Wells Fargo has destroyed its reputation as one of the cleanest banks in America. Its “eight is great” sales mantra boosted fraud across its retail network, with the front line issuing credit cards that were never requested by its customers, among other misdeeds. Some actions may just skirt criminal conduct. What is unnerving is that oversight failed throughout the bank. How does that happen? The answer lies in behavioral economics. One point: the negative value of lying does not register when cheating is prevalent. Another is that people cheat more when they believe that they will not get caught. Cash penalties aside, the bank will learn that it should have focused more on ethics training. Federal and state regulators have lost patience for financial-sector misconduct. Politics too has a behavioral dimension. ■
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