Despite investing $268.8 billion in corporate social responsibility initiatives in 2010 Bank of America was the target of occupies Wall Street protesters most frequently in 2011. By July 2008, the Bank of had acquired Countrywide Financial, making it the nation's biggest consumer bank and mortgage provider. Due to expansion, it now houses four out of every five mortgages in America. People who demanded more and more services from Bank of America expressed outrage because they believed it to be the cause of the 2008 Housing and Mortgage Crisis.
The bank published its CSR report of 2010 in the early parts of 2011 despite the controversy on how it shall pay the public back because of the legacy issues all over the country. The report reinforced the bank's commitment to its key values, principles of operation and its operation in the mortgage market.
Question 1: ON ETHICS
Why demonstration despite huge allocation for CSR?
Despite the huge investment of $268.8 billion in activities related to CSR in 2010, it was the largest target for demonstrators of Occupy Wall Street in 2011. By 2008 July, the Bank of America had made acquisition of Countrywide Financial making it the America's largest lender of mortgage and consumer bank (Peng, 2013). As a result of expansion, it was home for every four home loans in America. It is believed that the subprime mortgage crisis of 2008 was started at the time when more than 20% of the borrowers who were considered high risk failed to repay their mortgages which had adjustable rates. The public outcry called for the bank to do more because it was accused of leading to the mortgage crisis of 2008. Protesters held the view that the huge or greet to make higher profit was the main cause of the financial crisis in America. The outcry by the public requiring the bank to become more socially responsible hindered its potential to undertake its business. Thus, the Bank of America was a notable target for the protestors of Occupy Wall Street.
QUESTION 2: ON ETHICS
Whether the bank did or should have communicated to the crowd of Occupy Wall Street regarding its CSR activities.
CRS activities are somehow controversial and can easily be interpreted wrongly. Despite this, some people may think that CSR activities undertaken by a company are driven by social consciousness and altruism. However, those with different opinions hold the view that CSR activities are geared at brainwashing the public view regarding the company especially after getting involved in exploiting them. Based on that, even if the Bank of America explained to the protestors of Occupy Wall Streets, it is quite difficulty for them to buy the idea (Carrol & Shabana, 2010).
Questions 3: ON ETHICS
Recommendations of Tuner and Smith to the Board
Because Smith had information regarding the conditions of the economy which includes that of the financial institutions, he was aware of the challenges to the liquidity of the bank and likely impacts to public. Though Turner held the view that corporate offering improved the image of the company, he was not sure whether the bank could be able to undertake the projects it had outlines as its CSR (Goel & Ramanathan, 2014). He was calling for greater financial spending reduction. There were needs to have both long and short term CSR goals to make it easy to plan.
References
Carrol, A. & Shabana, K., (2010).The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice. International Journal of Management Reviews 12 (1), 85-105
Goel, M., & Ramanathan, P., (2014). Business Ethics and Corporate Social Responsibility – Is there a dividing line? Procedia Economics and Finance 11 (2014 ) 49 – 59
Peng, M.,(2013). Global Strategy. Business & Economics: Cengage Learning.
