Taking responsibility

Just a week ago I wrote about the inability of Gary Cohn from Goldman to take responsibility for paying back his bonuses to Goldman as a result of losses Goldman incurred related to the IMDB funding scandal in Malaysia. His inability to accept responsibility is unfortunately consistent with the actions of far too many senior bankers for whom the misdeeds of their banks are never the responsibility of senior managers. This problem can be seen in banks besides Goldman.

Wells Fargo is a bank that has had a long history of issues in its dealing with clients. I provided some background on Wells Fargo in a post in March of this year. But the challenges there are laid out in great detail in a recent Slate article that is a version of a podcast Slate has produced. As noted many low level employees lost their jobs over their actions but one could question whether the senior managers responsible for the culture and policies that led to the mistreatment of clients paid an appropriate price for what happened.

Now it is the turn of Ralph Hamers, the former CEO of ING in the Netherlands, to be held to account. ING has had substantial issues related to money laundering. As a result the bank has paid substantial fines (nearly €800 million) in 2018. As part of that settlement, it was agreed that the board and management would not be subject to criminal charges. But as outlined in a Financial Times opinion column of John Plender as well as in other news stories, this immunity from prosecution has been challenged in the Dutch court system and may not be valid. As noted in the column: “The Hague court of appeal said it believed grounds were, in fact, sufficient for a successful prosecution of Mr Hamers ‘as the de facto supervisor of the criminal offences committed by ING.’ It added: ‘The facts are serious, no settlement has been reached with the director himself, nor has he taken public responsibility for his actions.'”

This column goes on to note that for far too many issues of banking malpractice, junior employees take the brunt of the pain whilst managers at the top are rarely held accountable in a meaningful way. Plender goes on to note that after the S&L crisis in the US in the ’80’s, there were many senior managers held accountable and some even went to jail. However, those held accountable were from smaller institutions and not from the largest banks in the world. It is possible that this lack of accountability for the senior managers of the largest banks in the world is one reason why the politics of today have a particular anti-elite tone. It would seem that if you can go to the World Economic Forum in Davos, you have a get out of jail card for any other responsibilities you have. The elite truly live by other rules than the rest of us.