Concept explainers
Case summary: RK had a solution for the challenge faced by retail banks which is to sell money. He suggested that cross-selling should be done. N bank got merged with WF bank and RK became the President and CEO of WF bank. The most important goal according to him was revenue growth and it can be achieved by cross-selling. Bankers were given targets and bonuses for better selling. The bank’s stocks saw a 67% increase from this transformation. This culture however created a lot more pressure on bankers. When problems started to emerge, RK was not the President and JS was the President. When the problem was investigated, rogue bankers were found and hence they were fired. The WF bank was fined by OCC for opening fraud accounts for which WF bank blamed the employees and not the culture. However, the inside story was different as employees told that due to immense pressure all this fraud happened and somehow bank was aware of this. When JS resigned, TS became CEO, and he removed the label of stores from banks and changed the incentive plans. The focus was now customer satisfaction and sales goals were also reduced. However, other scandals did happen in banks that were charging many customers for insurance who were taking car loans. The bank suffered a loss in reputation and ranking. Also, many penalties were charged.
To find:The underlying problem in the situation from the perspective of regulator.
Want to see the full answer?
Check out a sample textbook solutionChapter 8 Solutions
Gen Combo Looseleaf Management; Connect Access Card
- What is the role of Internal controls in preventing fraudulent business transactions?arrow_forwardDescribe prudential regulation and define and distinguish between macro and micro-prudential regulation. What is the purpose of prudential regulation?arrow_forwardWhat is CSR, and why is it important?arrow_forward
- provide an example of a governmental regulation that has affected in a positive way a business industry?arrow_forwardFraming rules for regulating business activities is the task of: A- Government B- Suppliers C- Customers D- Societyarrow_forwardDiscuss 3 instances in each case where the following third party's actions can be costly to an insurance company. a) Fire officers b) Medical officers c) Police officersarrow_forward
- What are the response roles assumed by each level of government, from local to national (including those of the department of Homeland security as well as other federal agencies and offices), and by private non profit organizationsarrow_forwardWith one example each, state and explain 5 outputs derived from a business policyarrow_forwardWhat is the role of regulation in keeping markets safe and ethical in the US? Do you think regulations in the US go far enough, go too far, or somewhere in-between? Based on your answer, what would you change about the regulation of markets in the US if you had the power to do so?arrow_forward
- Identify and discuss the various COSO imperative Enterprise Risk Management formulations that organization should aligned their objectives in each categoryarrow_forwardwhy larger companies tend to implement compliance programs more often than small companies?arrow_forwardGovernment regulation of the private sector is extremely critical. Discuss the justifications for, and the advantages of government regulations. What are the principles and benefits of good regulation? Course: Corporate Governancearrow_forward