Is Banking Culture still that elusive? 3712 Comments | By admin
Does Banking still make its association with culture quite oxymoronic… and remain dumbly addicted to self-perpetuated disease, decay and doom … or is it now just some fringe elements that are so. Your guess is good. I have stopped trying to.
Internal culture, risk management, regulatory compliance, dynamic oversight, anti-fraud programs, pro-customer spiel, hordes of policies, processes, controls, reviews of controls, checkers checking checkers check checkers…. all have been, mesmerizing-mantra-like, the major action items and programs at all banks in recent years – at least
after the last financial crisis (although many start to forget and therefore begin to herald the next big one… just a matter of time, folks)
Remember the sequels to the big horror movies that start with “just when we thought it was safe again” ….So, just when we thought the big banks were almost just about done with bigbankingness, here we go again, with another huge and respected name. Amongst things this august firm alledgedly and reportedly did over a five-year period
- propagated compensation policies that aggressively rewarded the opening of new accounts to what seems to be the obsessive exclusion of all balancing considerations
- set up ghost accounts (over 2 million of them?) that many clients learned about only after they started accruing fees
- routinely closed many of these accounts shortly after opening them, thereby showing awareness of their thin-air-existence
- issued secret credit cards (some 600,000 of them?) for years without client consent or even knowledge
- created fake email accounts to sign up customers for online banking services
And then
- paid almost $200 million in fines (half of it to the much-maligned Consumer Financial Protection Bureau, the largest such penalty the agency has ever charged)
- promised to refund several $ million in fees that “may” have been inappropriately charged
- fired at least 5000 (or more) employees who were “involved”
- Gasp! … then decided to make a bold run for the relatively uninhabited moral high ground … asserting that the problem was not about wrong incentives, unrealistic business goals, mindlessness on concomitant issues, indolence with regard to a stressed environment that sustained malpractice by worker-bees trying to impress their bosses, the bottomline, their bonuses.
- No sir, or so they spake. This is a simple problem of 5,000+ minions failing to honor the firm’s culture of treating clients with respect. Ergo, we will pink-slip the dreary lot of them.
- And oh, we have nary a thing to say about the senior manager who may have actually run this scheme for years and walked away into a modest $ 125 million retirement last year.
- Seguing into a primetime reality-show finale, and prospectively earnest eloquence at the Senate Banking Committee, where it will undoubtedly be said that this was all about very naughty low-level employees committing somewhat dastardly and heinous acts unto a trusting hallowed employer and its naïve customers.
Among possible immediate collateral non-trivial damages? A setback to any attempt to revisit the more draconian parts of regulation (such as in parts of Dodd Frank and Volcker), even while potentially feeding the calls for more, rather than less, oversight and regulation.
As sown, so shall be reaped … we will just move on, shall we ?