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Why bullying matters

In the credit function or out, it doesn’t belong in banking

“There’s really not much that indicates we’ve learned anything new over the last several cycles,” says veteran lender and CEO Ed O’Leary. He aims to fix that. “There’s really not much that indicates we’ve learned anything new over the last several cycles,” says veteran lender and CEO Ed O’Leary. He aims to fix that.

In my years in banking in staff, line, and executive positions, I’ve observed a fair amount of bullying. It can be found almost anywhere if you really look for it—lenders dealing with borrowers, borrowers dealing with lenders, seniors cowing subordinates, lending managers dealing with loan review staff or auditors, high-powered managers dealing with internal control staff … the list goes on.

The presence or absence of strength of character and intestinal fortitude are on display when bullies are at their offending worst. Unhappily, the victims are often no match for the behaviors of the bullies—especially because so many of the bullies are bosses.

Bullying in the credit portfolio

In my own experience, I recall two situations separated by geography and ten years in time, where a loan review professional was under severe pressure by executive management to alter his critical views on certain large credits.

The stakes were considerable—a higher provision to the loan loss reserve driving current bank earnings deeper into the red and a continued trend of increasing criticized asset totals.

It did not occur to me at that time that I was witnessing contests between professional colleagues where the core behavior of one of the protagonists was bullying.

In the first instance, the bank was considered by some to be at risk of foundering. The loan review officer, a former examiner, stood his ground against withering pressure by the president and the CFO. I recall that the executive managers made compelling, if unsuccessful cases, and the loan review officer was respectful but unmoved by entreaties.

My most vivid memory, though, was the way that the loan review officer was badgered in front of a small group of his peers. He held his ground and that impressed me and still does to this day.

(I must confess that I had no personal liking for this person. He constantly pointed out our internal flaws and errors to his former Comptroller colleagues and as a result was seriously distrusted by his peers within the bank. Arguably it was part of his job but he seemed to enjoy that part of it too much.)

In the more recent situation, the bank was under heavy examiner criticism over practices and procedures but was not believed to be severely strained by problem asset totals of an acute or largely unfixable nature. The loan review officer was a young man, 35 or so, and had a variety of experiences in banking, not all of them lending related. From an experience and maturity point of view, he seemed more vulnerable to being talked out of a position, or so I thought.

As the new CEO of the bank, I had to affirm the independence of Loan Review by sign and symbol or risk the wrath of the examiners and our internal auditor, no shrinking violet in any way himself.

So there were a series of encounters I presided over but where I did not weigh in on the outcome. Rather I viewed my role as that of an impartial arbitrator. The young man did not relent, though the pressure on him was as intense as any I can recall witnessing. He was in fact being bullied by the lenders, people used to having their own ways within the management structure of the bank.

The victory in both of these situations was the triumph of independence of one of the most important of all internal credit controls.

When banking bullies lose

As I mentally review these events years later, I am convinced that those who lost were bullies and the organization and its shareholders were the big winners.

Why? Because the incumbents in the function were found to be personally and professionally credible. It’s not that they were necessarily or absolutely correct in their judgments. Credit calls can often go either way, especially the tough ones where there is an honest difference of opinion.

What was on display during this process was overt bullying of two separate loan review officers and an assault on the processes of which these individuals were custodians. The bullies in these and other situations moved on to other occasions and other victims, probably never realizing how negative—and corrosive—their behaviors actually were.

Bullies are everywhere

Bullying plays an important role in in current day circumstances judging by various press reports over the last several months. Most all the stereotypes about bullies are true: bullies are predominantly men, they are predominantly bosses and their targets are predominantly women.

In a Zogby International poll of 7,740 adults sponsored by the Bullying Institute, 37% reported that they had experienced bullying behavior, 45% of the targets reported stress related symptoms, 62% of employers ignored the problem, bullies were bosses 72% of the time, and 40% of the targets remained silent about their treatment.

In the end, nearly two thirds of the victims chose to leave their employment. To me, this means that the bullies ultimately prevailed.

What do you suppose the costs are of the turmoil, strife, absenteeism, turnover, and mental attitude in general? They are huge and largely unrecorded in a causative way.

Bullying is symptomatic of careless and thoughtless behaviors. We treat our subordinates, peers and customers in often disrespectful, irresponsible, and uncaring ways. Bullies can infect a culture and each of us, especially managers, becomes quickly and effectively inured to it.

Newcomers to any organization pick up on these things very quickly. They assimilate the tone of communication and the tolerated limits of what is said and how things are done. They understand better in a day of observation than a week’s worth of reading policy and procedures manuals.

Why bullies survive

While bullies may not predominate in most organizations, they survive by the silence of those who are subject to or witness their behaviors.

We tacitly condone inappropriate behaviors and then, by repetition, these behaviors institutionalize themselves, to the serious detriment of the organization. It’s much harder to reverse a company’s culture that’s been degraded by neglect and attitude than it is to correct those tendencies that will undermine an otherwise strong one.

I suggest that as we repair our credit cultures while the economy is still strong and that we be vigilant and aggressive about rooting out those bullying behaviors or tendencies. These can undo all our good work in the areas of morale and effective internal controls.

And we won’t find solutions to these issues in the policies or procedures manuals or in the Mission/Vision/Values statements.

Ed O’Leary

Banking Exchange Contributing Editor Ed O'Leary, a veteran lender and workout expert, spent nearly 50 years in bank commercial credit and related functions, working with both major banks as well as community banking institutions. His last job before retiring was as the CEO of a regional bank headquartered in Alburquerque, N.M. He earned his workout spurs in the dark days of the 1980s and early 1990s in both oil patch and commercial real estate lending. O'Leary began his banking career at The Bank of New York in 1964, and worked at banks in Florida, Texas, Oklahoma, and New Mexico. He served as a faculty member and thesis advisor at ABA's Stonier Graduate School of Banking for more than two decades, and served as long as a faculty member for ABA's undergraduate and graduate commercial lending schools. Today he works as a consultant and expert witness, and serves as instructor for ABA e-learning courses. You can e-mail him at [email protected]. O'Leary's website can be found at

In mid-2016 O'Leary's "Talking Credit" blog received a bronze excellence award for the Northeastern Region from the American Society of Business Publication Editors.

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