Elaine Chao is certain to be confirmed as President-elect Donald Trump’s secretary of transportation, but that won’t be her only source of income when the new administration takes over. As Lee Fang reports Tuesday at the Intercept, Chao will receive payments of between $1 million and $5 million over the next four years for her service to Wells Fargo, according to her financial disclosure forms.
Talk about a swamp draining! Chao joined the board of Wells in 2011. If that year sounds relevant to you, it might be because that’s when the Consumer Financial Protection Bureau says Wells Fargo began to look the other way while its employees, desperate to keep up with unrealistic sales targets, opened up 2 million unauthorized accounts on behalf of unsuspecting customers.
Chao, who worked in George H.W. Bush’s Department of Transportation and served as labor secretary under George W. Bush, is seen as one of the more competent and uncontroversial of Trump’s Cabinet picks, and her confirmation hearing last week was a breeze. The New York Times headline: “Elaine Chao Gets Cozy Reception at Confirmation Hearing.”
But there’s a good case for Chao having to account for her time at Wells. It’s highly unlikely, after all, that the contours of the Wells Fargo scandal were unfamiliar to her and other board members. The Los Angeles Times published an investigation of suspicious doings at the bank in 2013, quoting one employee who complained of being told workers who couldn’t keep up would “end up working for McDonald’s.” The Los Angeles city attorney’s office filed a lawsuit against the bank in 2015 based, in part, on the newspaper investigation.
With millions of customers wondering about damaged credit records as a result of the fraud and with Wells Fargo agreeing to pay a $185 million fine, it would seem Chao’s Wells service would raise major concerns, even if you didn’t know that Chao’s golden parachute supplements the $1.2 million CNN estimates she earned for her board service between 2011 and 2015. And as the Intercept points out, Chao was also granted Well Fargo stocks as a part of a deferred compensation package. Her Wells contract would likely forbid her from cashing them in if she joined a rival bank—deferred compensation is meant to encourage an employee to remain in place, not reward them for leaving to work for a rival. But government service? Not a problem! Wells, like most banks, explicitly says leaving the bank to take on work for the government is not an issue. The bank will simply issue what Chao described as a “cash payout for my deferred stock compensation.”
Fang goes on to elaborate one reason Wells might look kindly on Chao returning to public life. The secretary-designate said at her hearing last week that she would encourage public-private partnerships to find money for the increased infrastructure spending Trump covets. If you guessed Wells Fargo is one of the financial-services behemoths likely to finance some of these deals, make your way to the head of the class.
None of this is remarkable for a Cabinet pick, but you might think it’d be disqualifying in the administration of someone who promised to drain the ethical swamp. Candidate Trump may have ceaselessly badmouthed Hillary Clinton for collecting several hundred thousand dollars for speaking at Goldman Sachs, but he’s stacked his administration with enough Goldman veterans that they could host an employee reunion at the White House. Chao’s payout from Wells is simply the latest reminder that Trump isn’t draining the swamp, but turning a fire hose on it.
