An oddity here is that, at least in this market, up until the end, Washington Mutual kept advertising aggressively -- I heard a radio add for the company just a few hours ago. Here's a link to the press release by WaMu announcing the company's "Whoo Hoo!" campaign, "Whoo hoo! WaMu Unveils New Ad Campaign Celebrating and Inspired by Their Customers". Just in case the link is dead by the time you read this, here's an excerpt:
SEATTLE--(BUSINESS WIRE)--Feb. 12, 2008--WaMu (NYSE:WM) today announced a new marketing and advertising campaign that taps into customers' emotional reactions to capture the essence of what it feels like to bank at WaMu.
"We want to become an iconic brand that people love," said Genevieve Smith, chief marketing officer for WaMu. "Through ongoing brand tracking, we know we always outperform our peers when it comes to being emotionally relevant to people. It gives us a unique opportunity to talk about who we are."
The new campaign brings WaMu's brand values to life: A company that lives to simplify banking and do it with a smile.
"Whether it's been in focus groups or surveys, we hear that WaMu is a bank that truly cares about the customer, doesn't nickel and dime them, and gives something back. We created a campaign that reflects this," said Smith.
A few weeks ago, Cheryl and I were watching TV when a WaMu commercial came on, and when the announcer said, "we won't nickel and dime you", Cheryl noted the company's dire straits and said, "Maybe they should start nickel and diming people again".
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WaMu's last press release: "WaMu Recognized as Top Diverse Employer—Again Company ranks in top ten of Hispanic Business’ Diversity Elite and earns perfect score on the Human Rights Campaign’s Corporate Equality Index
SEATTLE, WA (September 24, 2008) – Washington Mutual, Inc. (NYSE:WM), one of the nation’s leading banks for consumers and small businesses, has once again been recognized as a top employer by Hispanic Business magazine and the Human Rights Campaign.
Hispanic Business magazine recently ranked WaMu sixth in its annual Diversity Elite list, which names the top 60 companies for Hispanics. The company was honored specifically for its efforts to recruit Hispanic employees, reach out to Hispanic consumers and support Hispanic communities and organizations.
The Human Rights Campaign, the largest national gay, lesbian, bisexual and transgender (GLBT) civil rights organization, also awarded WaMu its second consecutive 100 percent score in the organization’s 2009 Corporate Equality Index (CEI), which measures progress in attaining equal rights for GLBT employees and consumers. WaMu joins the ranks of 259 other major U.S. businesses that also received top marks in the annual survey. The CEI rated a total of 583 businesses on GLBT-related policies and practices, including non-discrimination policies and domestic partner benefits."
More here: http://isteve.blogspot.com/2008/09/washington-mutuals-last-press-release.html
Interesting. I have a post in mind about the corporate quest for diversity in general. Haven't had a chance to write it yet, but perhaps over the weekend.
Yeah Dennis, incredibly relevant, insigtful comment. Everyone knows its all the minorities' fault that WaMu failed. I heard Bear Stearns had a lot of those pesky minorities also. Straight white Christians are the best people in the whole world. JPMorgan is a weak bank and the next to fail because they are incredibly diverse also.[/sarcasm off]
Having to worry about diversity, or the lack of it, is very detrimental to all businesses.
Hiring the best person for any job should not be interfered with just to comply with equal opportunity b.s.
I would venture that the majority of large, publicly-traded companies in America have pro-diversity human resources policies of one form or another. For example, J.P. Morgan Chase, which acquired WaMu's deposit base at a fire sale price, notes on its website,
"We support and nurture diversity and inclusiveness in a number of ways across the firm. We feel good about our efforts in this regard and are especially gratified when external partners recognize our efforts through awards and honors as well"
That page includes a link to related Awards & Honors, which include these:
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Named a top 50 employer for women in the UK in The Times' "Where Women Want to Work" survey, 2007 and 2006
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Named a "top 10" family friendly company in Working Mother's "100 Best Companies" for the past 11 years, 2007
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"Top 50 companies" by LATINA Style magazine, 2007 and previous six years
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"Top 50 Companies for Diversity " by DiversityInc magazine, 2007 and six previous years running
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"Top Companies for Multicultural Women of Color" by Working Mother magazine, 2007 and previous three years running
[Going by anonymous on this comment out of awareness of company policy regarding blog posting]
As an employee of JPMorgan, I can say that the robust diversity initiatives in our company are very beneficial, especially when it comes to marketing to the public, attracting top talent, making for a pleasant workplace, etc. etc.
Another local company, MBNA, (firsthand knowledge in this case also) did not have a strong diversity culture, and as a result there was much blatant unjust discrimination. MBNA was lucky not to get hit with big, painful class action lawsuits. When the Bank of America merger team delved into MBNA's HR department they were *shocked* at many things they found.
Especially in the case of large companies that have to maintain top-notch reputations inside and outside the company, having a strong, pro-diversity culture makes good business sense.
"Especially in the case of large companies that have to maintain top-notch reputations inside and outside the company, having a strong, pro-diversity culture makes good business sense."
Pretty funny. You mean so they don't get sued out of existence by diversity mongers.
BTW, JK, Bear Stearns went out of existence because of mortgages too. And I'll assume your gratuitous reference to "straight, white Christians", whom I didn't mention, is an indication of bigotry on your part. Liberals are so funny, how they pretend to be tolerant and all.
Also, see here: http://mangans.blogspot.com/2008/09/how-clinton-era-rule-rewrite-made.html
Dennis,
I can think of at least one other motivation behind the diversity drive: Some clients demand it. A few years ago, I briefly worked a temp job in the asset management division of Goldman Sachs, reviewing and editing proposals Goldman sent in response to requests from potential institutional clients. For example, the pension fund of a municipality or a large union would solicit proposals from various money managers to manage part of its fund (e.g., the small cap growth portion), and Goldman Sachs would compete for the business.
You might think that those RFPs would focus solely on the money manager's methodology, ability, risk-adjusted track record, etc., but often they would ask explicitly about the manager's policy toward diversity, and in some cases ask for a breakdown of the company's employees by race, gender, etc. In the responses that I reviewed, Goldman wouldn't give a numerical breakdown, but it would quote its diversity policy from its business principles:
"For us to be successful, our men and women must reflect the diversity of the communities and cultures in which we operate. That means we must attract, retain and motivate people from many backgrounds and perspectives. Being diverse is not optional; it is what we must be."
"Pretty funny. You mean so they don't get sued out of existence by diversity mongers."
What part of the reality of ILLEGAL discrimination don't you understand? We're not talking merely a lack of pro-diversity, strictly merit-based initiatives, which is what MBNA may have *thought* they had, but real illegal race/gender discrimination. Systemic diversity initiatives help keep companies from getting too close to the line. There were other benefits I mentioned, but you glossed over those to seize on those 'pesky sue-your-pants-off liberal ACLU types'.
Of course, from reading a number of your opinions in your distasteful blog, you probably think that out and out racial discrimination shouldn't even be illegal. I won't argue that point with you since I don't need to. It's an outdated viewpoint quickly going the way of Aristotlean science, orgone energy, etc. Do you express those viewpoints in public or are you reduced to being an over-ambitious online pundit who, out of social awkwardness, has to release their pent up personal discontent in vitriolic "blather" to other discontented societal misfits? If it weren't a viewpoint that a real person seriously held, the extent you go to in order to blame every societal issue on minorities and/or liberals would make for good comedy.
"BTW, JK, Bear Stearns went out of existence because of mortgages too. And I'll assume your gratuitous reference to "straight, white Christians", whom I didn't mention, is an indication of bigotry on your part. Liberals are so funny, how they pretend to be tolerant and all."
You didn't mention it specifically, but I've read your racist opinions before so I know where you are coming from. I don't have anything against any group (their IDEAS, sure), only against those pretentious individuals who try to put certain people or groups on a pedestal over everyone else.
BTW...the high-fee, pyramid scheme-ish securitization of mortgages into financial instruments based on faulty models is what is primarily causing the havoc you see, not merely the original mortgages defaulting. If you worked at a financial institution you could see this first hand.
A racist is someone who's winning an argument with a liberal.
"BTW...the high-fee, pyramid scheme-ish securitization of mortgages into financial instruments based on faulty models is what is primarily causing the havoc you see, not merely the original mortgages defaulting."
Securitization, in itself, isn't a pyramid scheme. It had been used effectively for decades. Mistakes were certainly made on Wall Street, but it's not fair or accurate to put all of the blame on the Wall Street. There is plenty of blame to go around, and a lot of it belongs with the federal government. There was a bipartisan drive to extend credit to marginal borrowers in order to raise home ownership rates.
The sort of regulations that would have prevented the bubble -- e.g., requiring larger downpayments -- would have been opposed by the same folks who lament the lack of regulation today.
Dishonest mortgage brokers and dishonest mortgage borrowers who walked away from their obligations also deserve blame. The cozy oligopoly of rating agencies that slapped triple-A ratings on CDOs derived from sketchy mortgage backed securities deserve blame as well. As do the financial engineers whose models didn't take into properly take into account the perverse incentives of mortgage originators and borrowers: once the mortgage brokers sold their loans to the securitization market, they had no skin in the game, so they didn't care much if the mortgages later defaulted. Similarly, borrowers who put no money down on their homes had no skin in the game either.
Dave, I agree wholeheartedly that there is plenty of blame to go around.
Perhaps I wasn't clear in my description, by using those adjectives I wasn't implying that ALL securitized financial instruments/derivitaves were scammish...but the scammy ones certainly became prevalent in the mortgage world, and we(financial institutions-not naming anyone in particular) sold them to naive foreign banks/mid-wealthy private investors who fell for nice sounding products. It's funny the criteria people used to determine the risk/return of the products. The customers levered up on flimsy products that were overlevered themselves. The demand for MBS's became so great that we pressured brokers to feed us more and more mortgages, and the brokers loved their new bonuses so much that they would generate mortgages out of thin air. All it took to knock the whole kit and kaboodle down was a slight change in the underlying assumptions the computer guys were running their models on. Of course, we got more than just a slight change. In the news, they make it seem like a particular financial institution has its own mind and they ask "how could they be that dumb?" All it really boils down to is individuals within the company chasing the bonuses. The company itself is just a framework to chase bonuses in. That goes from the mortgage brokers at the bottom to the CEOs at the top. You think any of these guys regret descisions that hurt their companies? Hellll no. Nobody cares about the company itself, or the customers. The name of the game is take the money and run.
"Nobody cares about the company itself, or the customers. The name of the game is take the money and run."
This has a lot to do with how compensation is structured and the sort of 'social contract' between firms and employees. In the old days when the big investment banks were partnerships, I think there was more loyalty going both ways: firms wouldn't be as quick to let employees go during lean times, and employees would act as if they were going to be with that firm for a long time; hence there would be less incentive to blow things up for a short-term gain. I mentioned in a previous post that a privately-held investment bank I had dealt with had apparently managed to avoid this mess, and perhaps it's this sort of cultural difference that enabled them to do so.
One idea for reform (which shouldn't have to require regulation -- shareholders should demand it) would be to have bonuses payed out over 5 year+ time lines, subject to forfeiture in the event of fraud or if the business results in steep losses a few years later.
Another point, regarding those who were making the models: if they worked at firms with their own mortgage operations divisions, they should have talked to their ops people. I know someone who works in mortgage ops at an investment bank and none of this was any surprise to her or her colleagues -- they saw the crap coming on the lines.
Pretty much agree with your thoughts there. Couple of additional thoughts: When a company reaches a certain size, it becomes more and more impractical for the right hand to know what the left hand is doing. Very beaurocratic and inefficient. If everyone has their hands in everything, you also open the door for fraud. I know of several instances where employees at companies I work for stole a lot of money, got caught, and then were not prosecuted for fear of embarrassment to the bank. It was quite common in the 90's. The response to this was the compartmentalization of departments so that each company role is only focused on their job, not the big picture.
Also the problem with shareholders demanding change, is that the largest shareholders of investment banks or most any public company for that matter would be those very financial institutions, via the mutual funds they run, etc. Who would really step up to the plate and demand change?
Regulation looks more and more attractive. I don't think it would be necessary if we weren't going to be bailing out whole sectors, but if bailouts and interventions are going to be the status quo, then imo we should maybe look into tight regulations of the policies and corporate culture of companies whose business has a disproportionate effect on the economy.
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