Monday, March 2, 2009

ERM-BC-COOP: Flaunting it

Recently Bank of America's president flew, tin cup in hand, to Washington D.C. in one of the bank's corporate jets to beg Congress for a handout for his bank. According to the media, he rode from the airport to Capitol Hill in a luxury SUV.

Is this an Enterprise Risk Management issue?

I think so - the threat is to both the bank's financial well being and to its image.

The BofA president, who must have known about the automakers' cold reception from Congress when they flew to DC in their private jets, was blatantly thumbing his nose at Congress and, indeed, the American people who, apparently unlike the bank executive, are suffering from the economic "turn down."

At the same time that "image" is very much an ERM issue, it is equally obvious to me that the BofA president, had he been advised of this PR faux pas, would have "shot the messenger."

The word that comes to mind is "Chutzpan," a person full of "chutzpah" or "gall."

If I had an account with the current BofA I'd move it to another bank that made me feel that the customer was important and that my bank's management was fiscally conservative, particularly in these times.

As an American taxpayer I am unhappy with Congress for bailing out over-paid executives with loans lacking any controlling "stings" or security. For the bankers who got the first handouts, it was business as usual, except that the business was "as usual" with my money (and that of other US taxpayers).

I don't have a problem with government owning stock in the organizations it bails out - although my government has proven itself as inept as private industry when it comes to good management. Governments are part of most European and Japanese corporate boards.

In a world so concerned with PR and "image," it is hard to comprehend why the automakers formerly known as "The Big Three" could have been so image-ignorant as to travel in luxury jets to beg for money. But as difficult as that is to accept, it is impossible to accept the BofA president's - there's no other word for it - PR stupidity.

Is he totally isolated from the media? Is his head so far in the sand?

To be fair, the BofA executive is in "good" company. AIG, the insurance giant that forgot about its core business, repeatedly comes with its corporate hand out while financing extravagant events . . . events for which the taxpayer is footing the bill.

I constantly am amazed at the arrogance of management that apparently thinks the consumer-taxpayer is too stupid to react to their extravagance - at our expense.

As a taxpayer I resent the executives' actions.

As a consumer, I intend to take my business elsewhere.

As an enterprise risk management practitioner I only can shake my head and wonder: Doesn't anyone listen to us, to professional risk managers?

John Glenn, MBCI, SRP
Enterprise Risk Management/Business Continuity
Planner @

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