More Cultural Failures
Although the list of companies experiencing disaster from cultural deficiencies is too long to include in any one book, we can look at some of the failures inherent in the recent financial system meltdown.
- Mortgage generators. It's become all too clear that many banks, mortgage brokers, and other generators of home mortgages developed a culture of “get my money now, damn the customer.” Putting buyers in homes they simply could not afford—either initially or when adjustable rates were to ratchet up—certainly helped the companies' bottom lines in the short run, but resulted in disaster for both the companies and home buyers alike.
- Credit card companies. The next shoe to drop in the mortgage-led economic downturn was the credit card industry, which sent pre-approved applications seemingly to anyone who could breathe. Providing credit to people unable to afford further debt, along with policies of charging exorbitant interest rates for one-day-late payments or jacking up rates on new balances, surely does not put the customer first, and bad debts are now overwhelming these organizations. The Dodd-Frank Act and ensuing regulations are intended to deal with these practices.
- Investment banks. Of course we can look to the investment banks and other financial institutions slicing and dicing collateralized debt obligations and selling them off as gold-plated securities. Another fair question is to what extent they knew these securities didn't deserve the triple A ...