Here’s an interesting article and video on Bank of America’s latest grab for Fed. money. A few months ago, I asked one of my MBA students (who works for BOA), “Aren’t you concerned the same thing is happening to BOA that happened to Lehman and Bear?” “What,” she queried. “BOA is getting to big and won’t be able to sustain itself,” I responded. “We’re fine,” she answered with confidence. Ya right.
All is not well for BOA and here’s part of the reason why. When I get to big and wield to much power, I become immune to my own frailty, my own vulnerabilities. These Wall Street types are still not getting it. They are trying to skate by unscathed. The solution to this is not more money, it’s a different kind of leadership. The self-deception at the senior levels of these banks is obvious. There are two problems here. I’ve already mentioned the first:
1) Big-ness tends to lead an individual to insulate him/herself from important realities and creates a presumptuous attitude
2) Big-ness tends to lead to un-sustainable growth (it’s ironic that, at least one of the very things –un-sustainable growth– that got us into this mess is continuing to happen)
Now, I understand that this problem is complex and to offer a simplistic answer like, “make all the banks small” is ridiculous. However, so is the alternative (keep growing the status quo).
The first real change that needs to occur is the leadership situation. The senior leaders in these organizations may be smart, but they have reached a level of arrogance that is not good for their companies nor our country. They “expect,” like BOA CEO more bailout money simply because of who they are.
It’s reported that the BOA CEO said they needed more money because Merrill Lynch is in bigger trouble than originally thought. If you or I went to a bank and asked for more money because we had either NOT done our due diligence, OR we had done our due diligence and done something stupid, how quickly do you think BOA would lend us money. Nada. When the rules of good leadership and common sense no longer apply–because we’re to big to play by them–you’re in trouble (can you say Nixon).