B of A's brush with sexual harassment shows need for more openness
Wake-up call: Just because banks talk a good game on creating an inclusive culture doesn’t mean they always live up to their rhetoric. Consider the recent departure of Bank of America's Omeed Malik, following allegations by female employees that he made unwanted advances and engaged in other inappropriate conduct. This could have been another quiet departure – and it initially was – but reports suggest the women were not happy about the secretiveness, especially when they saw Reuters reporting that Malik left to start an advisory firm for hedge funds, without any mention of the circumstances around his exit. So B of A employees leaked what happened (and this kind of truth-telling is happening elsewhere too – a similar disclosure after the fact is now out about Save the Children’s Gerald Anderson). Is the B of A incident a wake-up call? Will it encourage exposure of bad behavior at other banks? Will infractions that were “handled” get a second, more skeptical look? And what would be an appropriate way for a bank to deal with such departures? Is saying nothing still acceptable? Or is it enabling the behavior to be repeated elsewhere? Are the standards changing? Here is our analysis, and here are links to coverage by the New York Times, Wall Street Journal and Bloomberg. (Please tell us what you think.)
More one percenters: Bank of America's gender pay gap, among U.S. and U.K. staff, is 1%, according to an internal memo sent this week from Sheri Bronstein, the company’s global human resources executive. The pay for U.S. minorities in those markets is also 99% that of their nonminority counterparts. B of A – which also plans to stop asking job candidates about their salary history – said its analysis adjusted for factors such as experience, work location and performance. Citigroup, in analyzing its own gender pay gap, published identical results just last week, as we reported here. (Do these ratios sound about right to you? Shoot us an email, on or off the record. We are curious to hear your reaction.)
Humans in an AI world: Artificial intelligence won’t make human employees expendable, said Cathy Bessant, Bank of America’s chief operations and technology officer. Using AI is not just a matter of automating repetitive tasks; it requires figuring out when, where and how to apply extraordinary computing power to immense amounts of data, and doing so responsibly. That means human judgement matters, Bessant said. For example, B of A patches 40 million vulnerabilities a year, which is 20 times its rate from five years ago. Humans need to decide what to patch in what order, identify where in the system the biggest risk of instability is and be sure to balance the pace of change with the patching, said Bessant, who argued that the caliber of talent at a bank is just as important as the technology it uses. (Bessant is American Banker's Most Powerful Woman in Banking for 2017.)
Truce: Wells Fargo has ended its highly publicized legal battle with Claudia Ponce de Leon, a former retail bank manager who blew the whistle on the phony-accounts racket back in 2011. She was fired three weeks after reporting the activity via an internal ethics hotline. Both sides say they reached a settlement this month, signaling a possible shift in the company’s legal strategy. Wells likely wanted to avoid the "massive exposure" of a jury trial, one observer suggested. This is perhaps the first instance in which Wells voluntarily ended one of its lengthy fights with any of the whistleblowers in its accounts scandal. Terms of the settlement were kept confidential.
A good grilling: Fifth Third Bancorp’s chief legal officer, Jelena McWilliams, who is President Trump’s nominee to lead the Federal Deposit Insurance Corp., faced thorough questioning from the Senate Banking Committee Tuesday. Her responses show she’s warmer to industrial loan companies than previous FDIC officials have been. The issue is of heightened importance lately, as both SoFi and Square have submitted ILC applications in the past year and many bankers worry other tech companies like Amazon could do the same. “ILC’s do exist … and the job of the FDIC is to give each ILC application due consideration,” McWilliams told the committee. “I don’t know how much work has been done on the ILCs in the past few years — I assume not a lot, because I’ve not seen any new charters. If confirmed I will work with your office to find out where the holdup is in the approval process.” McWilliams also said cybersecurity and capital rules are among her priorities.
Data freeze: The decision by the Consumer Financial Protection Bureau’s acting director, Mick Mulvaney, to halt the collection of consumer data is a deliberate attempt to undermine the agency, Elizabeth Warren wrote this week in an op-ed. The CFPB can’t detect a mortgage scam or catch an abusive student lender without the information it has been routinely collecting, Warren argued. Describing the CFPB as “a cop on the beat,” she said, “Mulvaney is working overtime to hamstring those cops as he puts the interests of Wall Street banks and various scam artists ahead of the interests of American families who are trying to buy a home or save for college. Instead of standing up for these families, Mulvaney is trying hard to make the consumer agency work for the people who want to cheat consumers.”
The Federal Reserve Bank of San Francisco has added two women to its Portland Branch board of directors. The new appointees are Stacey Dodson, U.S. Bank’s market president for Portland and Southwest Washington, and Hilary Krane, chief administrative officer and general counsel of Nike.
Coinbase has hired Tina Bhatnagar, former vice president of operations and user services at Twitter, as its vice president of operations and technology.
Performance payoff: Ethnic diversity has an even stronger link to financial performance than gender diversity does, according to a new study. McKinsey examined the financial data of more than 1,000 major companies across 12 countries, along with the gender and ethnic makeup of their workforces. When ranked by how ethnically diverse their executive teams are, the study found those in the top quartile of that ranking were 33% more likely to outperform competitors than those in the bottom quartile. A smaller McKinsey study from 2015 showed that companies with the most gender diversity on their executive teams were 21% more likely to outperform, compared with their less diverse counterparts. Of course, advancement in the workplace for both groups is slow. Among the 346 companies involved in the previous McKinsey study, the number of women on executive teams has risen only two percentage points, to 14%. The proportion of ethnic and cultural minorities has climbed one percentage point, to 13%.
I got you, girl: Actress Jessica Chastain has tied her salary to Octavia Spencer’s on an upcoming comedy the two are doing together, as a way to ensure Spencer gets paid what she deserves. Speaking at the Sundance Film Festival about how that came about, Spencer said that, when she and Chastain started discussing pay for the film, “She was like, ‘It’s time that women get paid the same as men!’ And I’m like, ‘Yeah, Jessica! It’s time!’ And we were dropping f-bombs and getting it all out there.” Spencer told her, "But here's the thing, women of color on that spectrum, we make far less than white women." Chastain replied, "Octavia, we're gonna get you paid on this film." As of last week, Spencer said, the two are making five times the amount that she was initially offered. The film was snapped up by Universal, after they pitched it around town. “We had a bidding war,” Spencer said. “And we’re just sitting there sipping coffee going, ‘Oh my god, women are in demand, leading films!’”
She had been underpaid for so long. When I discovered that , I realized that I could tie her deal to mine to bring up her quote. Men should start doing this with their female costars.
— Jessica Chastain (@jes_chastain) January 24, 2018
Let's talk about Larry Nassar
The enablers should be charged: Who isn’t sickened by the news from Judge Rosemarie Aquilina’s courtroom in Lansing, Mich.? Of all the essays on the sentencing of Larry Nassar, this one from Sports Illustrated is particularly passionate. The former USA gymnastics team doctor – who sexually abused more than 100 girls – is not the only one who needs to be held accountable. So are those who allowed his abuse to continue for years even after some girls spoke up.
Here’s why this is important.
We need to send a message to all the people who are looking the other way in situations like this right now. Some of these people are doing their own calculus about what negative consequences they could experience personally if they choose to act somehow in favor of the accusers rather than the accused. It is, after all, very uncomfortable to challenge the powerful, or even just the status quo. These people could be tempted to think that it is easier not to act than it is to act. They think of the hornet’s nest they would stir up if they act, one that could hurt them. They could convince themselves that they are just giving a well-respected person the benefit of the doubt, rather than protecting a criminal and subjecting young women to more abuse. Moving to protect the accusers would be a departure from the longtime practice. But if there are real consequences for not acting, that could change the calculus. It could become more difficult to stay silent, more uncomfortable to not act, if it meant you could go to jail too.
The conspiracy of silence is a problem that needs to be addressed – legally.
It goes far beyond the especially egregious case of Nassar. Consider the Gerald Andersons and Omeed Maliks of the business world.
Should companies be sending people off with strong recommendations (as Save the Children says happened with Anderson)? Or simply saying they left to pursue other opportunities (as B of A reportedly did with Malik)?
As things stand, saying something could create a liability, right? But doesn’t saying nothing make you complicit? Shouldn’t that be a liability too?
This GIF of Judge Aquilina throwing away the letter Larry Nassar wrote the court about how hard it is for him to listen to victim testimonies PRETTY MUCH SAYS IT ALL. pic.twitter.com/5HB9WMaPqU
— Ellie Hall (@ellievhall) January 24, 2018
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