News & Events
In the lessons learned department, Wells Fargo, a bank that largely escaped the fall-out from the subprime mortgage market because it chose not to go down that path too far, is the first lender to recognize the evolving risk in the subprime auto lending market. No more than 10% of its portfolio will be made up of subprime auto loans.
Market analysts praise the bank for “deftly managing risk.” How about if we praise the bank for seeing a pattern in history and acting accordingly? The outcome on the subprime auto market cannot be good. The analysts also wonder whether other banks will follow Wells’ lead. Fools rush into risky markets and the greater fools stay in them. The biggest fools grow their interests in those markets.
By way of full disclosure, Wells Fargo is the Barometer’s bank, precisely because it has shown wisdom and a focus on the long term. No company is perfect, but this one deserves credit for a choice to not ride the market wave until the crash.
In the class, “Sports, Ethics, and Religion,” 64 of the 272 students taking the class were suspended for cheating. How difficult is the concept of not cheating in an ethics class?
L. Dennis Kozlowski, former Tyco CEO, recently free of prison, work-release programs, and probation, bemoaning his unfair prosecution. Yes, convictions for unauthorized loans from the company, conspiracy, sales tax evasion, and falsifying corporate records were all just part of a prosecutorial conspiracy to persecute and prosecute a man who spent $6,000 of Tyco funds on a shower curtain for his Manhattan apartment.
The Barometer agrees — his conviction was silly because a man so bright and given so much should not have squandered it all by being cheap. If he had not tried to evade the 8.25% sales tax on his art collection activities, the rest of his Tyco activities would have gone undetected. And those activities, from the $2 million birthday party for his second wife (at company expense) to a key employee loan program that did not require repayment of the loans, were the stuff of criminal charges. All cheap and silly decisions by a man who still cannot seem to admit that what he did was just plain wrong.
Professor Stephen Mosher, Ithaca College, an expert in sports ethics, reflecting on the Patriots’ Deflategate and other similar sports examples of shaving the treetops to win.
The Barometer was strolling through the home section of a major department store. Tempted by Christmas potholders at 50% off, the Barometer stopped and soon planted feet firm to continue listening as three employees of this fine establishment conversed about their futures. The ring leader was explaining to the novice employees that after the new year begins, most of them would be going to part-time status because of slow sales, the economy, health care issues, etc. The two employees seemed crestfallen. But, their mentor would have none of it. “Don’t do it!” said he. “Get yourself fired because the money you make on unemployment will be better than part-time work here and you can get 99 weeks of unemployment. Plus, you are eligible for medical care through the government because you are unemployed. It’s a better deal. It is so not worth it to keep working.” This fine consigliore (more…)
Even the well seasoned Dillard’s manager was taken aback by this one. A customer brought in a pair of moderately expensive dress shoes, expressing a desire to return them because they just weren’t quite right. As the manager processed the order she checked inside the box to be sure that the shoes in the box were the shoes the matched the box – past experience dictated that follow-up on returns. The shoes were the correct ones for the box, but the customer had another issue. The shoes had masking tape on the bottom – masking tape that was dirty. When the manager returned to the customer (more…)