Ken Osmond and the “Eddie Haskell Effect” A Not-So-Stellar Hollywood Career But Stunning Validation

Ken Osmond, the actor-turned-police-officer who played Wally Cleaver’s best friend on the TV series, “Leave It to Beaver,” died at age 76. The series ran from 1957-1963. The character Mr. Osmond played, an obsequious, duplicitous snake, Eddie Haskell, was so memorably etched that Mr. Osmond could escape the typecasting. He became part of the thin blue line.

Eddie was a charmer, offering, “Good evening, Mr. and Mrs. Cleaver,” but that was quickly followed by his day-to-day demeaning chatter to the Cleaver boys, “Look Sam, if you can make the other guy feel like a goon first, then you don’t feel like so much of a goon.” Sometimes Wally was “Gertrude,” or “Chief.”

Mr. and Mrs. Cleaver were on to Eddie: “Your father gave me a funny look when I came in… like I’m a teenage werewolf or something.” In answering Wally as to why he believed Ward Cleaver did not like him, Eddie offered, “On account of the way he looks at me when he opens the door. Sometimes I think he’d be happier to see Khrushchev standing there.”

We laughed at Eddie’s pseudo-charms and behind-the-back barbs because we know Eddie Haskell is alive and well. We went to school with Eddie Haskells. In their book, “Developing and Reporting Systems for Student Learning,” Thomas R. Guskey and Jane M. Bailey discuss the “Eddie Haskell effect” in describing the manipulative students who earn “brownie points” (from the junior Girl Scout organization called “Brownies) with teachers in order to earn a good grade. Today’s generation has a far harsher phrase than “brownie points,” but you get the idea. The brownie points are, in the experts’ words, “crucial in the grade commodity market.” (p. 19) We sloggers just studied, too shy or too respectful of authority to work the system.

We work with Eddie Haskells. They brag. They create the appearance of being loyal, hard-working employees. We are on to them; the boss is not. They come in and leave a jacket or sweater on their chairs and then disappear for hours. We do hear from them in their extended absences. They call in or text to have us go into their offices to re-activate the motion-sensor lights. When they are not dodging, they are doing the brownie-point thing. Or taking credit for others’ ideas.

Some of us have had Eddie Haskell children. Angels at home and hellions at school. There is even a checklist for determining whether you are dating an “Eddie Haskell.” “ Who has not listened to an obsequious politician with flattering words only to find them voting the opposite of those promises and compliments once in office? If you are really looking for duplicity, study foreign relations.

It is the duplicity. And duplicity’s heart is dishonesty. A CEO once commented that the greatest test of integrity is whether a person behaves the same way around everyone. Officers in a board meeting are not the same people as those officers in a meeting sans the board The language is different, the bottomline is different, and the deference is gone. How those officers treat their staff members is yet another story.

One of the great challenges in life is learning to treat everyone the same way as you would treat Ward and June. Ken Osmond, thanks for bringing us one of TV’s most memorable characters, thanks for teaching us to be on the lookout for the duplicitous and obsequious, and thank you for dedicating your life to honorable public service. You did escape the typecasting after all. You, sir, are no Eddie Haskell, RIP.

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In the Chutzpah Category — WeWork Founder Neumann Sues SoftBank

Adam Neumann, one of the co-founders of WeWork has filed suit against SoftBank because the bank backed out of a deal to pay up to $3 billion for shares in WeWork, $970 million of which would have gone to Mr. Neumann as part of a plan to get him out of the company. SoftBank backed out because the civil and criminal investigations into the company were not resolved by the deal’s April 1 deadline.

Who would have been responsible for the conduct the resulted in the civil and criminal investigations? The conflicts of interest. The sloppy finances. Well, Mr. Neumann was the CEO. Staggers the imagination that Mr.Neumann fancies himself a plaintiff.

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In the “This stuff wants out there”Category

The odds are astronomical, but Tara Reade’s allegations that former Senator, Vice President, and now presidential candidate (presumptive nominee) sexually assaulted her just got some street crew. Turns out that in 1993, when the events occurred (according to Ms. Reade), a woman from San Luis Obispo called into the Larry King Show on August 11, 1993 and asked the following question of King,”Yes, hello. I’m wondering what a staffer would do besides go to the press in Washington?” My daughter has just left there after working for a prominent senator, and could not get through with her problems at all, and the only thing she could have done was go to the press, and she chose not to do it out of respect for him.”

Ms. Reade’s mother, Jeanette Altus, lived in San Luis Obispo at the time of the call. She has since passed away, but Ms. Reade identified the voice as that of her mother and that her mother wanted her to go to the police when the alleged event occurred.

The odds are indeed astronomical that the tape would emerge, but these things just find a way, particularly in politics and potential Oscar hosts.

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The Banks and Their Amoral Technician Skills

There were $349 billion dollars in loans sent out from the Feds to small businesses to help them through our analytic-induced coma now crippling the U.S. economy. However, the big banks, the bane of Main Street’s existence since about 2007 with their subprime, bail-out, and other interpretive shenanigans, stepped in and scooped up the loans for their biggest customers.

Many of the customers did not even have to do the loan paperwork — they just had to call. JPMorgan Chase, Citibank, and U.S. Bank approved the loans for nearly all of their big customers. Meanwhile the riff-raff small business folk struggled with convoluted forms, and netted a two out of 30 loan approval. That the money was never intended for the big guns was not an issue. Where there’s a loophole to exploit, count on the big banks exploiting away until the Feds catch up and try more regulation.You can’t regulate an amoral technician. They just find a way to get around laws for their own financial gain at the expense of others.

Other examples of amoral technicians? The mother in Illinois who turned her child over to a guardian so that she could qualify for financial aid. With zero income. that’s a sure thing. Then there are the Ivy Leagues who solicit applicants they know are not qualified in order to lure them into applying, thereby increasing your denominator (in the language of those health-care, plateau-seeking, now vaccine-seeking analytic experts). Increase the denominator and your acceptance rate us strikingly low, thereby enhancing exclusivity. It’s not real, but it does bring in the money. By donation or the back-door way through coaches paid to use their slots for the physically untalented of wealthy parents.

The ethical mind always asks, ‘What would happen if everyone did what I am doing, how would the world look? In the case of the bank, they all did it, there was no money left for small businesses, and they lost more business or trotted over to Chapter7 bankruptcy. ‘Tis a lovely world amoral technicians can create.

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Thoughts on Our Times

The Barometer and her husband had avoided the grocery stores and the great toilet paper drain, as it were, of 2020, until March 20. We are stockers, and had sufficient TP to decorate a house or two in the manner of our younger days. Until our adult children swooped in because of their millennial ways of, “What, me worry? My phone is down to 10% battery before I think about charging it.” So, off we went foraging that Friday for baked potatoes, milk, and TP.

The TP was being doled out, one package per family, at the manager’s desk. No pick-up from the aisles for this precious commodity. TP had become like Bose headphones at Best Buy. You must ask for them, they are locked in a cabinet, and only certain employees are trusted to dole them out to non-scruffy customers who must pay prior to handling them.

We approached the manager humbly, “Please, sir, could we have just one?” We mentioned that we were stunned that the Walmart Neighborhood Market had become so involved in rationing. Another employee stepped up, leaned forward, and whispered to us as only someone with inside information would, “You know they are sending in the marshal on Monday.” Visions of Matt Dillon riding into Mesa, Arizona came to mind.

However, research showed that there was an Internet rumor that the Feds were going to impose martial law that Monday. The old game of telephone is alive and well, all with the exponential power of technology. Around the country the rumor spread. The hang-up for the fearful was the spelling. Or was the hang-up that no one understood what martial law was? Whatever the reason, the blasted Internet, the tweeters, the flash-grammars, the chap-shatters, and the rest all fell for it and rushed in to get theirs. AH, the makings of a brutal Netflix series were there before our eyes. Have mercy on us through April 30 as people are locked up with their phones and computers. Who knows what showdowns at the corral are coming, or it it coral?

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“Beyond Disappointing” and “Deeply Disturbing Conduct”

New Wells Fargo CEO, Charles Scharf, testifying before the House Financial Services Committee, regarding the findings of a House report on behaviors at Wells since the time of the discovery of the 3.5 million fake accounts, give or take a few thousand here and there.

The e-mails and conduct in the report reveal a bank looking only to have its cap on growth eliminated. Here’s a classic quote from the now former chief risk officer,”If any of the $200MM [for customers injured due to unauthorized accounts] is left over, we promise to give it to charity—only after the CFPB and the OCC let us out of the consent orders. If they do not, no donation. Put the onus back on them.” Yes, that’s where the onus should be, after all.

So, to get out from under the cap and their consent decree, the chief risk officer used charitable donations as a bargaining chip. Remember all those ads Wells was running about its dedication to social causes and the extent of its donations? This is one scary crowd.

Here’s wishing Mr. Scharf well in his efforts at the bank. Between reading the baseball commissioner’s report on the Astros and this latest report on Wells Fargo, the Barometer has her head shaking like a baseball bobble figure on a dashboard.

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Barclays CEO Might Not Have Been Candid

Mercy! These CEOs. The Barometer is thinking of a new book — The Seven Things CEOs Do That Cost Them and Their Companies Dearly. Lack of candor would be one of them.

Here comes Yes Staley, CEO of Barclays. Do a search of this website and you will find the tales of his fines and troubles surrounding his actions to find out who a company whistleblower was. Now Barclays is grappling with a British investigation into whether Mr. Staley told the truth about his association with the infamous pedophile, Jeffrey Epstein.

While Scotland Yard (actually it is the U.K.’s Conduct Authority and Prudential Regulation Authority doing the work)is busy with its job, Barclays issued a statement that, for the first time, acknowledges that its CEO did indeed visit Epstein’s private Caribbean island, Little St. James, on two occasions. This was an island populated by many young girls, some as young as 11-13. However, Barclays assures that Mr. Staley was accompanied by his wife on both visits.

Barclays also indicated hat it was examining what Mr. Staley told Barclays about this issue when he was hired in 2015. The Conduct and Prudential folks have e-mails from both JPMorgan and Barclays that they are examining. JPMorgan turned its e-mails over, and the Barclays folks turned theirs over and are also perhaps perusing them as well.

Uh-oh. On so many levels.

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“Boeing CEO Regrets Candor”

There’s a headline that inspires confidence in the new leadership of a company that has been struggling with, well, candor with the public, with regulators, and with itself.

Alison Sider and Andrew Tangel, Wall Street Journal, March 9, 2020.

New CEO Dave Calhoun gave a quite remarkable interview with the New York Times. During that interview he said what those of us who are outside observers knew anyway.Just the title of the article reflects what many of us have been struggling to make clear, “Boeing’s Problems Are a Lot Bigger Than He Feared.” He must have gotten an earful from the powers that be, whoever they are. A few tidbits, candid though they may be, from the interview:

“It’s more than I imagine it would be, honestly. And it speaks to weaknesses in our leadership.”
He will be, “Hunting for bad news and acting on it.”

The one time in all of this that someone at Boeing gets something right, they rein him in. Would that they would have been so outraged at the e-mails the employees were writing for years. The Barometer’s hopes were dashed within two days of the surprising, but necessary, candor

Natalie Kitroeff & David Gelles, “Boeing’s Problems Are a Lot Bigger Than He Feared,” New York Times, March 6, 2020, p B1.

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The Goodwill Accounting Trap: Newell Brands Gets an SEC Subpoena

Newell Brands (Rubbermaid) has received a subpoena from the SEC following informal information requests. Uh oh!

Newell purchased a competitor (Jarden) in 2016 for $20 billion. That brought $8.3 billion in goodwill to its books and, as a bonus, quadrupled its debt. Then, by 2018, Newell had written down, yes, get this, $9 billion in goodwill. It is one of those, “Okay, we were wrong on the valuation thing.” Oops.

Goodwill is one of those accounting red-flag areas. When you see it, don’t believe it because, sooner or later, and more and more it is sooner, it is going away. When it leaves, the SEC arrives.

Newell is now the stuff of junk-bonds (S&P Global). And the SEC says that it is looking at “sales practices and certain accounting matters.” Raise your hand if you can figure out the components of “accounting matters.”

Analyst say investors do not care about goodwill, debt covenants, etc. Perhaps so. However, what you find in all of these factors that are ignored by analysts are the following:

1. The pressures at the company
2. The ethics of management (keeping your word is some small part of debt covenants)
3. Combine ethics with the squishy numbers in goodwill impairment and the highly subjective becomes highly material

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Former Baltimore Mayor Gets Three Years

Catherine Pugh made $800,000 selling her self-published children’s health books to those nonprofits and foundations that could benefit from the Mayor’s noblesse oblige in spreading around city grants and funding to those purchasing the books. There were issues with failure to deliver the books and tax evasion. And then there were the campaign finance violations — she used the book money in her campaign.

At her sentencing she said, “I apologize for all that has led me here.” Not sure what that means, but it seems a tad evasive. Creative graft would have been a better term to use with this scheme.

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Picking Up New Boots at a Party

The Ethicist column in the Sunday New York Times generally has questions about racist neighbors, landlords, etc. or roofers who have Confederate flags on their trucks. My favorite was the politically incorrect landlord that the tenant did not want to do anything about because the landlord was giving them a smokin’ deal on rent. The description sounded as if (because there was only one mailbox between landlord and tenant) there were zoning and housing ordinances being disregarded by the politically incorrect landlord to the benefit of the politically correct tenant (who did not want to rock the low-rent boat).

Then there are the family squabbles about who should pay for what. These are questions from lost souls seeking an ethics guru’s imprimatur for not helping some family member who is sick, broke, or both. The helpless they do not want to help are always helpless because of their own actions, decisions, obnoxiousness. The question-asker always details the flaws of the helpless.

Finally, there are the, “Should I tell them?” questions. You have a middle-school girl writing to see if she should disclose that her friends cheated on yet another one of those tests for admission to a highfalutin public school in New York City. This group includes disclosure angst to cheatees about cheaters: affairs of parents, best friends, teachers, and roofers who have Confederate flags on their trucks.

However, last Sunday there was a novel question. The teen daughter of the ethically inquiring mind had gone to a friend’s birthday party. The friend is Asian, and the party-goers followed the custom of removing shoes at the doorway. When the inquiring mind’s daughter was leaving the party she discovered that her boots were missing. Some scoundrel had traded up from the assortment of shoes and gone home in a quasi-new pair of boots. Nancy Sinatra warned us that boots were made for walking.

The Ethicist fan assured us that she would not demand payment for the boots for the hosts, so as to preserve her daughter’s friendship. Those of you with an ounce of graciousness should breathe a sigh of relief here. However, she wondered if it would be right to hold the hosts responsible for the theft. The Ethicist postured that the hosts were negligent for not having some form of check-in system for all the shoes. Wouldn’t that be a fun greeting? But he added, the hosts were negligent with their own stuff. If you invite people to parties in your home without any form of screening you risk things beyond boots in the doorway being pilfered.

Some of us still have faith in mankind (used in the anthropomorphic sense here). We open our homes and shoe deposits at our doors with faith that people will do the right thing and leave in their own shoes. If you want the thrill of wearing shoes that carry someone else’s smells and body oils, try bowling. Sometimes we are wrong about mankind (disclaimer here again). However, the Barometer would not be above posting copies of a photo of the boots around the school with a caption, “Seen these? If so, call this number.” Sometimes disclosure and enforcement improve mankind’s behavior going forward.

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Arthur Levitt and PCAOB

The Trump Administration has proposed putting the Public Company Accounting Oversight Board (or as we called it in the early days, “Peek-a-Boo”) under the SEC. Arthur Levitt, a former head of the SEC who was effective in exposing accounting mumbo jumbo in financial statements, believes it is a mistake to shuffle the function over to the SEC. Mr. Levitt says:

1. The SEC is slow
2. Elimination of PCAOB would undermine confidence in the audit profession

The Barometer concedes the first point to Mr. Levitt. The SEC is slow, except when it comes to Musk Tweets. That sounds like a treat for rodents, but it would be the SEC jumping on Elon Musk for his defiance of the agency. Not that a CEO trashing the SEC is a good thing, but it does seem to be a timeliness focus for the agency.

However, elimination of PCAOB would undermine confidence in the audit profession?

Let’s recap what the audit profession has been able to do all on its own, and all with the mighty PCAOB in place:

Audit quality has not improved much despite PCAOB’ ratings (its minimal sanctions have not helped the cause)
PwC got the wrong envelope for best picture in 2017 — somehow the firm mixed up the envelope — how are you going to do goodwill valuation and ACRS if you can’t see the difference between “La-La Land” and “Moonlight”?
PwC’s tax strategy at Caterpillar netted that company early-morning IRS raids at its facilities
A KPMG partner entered a guilty plea to feeding a friend insider information on clients so that the client could do some advance trading (but he got a Rolex in exchange)
PCAOB fed information to KPMG’s audit folks, turned state’s evidence, and one partner was convicted of collusion with PCAOB (and despite KPMG being given a heads-up on which companies’ audits PCAOB would be examining, KPMG’s audit quality was not affected — there some crackerjack work)
Ernst & Young is now under criminal investigation for allegedly being fed bid information by management so that the independent audit committee of the company board would pick EY for its auditor
KPMG was the auditor for collapsed New Century
PriceWaterhouseCoopers (PwC — and this acronym at least matches the letters in the words) settled for $41.9 million for overfilling federal agencies for its work
PwC, EY, and KPMG settled with the federal government for overbilling travel expenses to the government

The list could go on — and that it just the most recent stuff. What could possibly go wrong with this group handling audits of publicly traded companies?

The semi-private PCAOB has not proven itself to be a fierce watchdog. Perhaps its resources would be better used in an existing regulatory framework such as the SEC. The again the SEC missed both the Madoff and Stanford Securities Ponzi schemes. You can’t relate ethics. Fundamentally, the strength of audit firms is dependent on the ethics and backbones of auditors. From watching out for conflicts to refusing to back down when clients pressure them on issues, the critical juncture lies in auditors’ ability to call ’em as they see ’em, not as the client would like to have it. PCAOB was never ever to move the needle on that metric.

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Kicking the Trade: Car Dealers Telling Buyers to Give Their Cars to the Repo Guy

Car dealers seem to be giving some bad credit advice to customers who bought a car above their pay-grades. The advice? Buy another car, then turn the first car over to the repo guy. The dealer makes two sales instead of one. The buyer has a more affordable car. And the lender is stuck with the repo.

Dealers deny the practice. But the Wall Street Journal offered data: Transunion says that there were 24 million auto loans in the US in 2018. About 300,000 of those cars were repossessed — up 17% since 2018 despite a booming economy. Just think of the ethical issues in this practice.

The credit experts tell consumers not to do it because it is bad for their credit score. And destructive to their souls.

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The Misguided Pardon of Michael Milken

Like the Astros, Mr. Milken has never gotten it. During his time since prison (he served only two years of a ten-year sentence because of prostate cancer), he has twice been involved deal-making despite a lifetime ban against, well, deal-making. While he made no admissions, he did settle with the SEC. Let’s be frank: No one ponies up a fine of $47 million to the SEC because of innocence. That was in 1998, and he has walked the straight-and-narrow since then. But somehow the hubris is still there. We have not heard the last of Michael Milken.

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