This guy can write! I was scanning the net for business ethics sites and came across it. He writes with intelligence and passion. He’s often very indignant and appalled at what is happening in his country (similar to some one we know, right?).
I want to meet this guy. Like me he teaches. He talks about it with the same passion I bring to it. Read his stuff.
James Pilant
There is no way to look at business ethics on the web and miss Chris MacDonald’s “The Ethics Blog.” A good writer who knows his subject backwards and forwards.
Lauren Bloom’s Ethics Blog is always a good read. She prides herself on practical advice and delivers.
The Week in Ethics by Gael O’Brien is another web site to stay with in the struggle to get intelligent moral sentiments on our modern culture.
Working Life by Jonathan Tasini is a site I strongly recommend. He’s good.
Julian Friedland’s blog, Business Ethics Memo, has a slogan, “To educate a man in mind and not in morals is to educate a menace to society.” Intelligent and tough, a good blog to read regularly.
Three years ago, the states began to get concerned about mortgage fraud. So they asked the banks about it.
From the Washington Post –
As foreclosures began to mount across the country three years ago, a group of state bank regulators suspected that some borrowers might be losing their homes unnecessarily. So the state officials asked the biggest national banks for details about their foreclosure operations.
Guess what! Some banks didn’t cooperate.
When two banks – J.P. Morgan Chase and Wells Fargo – declined to cooperate, the state officials asked the banks’ federal regulator for help, according to a letter they sent. But the Office of the Comptroller of the Currency, which oversees national banks, denied the states’ request, saying the firms should answer only to inquiries from federal officials. In a response to state officials, John Dugan, comptroller at the time, wrote that his agency was already planning to collect foreclosure information and that any additional monitoring risked “confusing matters.”
You see it’s a “federal” matter. If the states stepped in, it would “confuse matters.”
From further down in the article –
But even as it closed the door on state oversight, the OCC chose itself not to scrutinize the foreclosure operations of the largest national banks, forgoing any examination of their procedures and paperwork. Instead, the agency relied on the banks’ in-house assessments. These provided no hint of the problems to come until they had tripped the nation’s housing market, agency officials later acknowledged.
Basically, the foolish states get in the way when they investigate things, you know, “confusing matters.” This is especially true when you, the feds, are not under any circumstances whatever going to investigate the banks yourselves.
From further down in the article –
“Based on what we were seeing and what we were concerned about, it felt like a chronic underreaction at the federal level,” said John Ryan, a senior official with the Conference of State Bank Supervisors.
What John Ryan means is, “We could have cracked this case, but you made sure we couldn’t by using federal preemption to keep us out. Why don’t you explain that?”
I want to hear that too.
Further in the article –
Even when the mortgage industry itself identified possible flaws in foreclosure paperwork, the agency was slow to act. In September, Ally Financial suspended foreclosures after discovering problems with tens of thousands of cases. But even then, the OCC did not begin to examine the operations of other major banks. Instead, the agency asked them to undertake internal reviews and told them it would conduct its own examination later, an OCC official said.
So, after waiting three years and only after the mortgage industry admits problems, do the feds leap into action. Our valiant defenders armed with certain knowledge that something is wrong put the full weight of the federal government on the problem.
They ask the banks to do internal reviews.
Two weeks ago, for the first time, the OCC began sending its staff into the banks to examine their foreclosure operations, interview bank employees and review paperwork.
Three years. What’s the big deal? A few (well, we don’t actually have any concept of how many) actual citizens thrown from the homes that the banks didn’t own. Giant financial institutions are held in no way accountable because the federal government refused to act and made sure the states could not. What’s the big deal?
Tell me, which is worse? 1) Breaking the law or 2) Refusing to enforce the law.
Tell me, are any bankers going to jail, any homeowners going to get their houses back or is anybody at any of these helping services, whoops, I mean regulatory agencies, going to get fired, at least reprimanded?
None of these things are going to happen.
Don’t be mistaken, this no low level official making the call. This is the direct policy of the Obama Presidency.
Nothing else is possible.
Let’s ask the questions. Sit in the chair with our esteemed President. Three years ago, the states begin suspect widespread fraud in the foreclosure industry. They tell the feds.
What do you do? Well, you’d probably say, “We’d better ask some questions. Show us what you got. We’ll follow up.” Isn’t that about right.
Okay, what did happen. The feds used preemption to stop the state investigations and then conducted no investigations of their own.
Three years later, the banks admit that there are serious problems. Let’s sit you in the President’s chair again. The banks have admitted that they have used fraudulent affidavits in hundreds of thousands of cases and that their paper trail of ownership may have problems. I bet you would want to get some people down there to find out what’s going in. I suspect you would probably consider a criminal investigation.
What happened? The feds asked the banks to do an internal review.
Next, the fifty states attorney generals launch a joint investigative action against the mortgage companies. The media, national and international, are jam packed with stories of scandalous repossessions, like foreclosing on paid for homes.
Now after patiently waiting until two weeks ago, the President and you have the same opinion. “We’re going to investigate.”
That’s how you make decisions, isn’t it?
James Pilant
Absolutely number one – Foreclosureblues. The writing is excellent and they are doing very well on staying on top of the situation. Read it! Here’s a quote –
The failure to uphold fiduciary duties of even a few larger institutions will put the entire banking system in doubt. What we witnessed in 2008 and early 2009 was a loss of trust, faith, confidence. It was a classic solvency crisis masquerading as a liquidity crisis – with doubt about which specific institutions had engaged in reckless behaviour putting a cloud over every bank in the entire system and causing liquidity to dry up economy-wide. When banks engage in unsafe and unsound business practices, they put the entire economy at risk in a way that you see in no other sector of the economy. This is why regulators in the US are supposed to take prompt corrective action in closing insolvent institutions and those institutions with unsafe and unsound business practices.
Rortybomb is fantastic. Read it! This guy is sharp and he keeps an eye on the rest of the internet that I can only envy.
I think a simple dose of game theory helps with these things. Given that servicers are being sued by their investors, wouldn’t they want a moratorium, want the government to step in with a heavy-hand and lend credibility? Nobody believes them, and nobody has a reason to. And I can’t tell what is scarier: that Bank of America knows it isn’t credible here, and just wants to hope it goes away, or Bank of America is simply too large, complicated and poorly functioning to figure out and/or learn whether or not they have a problem here.
How’s that returns to scale in banking working out for everyone?
Another site I recommend you check regularly with is National Foreclosure News. They keep tabs on the news across the nation on the foreclosure crisis. It gives you a good feel for how the whole thing is playing out in the media. It doesn’t take long to scan one days entry. So, it’s a good place to go for a summary picture of the foreclosure mess.
The web site, Living Lies, is very good place to go. However, it’s really for attorneys. Nevertheless for the layman there is still a lot of interesting stuff there.
$hame the Banks is another good web site. It’s definitely got some teeth. I really like it. There is a lot of material on this site. Here’s a quote.
After years of high-flying success and millions of dollars in profits, the future suddenly looks grim for the Law Offices of David J. Stern. The firm, which was the subject of a long MoJo investigation published in August, used to be one of the nation’s most powerful “foreclosure mills,” those assembly line-like operations that handle hundreds of thousands of foreclosure cases for the nation’s largest mortgage companies.
(In 2009 alone, the Stern firm handled 70,382 foreclosure cases.) But in the past few months, the corner-cutting and alleged fraud in the foreclosure business, as described in my August story, erupted into a national scandal. As a result, the Stern firm has seen its fortunes plummet, with major clients, like Fannie Mae, Freddie Mac, and Citigroup, cutting ties to Stern. Stern’s operation has also laid off hundreds of employees in recent weeks.
This is a realtor site but the guy has some independent thoughts. It’s a brand new site, so you might check it from time to time and see how it develops. It’s called Gilbertazrealtor’s Blog.
That’s my best advice at this time. As the crisis continues there will be other web sites dealing with the issue. I’ll try to get them up as quickly as I can.
James Pilant
Martin Joel Erzinger, who manages more than $1 billion in assets for Morgan Stanley in Denver, is being accused only of a misdemeanor for allegedly driving his Mercedes into a cyclist and then fleeing the scene, Colorado’s Vail Daily reports. The victim, Dr. Steven Milo, whom Erzinger allegedly hit in July, suffered spinal cord injuries, bleeding from his brain and, according to his lawyer Harold Haddon, “lifetime pain.”
Wow, fleeing the scene, didn’t call for an ambulance, hurt the guy bad, boy! I bet he gets in trouble for that!
Oh, wait a minute. It’s a banker!!!
This is America. Bankers are special. I mean “really” special.
This quote is from the District Attorney Mark Hurlbert –
“Felony convictions have some pretty serious job implications for someone in Mr. Erzinger’s profession, and that entered into it,” Hurlbert said. “When you’re talking about restitution, you don’t want to take away his ability to pay.”
“We have talked with Mr. Haddon and we had their objections, but ultimately it’s our call,” Hurlbert said.
Don’t you love that last sentence! The DA’s office is worried about this turkey’s ability to pay but when they asked the victim he wasn’t worried about getting money, he wanted justice. God, is he stupid or what?
This is a banker.
Let’s hear the victim –
“Mr. Erzinger struck me, fled and left me for dead on the highway,” Milo wrote. “Neither his financial prominence nor my financial situation should be factors in your prosecution of this case.”
I’ve been accused of being shrill. Well, I guess it shouldn’t bother me that if I hit a cyclist, severely injure him, then run from the scene, that I’m probably going to do about three years in the state penitentiary. It’s no big deal that a financier gets treated a little different than me. I mean how utterly, incredibly, stupid, moronic, can I be to think there is just one law? No, there’s two. One for people that matter and then there’s me (most of you too).
You have to feel sympathy for Mr. Erzinger. He’s got blood all over his car and he’s gonna’ have to replace a fender and maybe even the grill. He’s going to have to drive to the DA’s office and talk to people he’s not used to associating with. There may be criminals there. Doesn’t your heart go out to him?
This guy is suffering. Think what would have happened if he killed the cyclist. The damage to his car would have been more extensive. Of course, with the principal witness dead, he would have had to bear the guilt and shame all by himself.
I think we should all say a prayer for Mr. Erzinger in his time of need.
Right now in this very country, there are people with the thinnest justification saying cruel things about him.
Like me.
James Pilant
lol
Right! The President covered for the oil company for months. They restricted press access to the affected waters. The declined the recommendations of their own scientists. They underestimated the amount of oil leaking from the disaster.
We already know that BP was drilling deeper than they were supposed to. We know they had accumulated an awesome number of violations of regulations and had violated the regulations on a regular basis. We know their conduct in the 2002 gas explosion and their maintenance of the Alaska pipeline were disastrous. We know that they had good reason to believe their cement was substandard, this cement being one of the causes of the incident.
In short, the White House has a strong interest in giving British Petroleum a clean bill of health.
We also know that considering BP’s conduct that such a clean bill of health is not credible.
I am far more interested in the outcome of the lawsuits by the states and individuals harmed by this disaster.
The tragedy is that these findings may not be public for at least seven years. By that time, the heat on the government and that corporation will have long dissipated.
Whatever, you may think of the finding, in the long term it will be effective in blunting criticism and, more important, buying time.
Cynicism is merited.
James Pilant
Steven Mintz commented on one of my posts. The comment is below. I pass on comments from time to time, and my suspicion is that I will have the pleasure of doing so many times in this gentleman’s case. He has his own web site.
I just saw the movie “Inside Job” that explores the failures in the banking industry and how it created the financial services-driven recession in 2008. I highly recommend the movie to learn more about how and why the banking and financial services industry was able to bring down the economy. After seeing the movie I wonder why the bank confidence level isn’t even lower!
I have recommended the film myself. Here is the trailer –
You should read Steven Mintz, he knows his subject. He fights for ethics. He calls his site, The Ethics Sage.
James Pilant
Well, that’s awe inspiring.
What about big business? 16%
That’s less than Congress.
I bet they worry at night.
I bet they’re scared.
If there was an actual political party willing to defend the public and enforce the law, they might find some votes.
What do you think?
James Pilant
P.S. Those are the 2009 numbers. In 2010, their approval rating went up dramatically – 23%.
The business community finds the President to be confrontational. He has viciously criticized them. They don’t think he’s really devoted to free markets. They’re worried.
This is incredible. President Obama barely touched them. His anti-business talk was so limited it barely existed. This is their reaction to the small amount of criticism they got from the President.
And business leaders, even the few who continue to be Obama-friendly, say they are convinced he is hostile to free markets and the private sector. Some of these executives have balance sheets flush with cash but are reluctant to add jobs or expand in part because they don’t trust Obama’s instincts for growth.
“He used anti-corporate, confrontational rhetoric too for legislative gain, and kept doing it after folks found it gratuitous,” a top executive said. “During health reform it was the bad, evil hospitals. . . Same with financial regulation: It was fat cats, greed, corruption.”
They can’t take even the mildest criticism. Is this pitiful or what? The President cuts deals on health care with the industry. The President declines to prosecute or go after the banks politically. The President protects British Petroleum. The President guts financial reform. The President refuses to create a foreclosure moratorium or to change his HAMP program to get more people out of foreclosure.
And this is their response! He’s confrontational. When?
These guys live in an alternate world. Any criticism is just totally unacceptable in their minds. In spite of all that has happened over the last decade, the great corporations are guiltless. In spite of bonuses, in spite of the destruction of millions of American jobs, in spite of regular defiance of the law ranging from the environment to playing the stock market, in spite of acting as if their duty to their country, their states and their communities was non-existent and in spite of a level of patriotism, Aaron Burr would have found acceptable, their feelings are hurt.
What is this? Are they the political equivalent of a 12-year old girl at her first cotillion?
What do I draw from this?
First, their contact with the vast majority of Americans is about non-existent.
Second, they’re political wimps. They can’t take it.
Third and the main point, they live in fear of those great unwashed masses. You know, the ones they have mercilessly exploited, them guys. They realize that there could be accountability
They realize that they are one step away from being cut, from people walking over to the other side of the street, from criticism in the press, from being named as what they are. They’re cowards, closer to cartoon villains.
They should be made to watch the movie, “They Live,” once a year.
Maybe twice.
James Pilant
From Glenn Greenwald –
People are suffering economically and Democrats have done little about that. Beyond that, they failed to inspire their own voters to go to the polls. Therefore, they lost. By basing their power in Congress on Blue Dog dependence — rather than advocating for the views of their own supporters and implementing those policies — they failed, and failed resoundingly. Building their party around a large number of muddled, GOP-replicating corporatists not only creates a tepid and failed political image, but far worse, it prevents actual policies from being implemented that benefit large number of ordinary Americans. Democrats repeatedly refrained from advocating for such policies in deference to their Blue Dogs, failed to do much to alleviate the economic suffering of ordinary Americans, and thus got crushed. Anyone who thinks that Democrats lost because they were “too liberal” — rather than because Americans are suffering so much economically — is wildly out of touch, i.e., is a multi-millionaire cable TV personality who has spent decades wallowing in trite D.C. chatter.
It was American suffering that drove the voters.
No one at any time or any place told me they were voting against the Democrats because they had suddenly found a new political philosophy. People told me they wanted to vote against anyone in office anywhere, that they were all worthless, that they were all incompetent, (and most commonly) that they were all (insert seven or eight of the most vicious cuss words imaginable).
That’s not voter realignment unless you call wanting them all dead a political philosophy.
Americans want to be a vital concern for the government, not second to the banks, etc, etc,. but number one. They want help with their education, they want help finding jobs, they want government policies that keep jobs in the United States, they want a fair tax system.
Sometimes I tell people, friends and students, about some bizarre thing the government does (like allowing businesses to deduct the expenses of moving jobs overseas from their taxes – we pay for outsourcing). They ask me who they can write to, who they can e-mail or call.
I get to tell them the truth.
There is no one.
Every Senator and Representative in my state has voted to maintain those tax breaks and will continue to do so. There is no place to go. Not now, maybe not ever.
And if you have the foolish thought that an election is coming up in 2012 and you can get someone different. Well, the name of the candidate will be different, maybe the party affiliation will be different, but I can assure you they will vote to maintain those tax breaks.
American democracy does not work very well. There are only some issues that voting can effect.
Moving jobs overseas is a priority of both the Republicans and Democrats. They are both devoted the financialization of this nation and the destruction of its industrial basis.
There is nowhere to go, nowhere to hide, no one to turn to. The door of the federal government is closed.
James Pilant
Pilant's Business Ethics Blog 
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