that the bank had enough real-estate loans, and needed a balanced portfolio of long- and short-term loans. So we applied elsewhere, and were turned down twice more, though I was a full-time faculty member at a medical school.
Finally we got our loan from Great Western Savings. We had to pay 20% down, which represented most of my annual salary. We made the payments monthly, and after 30 years paid off the loan. But during that time things changed.
Credit cards came into wide use, enabling us to cushion unusual expenses − and enabling others to live beyond their means. The law forbidding interstate banks, which was passed during the Depression to prevent huge bank failures, was repealed. We forgot the past, imagining that we would never have to repeat it.
Great Western was bought out by Washington Mutual of Washington State, and I had to write a longer name on each check. But I refused to write “WaMu” − who would trust his money to a circus clown? Bank of America was acquired by NationsBank of North Carolina, but it kept its name. And then Washington Mutual became insolvent and was absorbed by JPMorgan Chase, which was itself in danger of insolvency. Bank of America was hardly better off.
Other things changed, too. Bankers used to be depicted in films as cautious, balding, middle-aged men in conservative suits. But somehow bankers, and corporate executives in general, became risk-takers − with other people’s money, of course. They no longer scrutinized borrowers carefully. While formerly they refused established professionals, now they gave loans to people unlikely to be able to make the payments − often with little or no money down.
Bankers and accountants dreamed up all sorts of innovative methods to disguise risky speculations as sound investments. They “securitized” mortgage loans. They bundled shaky loans with good ones, then issued certificates − which incompetent or corrupt rating agencies rated as first-class investments for pension plans and others looking for a safe place for their savings. People assumed, against all historical evidence, that property values would continue to rise forever.
In effect, they sold a Ponzi scheme to themselves.
Perhaps that is why we have a dearth of great novels, great plays, great music, and great art. Many creative young people went to business school, not art school. Unlike my uncles and A. P. Giannini, they learned about business and finance from professors with arcane economic theories, not from actual work. Their knowledge was academic, not practical. Their common sense was replaced by whatever theory their professors espoused. They learned to rely on mathematical models, not their own experience.
They turned their creativity from the arts, where it is missed, to finance, where it is misplaced. We see the results before us. What is the evidence that things got better when the majority of bankers and corporate executives were graduates of business schools?

When the MBAs replaced the engineers as masters of GM’s universe, everything went to hell.
− David E. Davis Jr., automobile journalist

If children don’t learn to talk when they are young, it becomes difficult or impossible to teach them. Kids raised in isolation either never learn to talk or do so poorly. The longer you wait, the more difficult it becomes. I believe this is also true for learning to be ethical. If you ask parents what they want their child to be, most will say “smart” or “successful,” but only a few will say “good.” And that is reflected in how children are raised.
Business schools now require ethics courses, as do law and medical schools. These courses are valuable in addressing specific problems. But I doubt that you can teach a 25-year-old to be ethical. All you can do is tell him how to avoid specific pitfalls − that is, make him into a higher-functioning sociopath.
Is this why banks and businesses prospered when people like A. P. Giannini and my uncles ran things, but now we are in deep trouble?
Is this why people used to do business for years on a handshake, but now flocks of lawyers find devious ways to void contracts and avoid obligations?
Is this why people used to trust the business on the corner, but now they have no confidence in the faraway conglomerate?
Is this why people used to build businesses brick by brick, but now they fabricate houses of cards?
Is this why executives used to have the long-term goal of seeing their company prosper, but now they have the short-term goal of enriching themselves and exiting before the roof falls in?
Is this why bankers and business people used to aspire to earn their customers’ trust, but now they aspire to receive a massive government bailout, even if it comes with massive government regulation?
Without a religious basis, “Thou shalt not steal” becomes “Don’t get caught.” We allow young people to cheat on tests and plagiarize papers in order to get into the “best” universities, and then to inflate their résumés to get the “best” jobs. We are producing a generation of Ken Lays, Bernie Madoffs, and John Stumpfs. If we produce enough of them, we will commit civilizational suicide.
While writing this column, I finally found out what A. P. Giannini’s first name was. It was Amadeo, meaning “love of God.” Do you think, just possibly, that there may be a clue here?

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