Richard Bowen

  • Home
  • About
  • Speaking
  • Videos
  • Media/Press
  • Testimonials
  • Blog
  • Contact
  • +1-214-604-5492

December 28, 2017 By Richard Bowen

Wall Street, The Fed and Ethics!

Source: AgnosticPreachersKid – Own work, CC BY-SA 3.0

Ray Dalia, Founder of Bridgewater Associates said: ”You’re going  to be wrong a fair amount of times; so the issue is, how do you be wrong well?”  Reading about Randal Quarles, the Federal Reserve’s first-ever vice chair of supervision recusing himself from matters related to Wells Fargo, I asked myself that question, “how do you be wrong well?” 

This incident doesn’t strike me as being wrong well.

Source Federalreserve – Randal Quarles official photo, Public Domain

Given the situation, Mr. Quarles recusing himself is puzzling and frankly raised some red flags for me. There are multiple dimensions of ethics and accompanying issues I question. We all make a fair amount of mistakes and in this case, the mistake may well be costly and not done as well as it should be for the sake of the country.

Mr. Quarles is our country’s top banking regulator. Wells Fargo is the third largest bank in the United States and has been under intense regulatory scrutiny as a result of many blatant ethics violations, from opening new accounts without their customer’s  knowledge to charging unnecessary car insurance fees to car loan customers.

There is no argument that anyone in such a critical position should recuse himself from making any decisions which could directly or indirectly be viewed as a conflict of interest. With that premise, I am in agreement. However, before taking the position,  Mr. Quarles divested himself of any interests he had with Wells Fargo. So what’s the issue?

First, Wells Fargo is such a major player in the banking industry virtually all decisions related to regulating the industry could impact Wells Fargo. And Mr. Quarles would have been at the helm of such decisions. Not now. Now he’s opened the door to a potential huge deficit.

The issue causing this sudden recusal is related to his wife’s family and their involvement with Wells Fargo. Mr. Quarles father-in-law  Spencer F. Eccles is currently Chairman Emeritus of  Wells Fargo’s Inter Mountain Banking Region. He was Chairman  & Chief Executive of First Security Corporation of Salt Lake City which was sold to Wells Fargo in 2000. Mr. Quarles brother-in-law Spencer P. Eccles was previously ”affiliated” with Wells Capital Management which is part of Wells Fargo.

Yes, the Eccles family ties are indeed extensive and were well known prior to the Quarles appointment. So the question I ask is why two months after Mr. Quarles appointment is he recusing himself? To what point? His father-in–law’s position as Chairman Emeritus is an honorary one. He has no formal role or responsibility in how the bank conducts its business.

Mr. Quarles is and will be a critical voice in how our central bank rethinks its approach to bank supervision. Yet he believes, given the former family ties to Wells Fargo it is necessary to bow out from all Fed decisions regarding Wells Fargo. In a memo to Mark Van Der Weide, the Federal Reserves’ chief counsel he said: “I have made this decision in order to avoid even the appearance of a conflict.”

I acknowledge this is important as there have been so many contentious prior conflicts of interest with government appointees which have been at the core of a continuous revolving door. The revolving door on ethical or fraudulent behaviors from  Wall Street to high government positions and back again has been especially egregious. 

The continued hiring of banking executives to government positions which puts them in a tenuous position to act on ethical or fraudulent misrepresentations by banks they were formally involved in or represented is legion. Some of these same individuals are hell bent on slashing regulations; which may well benefit their former companies or clients.

On the other hand, how is it possible Mr. Quarles will be able to satisfactorily oversee his responsibilities as vice chairman of supervision, one of the most important and powerful in banking? How will this decision affect his regulatory responsibilities and the development of supervisory policies and rules that will apply to banking organizations. I have to question how as it deals with regulatory decisions can the Fed’s supervisory function possibly be effective if its leader for these issues will not involve himself in any way with the regulation or supervision of the U.S. third-largest bank.

One of the questions raised is, is this another example yet again of the revolving door issue?

As I’ve said before, the revolving door which exists in government and on Wall Street, where the Wall Street sends key individuals to government; they serve in the Department of Justice, the Treasury, the Securities and Exchange Commission and the list just goes on. They serve in a government position knowing that their real reward is coming full circle – they come back home to Wall Street or serving Wall Street via the law firms which pander to them and reap huge financial rewards. From former attorney general Eric Holder, Goldman Sachs’ executives, the Federal Reserve Bank, the list is long and goes on and on and on! 

Well, if you’re coming back to play on Wall Street – or the Fed, you sure don’t want to alienate your banking buddies or decisions that may impact them adversely or prosecuting them for fraud and intentional wrongdoing. Heaven forbid you would hold them accountable!.

Mr. Quarles may be doing the right thing yet at what cost? This decision could be a significant hardship forcing all Federal Reserve staff to treat Wells Fargo as a special case.

And that by itself is an ethical issue.

Related Posts

Why Are Wall Street Bankers Taking Government Jobs?
The Wall Street Merry-Go-Round Revolves Again!
Bankers Haven’t Gone to Jail Because They Are Innocent…Of Crimes?!

Tax Cuts: Will the Rich Get Richer?
With many good wishes for the season!
Ethics on your mind? Subscribe to my ezine to get my latest article delivered right to your inbox. Click Here to Subscribe

Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

Related Posts

  • Can Ethical Principles Become the New Norm?Can Ethical Principles Become the New Norm?
  • Dodd–Frank challenged in court! A Win for Community Banking and the American PublicDodd–Frank challenged in court! A Win for Community Banking and the American Public
  • Preparing Students for an Ethical Future – University of Nebraska Gets it RightPreparing Students for an Ethical Future – University of Nebraska Gets it Right
  • Crapo Spin: Too Big to Fail … Too Small to SucceedCrapo Spin: Too Big to Fail … Too Small to Succeed

What People Are Saying About Richard M. Bowen

William D. Cohan"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst."

~ William D. Cohan, NY Times Best Selling Author
2017-06-30T10:08:59-05:00
"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author
https://richardmbowen.com/testimonials/2556/

Eileen McDonnell"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger."

~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
2015-02-13T19:51:19-06:00
"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger." ~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
https://richardmbowen.com/testimonials/711/

Ben Stein"Richard Bowen, you are a star and a hero."

~ Ben Stein, Economist and Political Commentator
2015-02-13T19:50:26-06:00
"Richard Bowen, you are a star and a hero." ~ Ben Stein, Economist and Political Commentator
https://richardmbowen.com/testimonials/712/

Jim Farrell"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership."

~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
2014-12-28T19:48:17-06:00
"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
https://richardmbowen.com/testimonials/532/

Dennis McCuistion"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program
2014-12-28T19:48:06-06:00
"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
https://richardmbowen.com/testimonials/533/

Betty Garrett"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!"

~ Betty Garrett, Garrett Speakers International
2014-12-28T19:47:50-06:00
"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!" ~ Betty Garrett, Garrett Speakers International
https://richardmbowen.com/testimonials/531/

fred-timmons"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences."

~ Fred Timmons, Chairman of The Texas Society of CPA's
2014-12-28T19:47:22-06:00
"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences." ~ Fred Timmons, Chairman of The Texas Society of CPA's
https://richardmbowen.com/testimonials/530/

Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

Want to Hire Richard?

Watch Richard

See What Clients are Saying

About Richard

Recent Posts

  • Warmest thoughts and best wishes for a wonderful and safe holiday
  • Thanksgiving 2020
  • Pausing For A While
  • The world is in crisis
  • Relationships Count

Categories

  • Business Ethics
  • Congress
  • Corporate Debt
  • Corruption
  • Ethical Leadership
  • Financial Crime
  • Financial Crisis
  • Financial Crisis of 2008
  • Holiday
  • International
  • Mortgage Lending
  • Mortgage Meltdown
  • Relationships
  • Texas Politics
  • The Fed
  • Too Big To Fail
  • Uncategorized
  • Updates
  • Wall Street
  • Whistle Blowers

About Richard

Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

Read more

Connect with Richard

  Facebook   Twitter   Linked   Google Plus   YouTube

Contact Us

Phone: +1-214-604-5492

Email: Richard@RichardMBowen.com

Contact Richard
Google+

Copyright 2019© 2021 · Richard M. Bowen | ALL RIGHTS RESERVED.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are as essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

SAVE & ACCEPT
X
Sign up to receive my blog posts via email!
Subscribe >>