The Courage (?) of Banking Leadership . . .

It is curious that physical courage should be so common in the world and moral courage so rare.  ~Mark Twain

Are my expectations about leadership too high?  Am I living in the past?  Should I just give in and accept it?

These thoughts are going through my head as I read that CitiBank will pay the Securities & Exchange Commission $285 million to settle charges of misleading investors. ” The SEC charges that Citi’s broker-dealer subsidiary Citigroup Global Markets marketed a structured portfolio of collateralized debt obligation tied to the housing market in which it selected the assets, sold them to investors, then bet short against those mortgage-related assets from which it would profit if the assets declined in value. Citigroup did not disclose to the investors its role in picking the assets or that it took a short position against them.”

(Now, in plain English. The bank sold mortgages to investors, mortgages that they chose, knowing they were poor quality, then bet that the assets would decline in value.  So, your “trusted banker” sold you a pile of crap, got your money, and all the while he was betting against you.  Does this sound slightly dishonest or is it just me?)

I kept on reading, incredulous.  “Quickly the market value of the bundled assets dropped, the investors lost virtually all their money, while Citigroup received fees of approximately $34 million for structuring and marketing the transaction and additionally realized net profits of at least $126 million from its short position.”

Investors, zero.  Bankers $160 million.  Sounds more like a mafia-run casino than a bank.

Enter the SEC to help. I continued reading. “The $285 million settlement will be returned to the investors, and as is custom in such settlements, Citi is not admitting or denying any wrongdoing.”  

That’s the part where I almost had an epileptic fit. Did not admit or deny any wrongdoing?  They paid out $285 million (they are still alive thanks to taxpayers bailout money) against SEC charges and admitted nothing? And banks want us to trust that they are vital to the economy and too big to fail?  Are they too big to stand up and tell the truth as well?

So, lets talk about leadership and brand image.  Currently, the brand image of banking is at an all time low.  Have you been watching the Occupy Wall Street demonstrations that have spread around the globe?  They are trying to call attention to the rest of the world, (those who believe it’s useless to fight the system) that the culture of banking is broken.

Let’s see.  If one of your neighbors paid a fine to the police and neither admitted or denied guilt, what would you think? How trustworthy would you consider that neighbor?  Would you loan them your car or let them watch your children?

 It’s a global neighborhood now and what I think is that the Board of Directors and shareholders of big banks need to think hard about the damage their “so-called” leaders are doing to the institution of banking.

I guess in one way the culture of banking does work rather well.  You can be a senior executive without having any courage or values, just show up and admit nothing! But keep the money rolling in.

Tight Lines . . .

John R Childress

E | john@johnrchildress.com      T | +44 207 584 3774      M | +44 7833 493 999

About johnrchildress

John Childress is a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. Between 1974 and 1978 John was Vice President for Education and a senior workshop leader with PSI World, Inc. a public educational organization. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress currently resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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One Response to The Courage (?) of Banking Leadership . . .

  1. Pingback: Bankers “must be better citizens” says Bob Diamond, Barclays CEO | John R Childress . . . rethinking leadership

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