January 9, 2014

American Banker, a banking industry trade publication, each year gives a “Banker of the Year” award to the CEO who has achieved considerable financial success and accomplishment.  Customer satisfaction doesn’t really factor much into the equation, which is fitting. After all, the industry is not particularly known for its customer service-orientation, despite what retail bankers’ splashy advertising may suggest. Hmmm…maybe the publication should consider adding a “Reputation Mismanagement” award to the lineup, to celebrate the bank that managed to tarnish its brand the most.  There would be no shortage of credible candidates.

Wells Fargo would have had a lock on the award for most of 2013, thanks to the outrageous behavior of its attorneys in a court case that so alienated a judge that he asked the company’s board of directors to formally endorse their legal team’s comments. But not to be outdone, Bank of America aced out its rival at the 11th hour. In mid-December, Bloomberg published a story alleging that a vendor hired by the bank deliberately and improperly delayed the loan modifications of thousands of troubled homeowners. As if those allegations weren’t damaging enough, Bloomberg revealed that BofA also allowed the vendor managing its loan modification process to make inaccurate statements to lawmakers and US regulatory officials via “Office of the CEO and President” letterhead.

We’ll let the courts decide whether Bank of America deliberately sabotaged loan modifications of troubled homeowners, as the country’s biggest bank denies any wrongdoing.  Instead, let’s focus on the bank’s admission that it did indeed allow the vendor in question, Urban Lending Solutions, to misrepresent itself as the “Office of the CEO and President.” Its justification for the deception offers yet another valuable lesson about the perils of PR spin (see here and here for more on this topic).

Ron Sturzenegger, head of BofA’s Legacy Assets Servicing unit, told Bloomberg the bank allowed the misrepresentation because it wanted to provide a seamless experience for homeowners who complained directly to BofA’s CEO Brian Moynihan.

“The way we view Urban and other vendors like Urban is as an extension of Bank of America,” Sturzenegger told Bloomberg reporter Hugh Son.

Really? That’s the story you’re going with??

The misrepresentation had nothing to do with ensuring a “seamless process.”  BofA’s goal was clearly to deceive lawmakers and customers into believing that their inquiries and complaints were being handled and addressed at the highest levels of the company, rather than by people who aren’t even on the payroll. That the bank’s deception included Congressional leaders concerned about the bank’s practices is rather extraordinary.

Surprisingly, the highly questionable practice of misrepresenting individuals as being from the Office of the CEO isn’t limited to BofA, or the banking sector in general.  Last year I sent an email to Hubert Joly, the CEO of Best Buy, praising some employees who went way beyond the call of duty.  I strongly suspect that Joly didn’t bother reading the email because a few weeks later I got an awkward call from someone representing himself as being from the Office of the CEO. He was clearly reading from a script that was intended to deal with complaints, and his lack of training left no room for him to engage me on something positive.  Let’s just say the call instantly negated the favorable perceptions I held toward Best Buy for its customer care practices.

The predecessor company to AT&T also deceptively represented to customers that they were dealing with the Office of the CEO. I know this because some 15 years ago we had a serious service issue that was impairing our business and, in desperation, I left a message for the company’s CEO with his executive assistant. Of course I didn’t expect a return call – or even for the CEO to care – but I knew that having a complaint forwarded from the CEO’s office might be enough to get some action. When someone actually did call back saying that he was from the Office of the CEO, the situation went from bad to worse as it soon became readily apparent he was a junior staffer whose job was simply to placate me. I cancelled our contract.

A very successful PR person once called me naïve because of my insistence that propagating disingenuous spin is never a smart PR strategy.  Well, given that maintaining trusted relationships with the media is a critical PR function, let’s see how BofA’s spin influenced reporters.  And for that, I turn to Mark Calvey, a veteran San Francisco business reporter who is unquestionably one of the leading media authorities on BofA. His words from a Dec. 23 article relating to Urban Lending Solutions cloaking itself as BofA CEO Brian Moynihan’s office:

Depending on your vantage point, allowing an outside contractor to refer to itself as BofA’s “Office of the CEO and President” is either a savvy marketing move or intentionally misleading.

Housing Wire’s Garrison criticized borrowers for thinking they’re actually dealing with the CEO’s office by asking, “Why anyone would think that the CEO of the largest bank in the nation would personally handle their $167,000 mortgage is beyond me, but let’s table that.”

No, let’s not table that. In my opinion it strikes at the heart of the matter. Here we are, almost six years since the worst of the financial crisis hit, and we have a respected blogger essentially asking, “Who are these chumps who believed what their bank told them?”

More than anything else, it reflects the loss of trust the nation’s major financial institutions have lost with many of their customers and the public. It will take many years to restore that trusted relationship that most bankers once held. 

Thanks, Mark.  I rest my case.