Eric Ben Artzi … is a former risk officer at Deutsche Bank.
Mr. Ben-Artzi was one of three former Deutsche Bank employees turned whistleblowers who in
2010-2011 notified regulators of improper accounting at Deutsche.
What was discovered resulted in a five-year investigation and a $55 million settlement
between Deutsche Bank and the SEC.
While Mr. Ben-Artzi was entitled to 15 percent of the award, he publicly rejected the multimillion
dollar award.
He shines as an example of a whistleblower who truly wants to change the system without
any personal monetary or other gratification.
In his most recent post, he reminds us to not let the political upheaval in the U.S.
and abroad cloud our judgements and common sense and hide what is still not happening
to correct the situation.
Government continues to exhibit an abject failure to correct the underlying causes of
the "culture that wreaked havoc on the financial system."
He says, "Fortunately, every now and then a tone-deaf bureaucrat inadvertently reminds
us of how far our institutions have strayed from their obligation to serve the public."
His example,
"William C. Dudley, President and CEO of the Federal Reserve Bank of New York, recently
addressed the UK's Banking Standards Board in London (BSB).
Mr. Dudley's speech capped several years of joint work by the New York Fed and the
BSB on the issue of reforming the culture of banking."
In that speech, Mr. Dudley pointed out a benchmarking survey conducted by the BSB which stated that
of the 28,000 or so responders in banking, nearly 30 percent of them were worried about
negative consequences if they raised concerns at work.
Supposedly this culture of fear is what Mr. Dudley's Fed and the BSB are attempting
to change.
In a previous post, I pointed out how banks retaliate against brokers, employees and others
for blowing the whistle, definitely a fixation with me as you might imagine.
In that post, we talked about the culture of winks and nods and jobs for the boys, where
too many people making bad decisions have gotten where they are for reasons other than
excellence.
The culture of fear seems to permeate the financial services industry.
Regardless of what steps Mr. Dudley may point out to "fix" the situation, the Fed, the
SEC and other regulators and key officials still look the other way.
Whom do we, should we believe?
The facts frankly say not the Fed and other regulatory agencies.
A prime example of the out of control behavior by our regulatory agencies is the Wells Fargo
situation.
Comptroller of the Currency Thomas Curry said during a congressional hearing in September,
soon after the bank's $185-million settlement with the OCC and other regulators, that he
had ordered a review of the OCC's supervision of Wells Fargo.
Wednesday's report is the product of that review.
In a recent report, the Office of the Controller of the Currency (OCC) admitted to lax oversight
on its part toward Wells Fargo, missing many opportunities to address its wrongdoing.
The report goes on to say, "The OCC did not take timely and effective supervisory
actions after the bank and the OCC together identified significant issues with complaint
management and sales practices."
This lack of oversight has to date resulted in significant lawsuits and settlements.
The report points out that in 2010 the bank examiners met with Carrie Tolstedt, the former
Wells Fargo executive, then in charge of the community banking division which was at the
center of the unauthorized accounts scandal.
While the examiners asked about the 700 whistle-blower complaints of workers "gaming" the bank's
sales goal system so they could receive more compensation, after that initial meeting the
investigation was dropped.
The OCC looked the other way and the fraud continued.
Some lawmakers, including Rep. Jeb Hensarling (R-Texas), the chairman of the House Financial
Services Committee have also asked why the OCC and the Consumer Financial Protection
Bureau had not identified problems at the bank earlier.
A spokesman said Wednesday that it seems clear the agency failed in this case; in just this
case!!
Really??
"If there was ever a case where consumers needed regulators to protect them, this was
it, "said Jeff Emerson, a spokesperson commenting on the report.
"Yet obviously Washington regulators, including the OCC, failed to do their jobs and let the
American people down."
The OCC did confront Carrie Tolstedt, then head of Wells Fargo's community bank, about
the stunning number of whistleblower claims.
However, there are no records that show that federal inspectors "investigated the root
cause," or force Wells Fargo to probe it.
And the OCC report also says that the Wells Fargo's board of directors received "regular"
reports going back to 2005 indicating that most ethics line complaints and firings were
related to sales violations.
Our regulators and that includes the Fed do not have a culture which permits dissent.
In fact, their own retaliation against Fed whistleblower Carmen Segarra, for not going
easy on the banks is another example.
The Fed's actions during and after the financial crisis have raised serious concerns about
its leadership's priorities.
It seems that it prefers the financial interests of America's banking elite over those of
the general public.
Numerous examples of revolving doors (Mr. Dudley himself is a former Goldman Sachs chief
economist) and conflicts of interest have been exposed in the Fed since the financial
crisis.
The Fed needs to also be accountable.
It has too much of its own dirty laundry; so how can it "fix" others issues?
Richard Bowen was a Business Chief Underwriter for Mortgages for Citigroup during the housing
bubble financial crisis meltdown.
He saw fraud first hand inside Citigroup in the way the company underwrote mortgages.
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