Today’s blog is inspired by one of the most blatant ethical missteps I have heard in years. In an article by Peter Lattman for The New York Times (August 27, 
2013), “Bank executive admits to using bailout money to buy condo,” we are introduced to Darryl Layne Woods a bank executive and a former chairman of the Mainstreet Bank of Ashland, Missouri. In a sense, Mr. Woods is emblematic of the worst of the abuses of banking in America.
We have to go back to 2008, when the economy was in a terrible recession, bordering on a word no one wanted to utter: Depression. It was during that period of time when the government, more specifically, the United States Treasury, made the determination to bail out the banks. Mainstreet Bank applied for relief, and they received $1 million. Many Americans are highly critical the banking bailout, and this is not necessarily the forum to discuss the pro’s and con’s of the strategy, but Mr. Woods took more than $380,000 of that money to purchase a waterfront condo in Ft. Myers, Florida.
According to Tammy Dickinson, the United States attorney for the Western District of Missouri:
“At a time when many other Americans were losing their homes, he was siphoning off public funds to buy a luxury vacation condo in Florida.”
To make matters worse, when the organization known as Sigtarp, the agency created to track how the bank bailout funds were being used, Mr. Woods completely covered up his lack of ethics in a letter to Sigtarp by stating:
“We are a small central Missouri community bank and while I would like to be able to provide you with very specific and quantitative responses we are currently operating under the assumption that the worst scenario could occur and the TARP proceeds will provide vitally needed infusions to a bleeding patient.”
His quote, while “homey,” and almost Norman Rockwell-like evoking images of a “small central Missouri bank…(and) infusions to a bleeding patient,” failed to mention that more than one-third of the U.S. taxpayer’s money paid for his luxury condo in Ft. Myers.
As I spend a great deal of my time traveling North America talking about ethical behavior, rather than focusing on banking and Mr. Woods in particular, I am more curious about the “why” of it all.
Because I Can?
Why did Mr. Woods feel it was alright for him to use the bailout money for personal gain? Is he a terrible person or a self-centered individual? I would doubt so. It is, in a sense, not an important point but part of a much larger scenario.
Woods will have the opportunity to reflect on his mis-behavior while sitting in jail for about a year. He has been banned from banking, of course, and any status he and his family enjoyed in Ashland, Missouri are pretty well erased. His punishment will last far beyond his jail sentence.
Something within Mr. Woods told him he was entitled to the money. He had the opportunity to take the money and he had the opportunity to cover it up and he took advantage of the situation. Is he emblematic of a larger problem? Well, we do know that since the bailout, more than 140 bank executives have been charged with criminal conduct.
Why have we become an entitled society? Why did all these bank executives feel it their right to use funds they had no business taking?
I believe people take advantage of situations such as funds given as bailout money because they lack an ethical compass. They have not been taught proper ethical behavior and they have not learned. In being given an opportunity to do wrong or right, those without an ethical compass will often do wrong.
The other part of it is that there must be a system of checks and balances in place. The Mainstreet Bank apparently had no such committee process to say to Mr. Woods that what he was doing was not only illegal but unethical.
We must also view the act as an off-shoot of where many people are as a societal backdrop and in all walks of life. Unfortunately, some people view themselves as being entitled to whatever they are given and I am not so certain they are even realizing that what they are doing is wrong. Imagine an adult not even realizing that what they are doing is ethically wrong.
That is perhaps the biggest shame of it all and why ethical training has never been more important.
YOUR COMMENTS ARE WELCOME!
This man truly thinks he has done no wrong. He wants to place blame on everyone else. He states this news was fabricated. I do know for a fact that he did spend this money as he thought he was entitled. He and his (wife who currently operates the bank) knew what they were doing when they paid off the condo. They both were snakes in the grass. He and her married during the trial. Hmmmm…. This man along with his wife are scam artist. She is currently working there under his word. She was hired on as a president with no prior bank experience. So is he really banned from his own bank? I think not! Has he even served time in jail yet? I have heard no further news! This man just got away with a wrong doing. He will never learn. Nor does he care too. Sad to see many MSB customers stuck banking with them. That relationship must be miserable!
Sickening, he profits and my family member lost their home to this bank! “Woods will serve eight months in a halfway home, followed by four months of home detention and a year on supervised probation. He also must pay about $97,000 in restitution and a $10,000 fine.” (http://www.komu.com/news/former-missouri-bank-president-sentenced-in-fraud/)
Yes, he seems to have that “I’m entitled” gene and will go to his grave thinking he was in the right. I own a small company and got embezzled over a three year period and when I found the problem and confronted her she just could not believe that there was a problem and that she did nothing wrong. She was entitled and felt it was all owed to her! This problem is rampant in todays society and it is sickening. Mr. Woods was caught in an audit and that is good. My embezzler did not get prosecuted as I did not choose to pursue as the cost of auditing and damage to our company reputation. According to my CPA and attorney, less than 5% of embezzlers are prosecuted. Mr. Woods’ actions seem to be part of the new “societal norm”.
To answer your question about Checks and Balances within Mainstreet Bank… When Darryl’s work would was checked it was by Jackie, his wife and current operator of MSB. When it came down to audits and tasks being given by the State of MO auditors or Federal Reserve auditors to the employees of MSB, he simply didn’t have time to answer your questions even thought they were questions from someone with importance and the right to shut the bank down or you were called an idiot for asking stupid questions, questions you were being told to ask, and was told not to worry about it.