Category: Business Ethics

Banks Fail Basic Business Ethics

On By southwerkIn Business Ethics

wn15-27Banks Fail Basic Business Ethics

Freddie Mac Unaware Of Homeowner Complaints, Inspector General Concludes

For more than five years, many homeowners who complained about mortgage industry foreclosure abuses have wondered whether anyone with a financial stake in keeping them in their home was paying attention. On Thursday, with the release of a new report from a federal watchdog, they got their answer: No.

The report, by the inspector general of the Federal Housing Finance Agency, says banks and other companies that manage more than 10 million home loans for Freddie Mac “largely failed” to alert the mortgage giant to the most serious category of homeowner complaints, despite a requirement they do so. These “escalated complaints” often include the most serious allegations of misconduct, including improper fees, misapplied mortgage payments and a frustrating cycle of lost paperwork and unreturned calls. In some instances, the mismanagement has led to a wrongful foreclosure.

“The results are shocking on a number of different levels,” said Steve Linick, the FHFA inspector general, in an interview with The Huffington Post. “It is surprising that servicers were not reporting in such large numbers, that Freddie was not on top of this, and that [the FHFA] did not catch it in its exam.”

Four of the largest bank servicers — Bank of America, Wells Fargo, Citigroup and Provident — reported no escalated cases to Freddie Mac, despite handling more than 20,000 over a 14-month period, according to the report. Freddie Mac examiners did not notice that the mortgage companies were failing to disclose the complaints, nor did the FHFA, which relied on “incomplete” Fannie Mae examinations, the report concludes. The FHFA oversees the bailed out lenders Freddie Mac and Fannie Mae.

Freddie Mac Unaware Of Homeowner Complaints, Inspector General Concludes

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Police Work is not a Business

On By southwerkIn Business Ethics

husbandmPolice Work is not a Business

Officers Say NYPD Sets Quotas For Stop-And-Frisks And Arrests | ThinkProgress

New York police officers testified this week that their office set quotas for both the number of police stops and arrests. Officers Adhyl Polanco and Pedro Serrano are two of the more than 100 witnesses to testify during a trial in a class action challenge to the New York Police Department’s rampant use of “stop and frisks,” a practice with constitutional implications in which an officer stops someone suspected of a crime, and may subsequently frisk that individual if they have justification for doing so.

The Department has conducted more than 5 million stops since Mayor Bloomberg took office in 2002, more than 85 percent of which targeted blacks or Latinos and only 12 percent of which resulted in criminal charges. Both Serrano and Polanco testified that supervisors required at least 20 summonses and one arrest each month, and that they were pressured to stop individuals — regardless of the grounds for doing so —  under threat of punishment. Polanco also said police later added a stop-and-frisk quota of five per month. During the trial, Polanco played an exchange he recorded in 2009. The New York Daily News reports:

In the tapes, one of Polanco’s supervisors is heard demanding that cops make their “20 and 1” quota and lambasting those who came up short.

“If you want to be a zero, I’ll treat you like a zero,” patrol Sgt. Marvin Bennett fumed on tape.

Polanco also recorded his patrol commander, Lt. Andrew Valenzano, telling officers to meet their quotas by ticketing bicyclists.

“If you see people over there on bikes, carrying the bags, you know, good stops,” Valenzano says on tape. “That’s what we need.”

Officer Angel Herran, a union delegate, was taped telling officers the quota was agreed to “in this last contract.”

“They’re telling you to ‘go make money,’ ” Herran is heard saying.

Officers Say NYPD Sets Quotas For Stop-And-Frisks And Arrests | ThinkProgress

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BP Rewrites its History

On By southwerkIn Business Ethics

 

Changing memory
Changing memory

BP Rewrites its History

BP edited its own environmental record on Wikipedia – Salon.com

Wikipedia editors have accused BP of editing its own page entry to whitewash its environmental impact in the public record. As CNET reported Thursday, “angry Wikipedia editors estimate that BP has rewritten 44 percent of the page about itself, especially about its environmental performance.”

BP edited its own environmental record on Wikipedia – Salon.com

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Corn Syrup Kills

On By southwerkIn Business Ethics

023Corn Syrup Kills

Big Soda: We’re not mass killers – Salon.com

Harvard researchers have found that over-consumption of sodas and sugary drinks may be linked to 180,000 worldwide deaths a year. The report, released Tuesday, also notes the studied beverages contribute to about 25,000 American deaths a year, placing the country third overall.

The report, unveiled during an American Heart Association meeting, links sugar-sweetened beverages to “133,000 diabetes deaths, 44,000 deaths from cardiovascular diseases and 6,000 cancer deaths” a year. The study’s co-author, Gitanjali Singh, also recommended regulations to curb the intake of sugary drinks, specifying that “taxing sugary drinks in the same way as cigarettes, or limiting advertising or access, may help reduce usage.”

Big Soda: We’re not mass killers – Salon.com

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Is Tipping Necessary?

On By southwerkIn Business Ethics

005Is Tipping Necessary?

Political Animal – Why you should (still) tip generously: a response to Michael O’Hare

Yes, I agree that if tipping were suddenly banned, the likely result is that markets would adjust to some extent, via increases in restaurant wages and prices. Unlike Michael, though, I’m not so sanguine that labor market in the restaurant industry works well enough that workers would entirely make up in wages what they would lose in tips. In case you haven’t noticed, the magic of the market really is not working so well for most wage earners. Productivity continues to soar but nearly everyone’s wages are stagnating or declining, and low-wage earners like restaurant employees are doing worst of all. This economy is a catastrophe and workers, especially those at the lower end of wage spectrum, have precious little bargaining power.

If tips were banned, I have every expectation that employers would opportunistically enact the equivalent of wage cuts, by refusing to make up in wages what workers would lose in tips. After all, what would stop them? The all-powerful labor unions? The many strict, scrupulously enforced labor laws that workers in this country enjoy?

Political Animal – Why you should (still) tip generously: a response to Michael O’Hare

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Student Loan Debt Trap

On By southwerkIn Business Ethics

 

Banking Honor?
Banking Honor?

Student Loan Debt Trap

Commentary: Helping alleviate the student debt trap | McClatchy

Andrew Ross, a New York University professor of social and cultural analysis and an advocate of student debt relief, spoke on the subject at Duke this month. In an interview, Ross said he sees the effect of debt on his students. “A lot of my students fall asleep, and not all of them because of my boring lectures, but because they are working two or three jobs,” he said.

Their struggle will continue after college, Ross said, despite a degree from one of the nation’s most expensive institutions. “This generation faces a predicament where their future is foreclosed,” he said. “They’ve taken on debt to prepare themselves for employment, and the employment is not there.”

At a time of bailouts for Wall Street banks and extensive corporate welfare through tax breaks, it’s wrong that we now accept heavy student debt as inevitable and inescapable. (Federal law prohibits, except in rare cases, private or federal student loans from being discharged in bankruptcy court.)

Commentary: Helping alleviate the student debt trap | McClatchy

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Is Healthy Food an Ethics Issue?

On By southwerkIn Business Ethics
Two Standards of Justice
Two Standards of Justice

Is Healthy Food an Ethics Issue?

Daniel J. Schultz: Betcha Can’t Eat Just One

Reading Moss’ book, I grew uneasy as he described the marketing and engineering principles used to reach one of the most targeted demographics: children. Examples include the use of fruit juice concentrate, which can make up as little as five percent of the total beverage, to give the “health halo” to sugary drinks. Other packaging mistruths include the promotion of cereals that are more than 50 percent sugar as part of a well-rounded breakfast. Lunchables are packaged to imitate the cheerful appearance of a gift to make children especially excited to open and enjoy the food inside.

Since the 1970s, researchers have known that kids are attracted to higher levels of salt and sugar, which companies have used as an advantage for their products. Moss quotes Julie Mennella, a biopsychologist, who describes this as “manipulating or exploiting the biology of the child.” I was one of the kids these companies targeted and successfully sold their products to, becoming one of their “heavy users.”

Daniel J. Schultz: Betcha Can’t Eat Just One

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Healthy Weight Part of Job Description?

On By southwerkIn Business Ethics

dancersHealthy Weight Part of Job Description?

CVS To Penalize Workers Who Don’t Disclose Weight, Body Fat

One of the country’s largest pharmacy chains is asking its workers to find out how fat they are and then disclose it to their insurance provider.

Not only is that company, CVS Caremark, telling workers who use its health insurance plan to have a doctor determine their height, weight, body fat, blood pressure and other health indicators. It is also asking workers to give permission to the insurer to turn over that information to a firm that provides benefits support to CVS, the Boston Herald reports.

Workers who don’t take part in the voluntary “wellness review,” paid for by CVS, will have to pay an annual $600 penalty.

Obamacare could make such practices more common. The health care reform law allows employers to levy a higher penalty against workers who don’t participate in company wellness programs. In some cases, workers could also have to pay more if they don’t meet certain health targets like appropriate body mass index.

CVS To Penalize Workers Who Don’t Disclose Weight, Body Fat

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Puritan Success

On By southwerkIn Business Ethics

citybeyoPuritan Success

Lynn Parramore: Jamie Dimon’s Ultra-American Rise and Fall: The Great Gatsby Meets Moby Dick

Australians have an old joke about their country’s founding elements: Sure, we got the criminals, but America got the Puritans, which is much worse.

The folks who arrived on our shores from Europe four centuries ago brought with them some peculiar notions. The Puritans believed in the Calvinist “Doctrine of the Elect,” a depressing divine plan whereby God pre-selected those destined for heaven and damned everybody else to hell. You could never know who was on the A-list and who was in for a fiery eternity. At least that’s what old John Calvin had taught.

But mere mortals could never be content with so mysterious a system, so they became obsessed with finding out who was elect. Material possessions, they concluded, must be a sign. Didn’t people who worked hard and kept up their prayers often amass more stuff than others? Hard work was godly, and since it often resulted in riches, they must be godly, too. Wealthiness was next to godliness.

In an essay on The Great Gatsby, America’s great literary ode to our distinguishing love of wealth, John A. Pidgeon notes that the striving for money became a means of salvation. Take the Puritan reverence of riches, add in equal parts transcendentalism and rugged individualism, and you’ve got the American Dream in all its shining glory: If you work hard, if you believe fervently enough, you can make yourself a fortune. You, too, can join the ranks of the elect.

Lynn Parramore: Jamie Dimon’s Ultra-American Rise and Fall: The Great Gatsby Meets Moby Dick

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Corporate Governance and JPMorgan Chase

On By southwerkIn Business Ethics1 Comment

 

An American Fable
An American Fable

Corporate Governance and JPMorgan Chase

Richard (RJ) Eskow: The Price of Evil at JPMorgan Chase

You’d think shareholders would be up in arms at Dimon and the Board of Directors for mismanaging their bank so badly. And yet they’re all still in their seats, thanks in part to the way large corporations are allowed to manipulate their own corporate governance.  Dimon is both CEO and Board Chair, an extraordinarily privileged position he was not asked to give up after the London Whale scandal.

And about that scandal: There are four things worth knowing about the Whale:

  1. The trades were illegal, according to all the evidence.
  2. Despite the bank’s bragging about its risk management model — which it publicized widely as a lure to investors — that model wasn’t followed by the London office.
  3. Jamie Dimon’s publicists and politician friends have burnished his reputation as “America’s best banker” – and he bypassed his bank’s org chart so that the London unit reported directly to him.
  4. His friends and publicists have also burnished his reputation as the country’s most ethical banker. As Henny Youngman used to say, How do ya like me now?

We’ve been all over JPMorgan Chase and Jamie Dimon for a long time. (See below for a partial listing), so we’re glad to see the public tide finally turning against the bank and its leader. One of the triggers for that shift was the Senate’s report on the bank’s trade, which is as damning in its own way as Rosner’s.

Richard (RJ) Eskow: The Price of Evil at JPMorgan Chase

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