What the Savings & Loan Crisis Taught Me about Public Trust

David Cooke

Post by David Cooke, Senior Government Advisor to BearingPoint

It’s impossible to underestimate the challenges that Geithner and the Obama administration face—the pressure to do something—anything—fast to fix the banking crisis. I don’t pretend to have the solution, but I do know that restoring public confidence is a critical part of the recovery process.

What I learned as the Executive Director and COO of the Resolution Trust Corporation (RTC) during the savings & loan (S&L) crisis is that the two—public trust and the crisis resolution strategy—are inextricable. Even more so when taxpayer funds are involved. The greater the public confusion or doubt, the more difficult operations will become – no matter how hard you try.

I saw this firsthand when the former S&L regulatory agency lost public confidence and was eliminated by Congress. Re-establishing trust was a very difficult challenge for the newly-created RTC, charged with managing the highly unpopular and misunderstood task of resolving hundreds of S&L closings. Congress and the public had very little understanding of the new RTC’s mission and authority, let alone the organizational, staffing, information, and funding challenges that we were facing. We quickly learned that we should have focused on reaching out to the public and stakeholders at the very start to help them understand our challenges—and our progress.

As Treasury Secretary Geithner grapples with finding the right strategy to reverse the enormity of the banking crisis, I offer a few recommendations from my own experience to get a running start in rebuilding public trust.

1. Design a transparent resolution strategy that is cost effective and makes sense to the public. Minimize perceptions of a banker bailout; remove nonviable banks from the market place with as little disruption as possible. Identify and isolate “toxic assets” to be managed separately from banking operations by qualified and properly incented professionals. Minimize perceptions that errant bankers are being rewarded for their mistakes or relied upon to solve their problems at taxpayer expense. Do not place healthy banks at a competitive disadvantage against assisted banks.
2. Base decisions and measures on reliable information. You need to know where you are to figure out where you are going and how to get there. Confidence in everything you do will suffer when unreliable information results in repeated funding requests to Congress.
3. Make every effort to minimize taxpayer losses by operating effectively and efficiently and pursuing those who caused the loss.
   • Develop and disclose meaningful performance metrics as soon as possible. Confusion and misunderstanding about RTC’s mission and its accomplishments were ameliorated once RTC established measures regarding resolution and asset sales activity.
   • Focus on eliminating waste, fraud and abuse. High taxpayer costs and demand for results made RTC more vulnerable to claims of waste, fraud, and abuse in the areas of contracting and contract management, information systems, and asset management and disposition. RTC expanded and enhanced its internal control programs and employee training to complete a very large task without any serious incidents of operational mismanagement.
   • Vigorously pursue claims against bankers and other professionals who contributed to losses. The claims that FDIC and RTC filed against former failed institution directors, officers, attorneys, accountants, appraisers, brokers, and other professionals contributed significantly to cash recoveries.

I can say first hand that resolving failing institutions using taxpayer money will be a very unpopular challenge. Mistakes certainly will be criticized much faster than accomplishments are recognized. Building trust and confidence will not be easy and will take time but following the principles outlined above will help the new administration get there. I look forward to reading what you have to say on this topic so please leave a comment below.

About the David
David Cooke gained lots of experience with failing banks and thrifts during his career at the FDIC and while serving as Executive Director and COO of the Resolution Trust Corporation (RTC) with responsibility for the new agency’s organization, staffing, and operations that involved managing the resolution of several hundred failing Savings & Loan institutions and many billions of illiquid assets. David is currently serving as a senior government advisor to BearingPoint. For related information, please visit www.bearingpoint.com/financialrecovery.

Enterprise 2.0: Engaging Your People

There is a growing importance to use Web 2.0 and Enterprise 2.0 concepts in human resources. Last week, I attended and presented at the Inspecht HR Futures Conference in Melbourne. The Inspecht HR Futures Conference brought together speakers covering all areas of HR, Recruiting and Technology to discuss how social media, innovation, culture and technology empower, attract, engage and evolve employees.

I presented how BearingPoint leverage Web 2.0 technologies to assist us in engaging our internal team members through the BearingPoint Wiki and shared some of my experiences and benefits using the tool in my day to day work. Following on, I explained how BearingPoint is reaching out to external information management experts through Mike2.0 where it provided us with an excellent platform to interact and discuss information management.

My presentation is below:

Author: Sean Lew

View more presentations from Sean Lew. (tags: 2.0 collaboration)

2008 Gartner Magic Quadrant for Social Software

Reposted from Synergise IT – Original post can be found here
by Sean Lew

2008 Gartner Magic Quadrant for Social Software has been released recently and what is really interesting is that even though there are 38 vendors being reviewed only 5 are not in the niche category namely Atlassian, IBM, Jive, Microsoft and Socialtext.

I must say that having used all 5 products before and each of them is really fantastic. Each has its own pros and cons and depending on your requirements different software should be chosen. I am glad to see that there is a good competition in this space and that makes my life as a consultant a tad easier having the ability to pick and choose the best product for the situation.

What is really interesting is that there is no one in the category of “Leaders”. Atlassian, Jive and Socialtext barely made it into the “visionaries” quadrant (they are all sitting on the line of the quadrant). All three products are really quite revolutionary. I demo-ed Jive to a class previously and a student responded saying, “its just a web page but its so smart” and a colleague said that the Atlassian Wiki we have within BearingPoint made his life so much better.

Next, IBM / Microsoft are in the “Challengers” quadrant with a much higher ability to execute but lack in vision. I personally think that IBM and Microsoft are not “visionary” because the general business environment is not quite ready for such software as of now. Many business people still do not quite understand what is Web 2.0, collaboration, social media and buzz words like that. I believe they are taking a wait and see strategy to this area of software development.

I would love to see next year’s results and hope to see some of the players rise up to the visionary quadrant!

Author: Sean Lew

Getting Greener via Facebook

Environmental concerns are not new and Green IT efforts are gaining ground at many companies, both big and small. Green IT solutions are available of course, but how else can businesses become more green? BearingPoint is searching for some new thinking on the topic.

We launched a contest on Facebook for the best new opinions on how businesses can become more environmentally conscious in their operations. Facebook users can contribute their ideas for the enterprise and pass those (and others) along to their friends and the larger Facebook community to vote on by Nov. 15. (And yes, the winner gets a green prize.) While a contest or giveaway on Facebook is not new, the use of Facebook as a method of cultivating ideas is something few companies are doing. The contest hopes to unearth some new approaches that businesses can take to increase their environmental efforts while also increasing their bottom line.

Contribute your ideas on how businesses can be more green.

Green IT: Designing a framework for the implementation

It’s no surprise that organizations around the world — big and small, public and private — are paying increased attention to how “green” their operations are. After all, there are mounting reasons to do so: the rising cost of fuel, a desire to extend the life of their assets, new environmental legislation to reduce waste, and an increase in public scrutiny on organizational policies…the list goes on. In fact, in a recent InformationWeek survey*, more than 55 percent of large companies currently have detailed strategies for “greening” their data center.

Companies and government organizations worldwide are striving to lessen their impact on the environment. Many firms have begun to address sustainability by setting up recycling programs, reducing energy consumption, upgrading to more energy-efficient hardware, consolidating data center operations and buying carbon credits.

But just how deeply has sustainability been embedded into organizational strategy? How viable are corporate sustainability initiatives? How do organizations prioritize changes to business operations and balance these efforts, given the challenging economy?

Read more

Sweat Equity

Reposted from E2.OH – Investigations into Enterprise 2.0
post by Nate Nash

The results of the dank, humidly oppressive heat outside and the icy breeze incessantly wheezing at full tilt from the vent over my cube is an appropriate metaphor for many things here. The two extremes combine into a somewhat temperate, moderately sticky existence that takes every opportunity to remind me my wool suit is a far from informed fashion statement. I have become the mildly disappointing middle-ground between immovable environment and the best laid apparel plans. A pitiful melange of attempted professional grandeur, slogging sweatily through a rain forest.

Awesome. Let’s implement some E2…

I suppose I am built for cooler climates, but alas I find myself in a tropical metropolis. It is not technically that hot. However, it is extremely technical when it comes to atmosphere. The humidity, smog, and millions of people everywhere fit like a moist, size too small glove, squeezing you into anonymous exhaustion. On this particular day Jay and I are presenting our progress on a new portal and KM prototype. The majority of the presentation was your usual schnauzer and quarter horse, but I found a specific snippet of dialog worthy to resurrect this rustbucket of a blog.

I loudly clear my throat, hoping to startle open the drooping eyelids of the unlucky meeting attendees. I bat .500 on the try, but figure it is better than a wholly unconscious audience.

“After interviewing stakeholders from across your organization, a single, shining beacon of a requirement has emerged. That beacon my friends, is the guiding principle by which we have developed your prototypes. From the most senior director down to the interns, your organization’s needs can be summed up in a single phrase…. ”

I pause for effect as fluttering eyelids and the squeaking of uncomfortable people adjusting uncomfortable chairs creates the desired climatic precipice. (In case it isn’t already blatantly apparent, I tend toward the dramatic. Come on…anybody can do PowerPoint. Let’s cook with jet fuel for once.)

“Nobody can find anything. Ever.”

A full room of vigorously nodding heads confirms the statement. A man leans forward from a particularly rickety chair in the back of the room and slightly raises his left hand. I acknowledge his question as he unknowingly blasphemes, “We need a logical structure! Just like my hard drive. Is this what you have created for us?”

I now have 2 reasons to sweat. The aforementioned climate and my answer to this question.

“You don’t need organization. You need transparency. Your guiding requirement is not a new place to put things. It is a new way to do things. The effectiveness of this organization is stifled through the corralling of people, process, and technology into utterly unusable pockets of opacity. We propose transparency as the guiding principle for change, affecting all aspects of the organization, technological or otherwise. Your complete organization states the inability to quickly find information as a chief concern. This is not caused by ineffective execution. This is caused by ineffective dogma.”

Glasses, ties, papers, feet, eyebrows are adjusting. The room is exploding with minor adjustments. Everyone in simultaneously slightly adjusting something. I am wondering whether I should adjust my flight home to account for the looming stage hook. Slowly the lesser vibrations cease and the same man speaks again.

“But my department needs control. My department has very sensitive information that can’t be shared. I need to be able to find information from the other departments, but our documents are confidential.”

The nodding quickly reaches a fever pitch, heads bobbing like chop after a summer squall. I launch into a pointless rant about what actually makes information confidential but it is relatively clear to me the stage has been set. No matter where we go from here, this implementation will be about air-conditioning in the tropics. You see no matter the intent or design of air-conditioning, there is always a lingering wisp of the natural environment. Sometimes it is barely noticeable, other times it is overwhelming. I am confident that the “guiding principle of transparency” will not be watered down to a “suggestion of translucency”, but there is a long road ahead. In order for complete success to occur, there must be an organic change in the environment, not a temporary, man-made attempt at cooling things off. Without the underlying shift in the organizational climate surrounding transparency, there will be rooms that are too cold or too hot, depending upon your perspective and location. Change is difficult indeed. However, addressing the root cause will make for much longer lasting results. Dropping a wiki on a group of people without first seeking to alter their method for work is like wearing a suit in the rainforest. Looks decent from afar but is completely uncomfortable up close.

Luckily, the organization is committed to the concept (at least), and starting to warm up (pun intended) to the prospect of change. We are committed as well, but should probably look into procuring a few linen suits.

Privacy in a Data-Deluged World

Reposted from Paul Dunay’s Buzz Marketing for Technology

Drop.io‘s CEO Sam Lessin presented “A Brief History of Privacy in this Data-Deluged World” at the Ignite II kick-off of Web 2.0 in NYC.

I loved Sam’s thought captured in the following quote: “For the first time in history it is now cheaper and easier for people to be public than to be private. What I mean by this is that for thousands of years publishing content about yourself was expensive and time consuming, and privacy was the default state… The web, and specifically the web 2.0 model, is turning that on its head in a very big way…. Even just a few years ago online ‘privacy’ meant little more than protecting your credit card information and identity, now it means thinking about every single thing you say, do, or write, online – and how it will be perceived, saved, and used – now and in the future.”

“In the end, privacy has been central to western civilization forever. It is something that has value. All that is changing is that something that used to come totally naturally is now something people have to both defend and actively invest in maintaining.”

To view his presentation materials, speech transcript and video online at http://drop.io/ignitesam

Collaboration with Wikis: Filling the void

Post by Sean Lew, Business Consultant at BearingPoint

There is a growing need for organizations to collaborate more efficiently across time zones, geographic locations and across departments. Collaboration promises greater efficiency, streamlined communication and better knowledge retention across an organization. Collaboration software like wikis has also been sprouting all over organizations with no real direction from the senior management. Many organizations have started taking a more serious look at such forms of collaboration technologies.

Internal collaboration

Collaboration is not just providing a virtual platform for employees to work together. It allows employees to hold conversations and discussions online and provides background and context for visitors or new team members. With all the information well documented, there is a reduced risk of losing information when employees move on.

Many collaboration technologies also provide a social aspect of it where employees can connect with people outside of their team. This allows self discovery of assets within the organization, find other experts and innovate on the project, department or the business.

External collaboration

Collaboration with suppliers and customers should also be an area organizations should look at. Harvard Business School (http://hbswk.hbs.edu/archive/5258.html) conducted a research on Procter and Gamble’s (P&G) innovation model which includes connecting with the global talent pool in search of promising ideas and implement P&G’s capabilities to create better and cheaper products – fast. Such forms of collaboration, may it be with suppliers or customers can be very astonishing.

The success of collaboration is to take an enterprise view and formulate an adoption strategy across the various departments. What is your organization doing to strategize and implement changes to meet the needs of your rising collaboration requirements?

Author: Sean Lew

Business Intelligence: Is your enterprise as intelligent as it should be?

Improved business intelligence (BI) tools provide organizations with new opportunities to capture performance benefits. Effective use of BI helps organizations transform raw data into actionable information and competitive advantage. But defining and executing the BI vision provides some challenges.

Organizations can be effective by matching their needs and pain points to mature technology tools on a just-in-time basis. And they must execute incrementally against a time-based road map. This new thinking to a practical approach works for organizations regardless of where they are on the BI maturity continuum. Executing BI within a business oriented vision and a broader enterprise information management framework can set companies apart from their competitors.

Develop your Business Intelligence strategy

Risk Management: Techniques for Regulatory Compliance Cost Reduction

Take a look at this article on Risk Management published in Financier Worldwide’s Strategies for Successful Public Companies in May 2008 written by BearingPoint’s Tony Klimas.

Compliance and regulatory costs can be a significant burden on global businesses. Some of these costs, such as environmental regulation and financial statement compliance are well documented while others, the cost of managing potential product liability for example, are less visible but significant.

Risk management business disciplines have become increasingly sophisticated and in many companies, the risk management function is a standalone business function under the responsibility of a senior executive. One key benefit of effective risk management can be an overall reduction in compliance and regulatory costs.

In this article, Tony specifically addresses the most recent audit standard developed as part of the Sarbanes-Oxley legislation, Audit Standard No. 5 (AS5). Tony explains how AS5 can help reduce the costs of compliance and explains the key changes that are incorporated into AS5 as compared to previous audit standards such as AS2.

About Tony Klimas
Tony is a Managing Director in BearingPoint’s Risk Management practice. He is based out of our Atlanta office.