Published in CommPRO.biz 2013.06.26

BofA Told to Lie

 

When an entire sector of our economy -a crucial sector- is handed “Get Out of Jail Free” cards by our federal government, we should not be surprised when they run off the rails. We are talking about the monster, too-big-to-fail banks. It is more than surprising, it’s a miracle that it isn’t any worse than it is. The Department of Justice (DOJ) and its head, Eric Holder, the highest ranking law enforcement officer in the USA, has decided in the case of these banks that he will not enforce the law. He has repeatedly given the monster banks a pass. His rationale is that jailing top banking officials will destabilize the banks and our economy. Shows you how precious little Holder knows about business.

We have the major banks running amuck, fixing interest rates, laundering money for drug cartels and dictators, playing fast and loose with mortgages, ripping off consumers right and left and anything else that comes to their evil little minds. The latest instance is playing out in a Federal Courtroom in Boston where former Bank of America (BofA) workers are lined up to blow the whistle on the warped sickies running this bank. A bank that owes its very existence to the nearly $50 billion we taxpayers handed them to literally keep them afloat following the economic collapse they helped trigger.

In sworn statements BofA expats detail the bank’s efforts to squeeze every dime out of homeowners struggling to hang on to their homes. Bonuses to meet their foreclosure quotas, gift cards, all kinds of incentives to lie and cover up misdeeds designed to line the bank’s pockets with fees and interest before crushing those they should have been helping. And why not? If you get caught and have to pay a fine, it’s peanuts in comparison to the bucks pouring into the bank’s coffers. Just another cost of doing business.

This is not going to stop until we start charging the top executives of these banks and they face jail - that’s what it’s going to take. Attorney General Holder may be a fine lawyer but he clearly doesn’t know squat about business. Executives who allow the kind of behavior that we’ve seen at BofA, HSBC, Chase and the other big banks are lousy business people and lousy leaders. There are lots of honest people waiting in the ranks of these banks, ready and able to lead and build on a proven ethical foundation to produce happy customers. And in case you haven’t noticed, happy customers produce higher profits.

We do need to remove the temptation that allows banks to speculate with their customers’ deposits instead of investing them in our economy. We need the so-called Volker Rule. And we need to break up the monster banks. Take them out of the too-big-to-fail league. All the stuff that the big bankers little helpers’ on “K” Street managed to lobby out of the laws that protected us against bad bankers for decades. However, the DOJ’s first order of business should be to level criminal charges against these arrogant, ignorant punks who have no place leading any business, let alone one in the financial heart of the world economy.

Wal-Mart, Same-Ol’, Same-Ol

They gathered by the thousands earlier this month (2013.06.06) at the Walton arena on the University of Arkansas campus in Fayetteville. It was the annual meeting of the world’s largest retailer, Wal-Mart. The crowd was largely made up of employees who had earned a trip to Fayetteville from their remote corner of the wonderful world of Wal-Mart through some display of loyalty. There were a few shareholders and high profile performers including Hugh Jackman, who was the meeting’s host. 

Unlike the Wal-Mart employees at the meeting, Jackman and the other celebs were not there at company expense, at least not Wal-Mart’s expense. Given the revenues generated for major motion picture and music companies by Wal-Mart –reportedly as much as 40% of their total income– we’ll guess that the stars were well compensated for their visit to Arkansas by someone.  

The affair was not all glitz, glitter, and company presentations. Time was set aside for participation by the shareholders, fifteen minutes out of the four hours, about 6%. That despite the fact that the shareholders had some serious beefs. Like what have you done about the rampant bribery, the deaths in Bangladesh factories and declining year to year store sales, things like that? Management’s answers? Less than satisfying. Easy for them knowing that the Walton family controls more than half the votes. As long as the family is happy, the management can ignore the rest of the world. 

A shareholder/employee commented on CEO Michael Duke’s nearly $21 million 2012 paycheck: “Times are tough for many Wal-Mart associates. We are stretching our paychecks to support our families.” Considering our low wages, she added, “I don’t think that’s right.” A considerable number of those in the audience cheered and applauded her comment. You can bet those folks won’t get a free ride to next year’s annual meeting, assuming they even keep their jobs.

For his part Duke said, "You operate with integrity, our company was founded on integrity. For Wal-Mart, compliance is an absolute. Make no mistake about it; we will do the right thing." It’s easy to see the disconnect right there. Duke obviously doesn’t understand that the “Right Thing” is not compliance. "The “Right Thing” is the ethical business model. “Compliance” is the letter of the law, working right at the edge of the law; Compliance is what you can get away with.

Compare this annual meeting with one held a month earlier in Omaha, Nebraska, the annual Berkshire Hathaway bash thrown by Warren Buffett. “Buffettpalooza,” as it’s called, attracted more than twice as many people, 35,000, all shareholders, all happily paying their own way. But those are just the surface differences when compared to the Wal-Mart annual meeting. The real difference lies in a culture of transparency at the core of Buffettpalooza, a culture that’s nowhere in sight at Wal-Mart.