from the hip

I have written earlier, in What’s wrong with American banks about the lack of efficiency, the continued use of checks and their outrageous fees. However, it seems I was much too kind. Some American banks seem to do much worse than even that. Now, according to New York Times,

Wachovia has agreed to pay as much as $144 million to end an investigation that accuses the bank of allowing telemarketers to use its accounts to steal millions of dollars.

So instead of trying to build customer confidence, sharpening up the service, improving efficiency, and building business by producing customer satisfaction, a huge American bank gets involved in a rather petty scam against its own customers for a few million dollars in profit! Elderly customers, at that! Wild! What a great way to destroy a brand name! What a great way to destroy customer confidence – just when they need it the most!

The bank’s actions were “part of a pattern of misconduct” that resulted in Wachovia’s collecting millions of dollars in fees, regulators wrote.

Wachovia has agreed to pay a $10 million fine, contribute $8.9 million to consumer education programs and make restitution to victims that could top $125 million. In a statement, the bank said this “situation was unacceptable and we regret it happened.”

How silly is it possible to behave? When is the American banking industry going to stop treating its customers as uneducated, stupid fools, and instead try to focus on building trust, satisfaction and loyalty by means of excellent service? Or building highly efficient transaction systems using the best available technology and software? In a country that, technologically speaking, is ahead of the rest of the world, but that nevertheless, from an implementation point of view – especially as far as the banking sector is concerned – is 10 years behind Scandinavian and German banks in the use of modern technology? They should improve transaction efficiency and lower costs – not run scams!

And if the high paid executives of the huge American bank are unwilling to or unable to improve their banks and customer service, then why hasn’t there been any regulatory action to just force them to increase efficiency and performance? Do American regulators not know how bad American banking is? Do they not go abroad and study how it’s done elsewhere? Do they think America is still in the forefront – and don’t want to be confused with facts?

I have always admired the fact that Americans devote so much time, energy, effort and money to charities. To me, this is one of many great things about American society.

However, I have often found myself to be pretty naive, too. And I may have been just that in this case as well.

While it is true that Americans do give, and some quite heavily, to charities, American charities may not be any better than charities in other parts of the world. I’ve seen many analyses of charities where 80 per cent, 90 per cent of the money, and in some cases even more, never reach the targeted group or purpose.

Lavish spending, bad subcontracting, high salaries, lawyers fees, and lots of other things have, in the bad cases, explained how the money have simply disappeared.

In a report by four professors who specialize in nonprofit accounting, the amount of loss as a result of fraud in non-profit organizations was estimated to be 40 billion dollars.

the typical theft from a charity was committed by a female employee with no criminal record who earned less than $50,000 a year and had worked for the nonprofit at least three years. The amount she stole was less than $40,000.

The most costly cases, the study found, involved male executives earning $100,000 to $149,000 a year. The thieves in such cases had typically been with the organization the longest.

..

If the $40 billion figure is accurate, then the money lost to fraud equaled the combined giving by corporations and foundations in 2006, said Diana Aviv, president and chief executive of the Independent Sector, which represents nonprofit groups.

But Ms. Aviv expressed skepticism about the report, noting that it relied on the fraud examiners association’s estimate of overall fraud across all sectors, including government and corporate.

“They’re lumping all those sectors together, and it could be that the for-profit sector experiences a higher level of fraud, while the nonprofit sector and government experience lower levels,” Ms. Aviv said.

Nonetheless, she said, “even if the figure is $20 billion, that’s still a huge amount and needs to be addressed.”

Now, 40 billion USD is approximately 13% of the money given to charities in 2006. That means, that on the average, 13 cents of every dollar you give disappears. That’s pretty bad!

So for the future, study your charity closely before you give. You may be paying for somebody’s retirement fund in a Swiss bank!

There is a good, in-depth article about “The Foreclosure Machine” in the US in New York Times today. For readers interested in the housing crisis in the US, it is highly recommended.