The positive correlation between incompetence and unethical conduct at companies is striking, for, theoretically at least, a person can be talented or smart and of questionable character. Of course, it could be that cutting corners is a survival strategy of people who are not competent. However, shirking seems to reflect a sordid character, which, like personality, is relatively constant throughout one’s life—though character flaws could manifest more when times are tough (as in when incompetence has eventuated in a dire balance sheet). One might investigate, moreover, whether a firm’s culture can become more tolerant of unethical conduct when the finances are going south—or do unethical cultures tend to be like fixtures in organizations irrespective of financial condition?
So it should perhaps be no surprise that the attorney general of Nevada, Catherine Masto, asked a judge on August 30, 2011 to end Nevada’s participation in the settlement agreement with BOA so Nevada could sue the Bank. The attorney general accused the bank of repeatedly violating a broad loan modification agreement made in October 2008. According to the New York Times, she “contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners [such as the veteran] as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending [such as the veteran’s] and failed to meet the settlement’s 60-day requirement on granting new loan terms.” Particularly with regard to the higher rates, BOA may have been trying to profit at the expense of struggling homeowners. Such selfishness at the expense of others is sordid in itself—add the bank’s culpability in the mortgage mess and the bankers’ desire for gain seems downright pathological. It is this complex—an unethical perfect storm—which seems so perplexing to me.
When I’m even partially at fault, I don’t ignore it and try to get more from a victim whom I know is already suffering as a partial result of my greed and negligence. Adding insult to injury doesn’t begin to characterize the sordid character trait that gives the go-ahead to kicking a vet when he is down partially because of the owner of that trait.
BOA became responsible for Countrywide’s subprime-mortgages when the bank bought the mortgage servicer in 2008. BOA has significant obligations as a result to the bad loans and shoddy practices at Countrywide. U.S. Bancorp, the trustee of a $1.75 billion mortgage pool originated by Countrywide in 2005, sued to force Bank of America to buy back the underlying mortgages because they were made without proper documents and did not conform to underwriting standards. In the complaint, U.S. Bancorp alleges, “During the time period in which Countrywide originated the loans, it completely ignored its underwriting guidelines.” Bank of America is in no position to take advantage of struggling mortgage borrowers, given the bank’s responsibility that it took on when it purchased Countrywide for $4 billion. That the purchase had by mid-2011 already cost BOA more than $30 billion suggests that the incompetence-unethical nexus applies to the bank.
I suspect that the bankers at BOA are not only partial when it comes to their organization’s complicity in the first place and their continued responsibilities; the bank’s proposed $8.5 billion settlement with major mortgage investors, including BlackRock, Pimco and the Federal Reserve Bank of New York, shows that the unwillingness to work with struggling homeowners is not reflected in a lack of interest in wealthy investors. At the very least, the unwillingness ought to go with those better able to withstand it. Even though both mortgage borrowers and investors are parties to transactions, I suspect that the bankers project undesirable qualities on the borrowers (and respectable qualities on the investors). As a result, the bankers’ respect is partial. In other words, the borrowers find themselves treated like second-class citizens while the investors find the bankers to be attentive to their needs. This differential is dogmatic (i.e., arbitrary) and, at root, psychological rather than based on the natures of the respective parties to the contracts. From a mortgage borrower’s standpoint, to be ignored (and gouged further) by bankers who have a complicity in the creation of the problem must surely be humiliating and enraging. The lack of accountability and the related asymmetry between TARP for the banks and the comparative lack of foreclosure relief (as well as some politicians’ sordid projections overlaid on the borrowers) must surely add to the frustration.
Beyond the judicial and public policy implications, I find myself shaking my head in utter disbelief concerning what must be the mentality of the managers at BOA. Simply how such a mentality could stand (and then have power!) is itself a quagmire. It may be as Nietzsche theorized; managers may in fact be weak yet driven to dominate nonetheless. Cruelty even for its own sake can be a manifestation of the instinct of the weak bird of prey. Least of all is this bird willing to face its own weakness; rather, it is jealous of the strong. For one thing, the strong are not continuously mindful of advantage, whereas the weak are obsessed with it (even though they do less well in terms of it). A manager’s “ruddy, fat hands” are ill-suited to the front of the table, and yet if the seat is for sale and the manager is driven to have it, he or she will try to convince the rest of us that it is a commodity that can be bought at some price rather than an honor that is reserved. There is in fact no honor in Bank of America. Sadly, this observation would hardly cause a ripple in such a culture where the desire to dominate in terms of gain is no doubt taken for virtue.
May the mighty trees of the forest that dominate the sunlight as though pushy hogs at the trough be felled by their own unbalanced weight so the tender plants below might take their rightful place in the sun above the deadwood. No longer beguiled by the towering bullies above, the slender trees would be freed up to grow quickly and evenly from a rich diet of rotting wood. Contrary to popular opinion, the bloated trees that are putrid at their core even while they are still standing are not too big to fall, and, indeed, the forest would be much better off—stronger—without the distended wood taking up the valuable real estate of sunlight. For those trees are not strong; they merely dominate, thanks in part to the sycophantic humans who prop them up using smaller but better trees below. This could easily be a description of the fauna on the mountain from which Nietzsche’s Zarathustra comes down to teach those fishermen below how to overcome even the force of their most intractable instincts (e.g., greed) in order to be freer and therefore stronger.
Click to add a question or comment on the mentality at Bank of America regarding its foreclosure practice.
Nelson Schwartz, “Number of Challenges Grows to Bank of America Settlement,” New York Times, August 31, 2011. http://dealbook.nytimes.com/2011/08/30/homeowners-seek-to-block-bank-of-america-settlement/
Gretchen Morgenson, “Nevada Sees Violations of Mortgage Agreement,” New York Times, August 31, 2011. http://www.nytimes.com/2011/08/31/business/bank-of-america-accused-of-breaching-mortgage-accord.html
Source: http://thewordenreport.blogspot.com/2011/08/nietzsche-on-bank-of-america.html
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