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Financial services and banks are one of the least trusted industries according the 2013 Edelman Trust Barometer . It measures "the state of trust around the world by exploring trust in institutions, industries, leaders, and the impact of recent crises in the banking and financial service sectors." Do you trust your bank? Explain. How can managers at banks (and other businesses) rebuild trust?

The Consumer Financial Protection Bureau (CFPB) is the first federal agency solely focused on consumer financial protection. The CFPB began consumer response operations on July 21, 2011 and the Consumer Response team has been hearing directly from consumers about the challenges they face in the marketplace, bringing their concerns to the attention of financial institutions, and assisting in addressing their complaints. This taking in, resolving, and analyzing consumer complaints is an integral part of the CFPB's work. The CFPB maintains a database on banks and credit card complaints at http://www.consumerfinance.gov/complaintdatabase . It tracks which banks have received the most complaints about their credit cards. So, consumers can visit the website and determine which issuer received the most complaints and how it responded. See the attached file snapshot of complaints received (June 19, 2012). The CFPB plans to remove the "beta" tag by then end of the year and add complaints on additional financial products. If you were the manager of a financial institution, how would you view the database? Would you welcome the CFPB's reports since they'd show you what your customers don't like about you, giving you the opportunity to fix problems before your customers go to the competition? Or, would you fear that the database may open the door to frivolous and unsubstantiated complaints? Do financial institutions want to have a good reputation? If so, how can managers ensure that customers are treated fairly and that their complaints are answered in a timely manner?

Visit msnbc.com for breaking news , world news , and news about the economy JPMorgan Chase, the largest bank in the United States, just lost $2 billion in something called its "synthetic credit portfolio" by making complex trades on European bonds (corporate debt). The loss came from the Chief Investment Office in London. Ina Drew was the chief investment officer who oversaw the trade. The trader involved, Bruno Iksil, was known as "the London Whale" for his big trades. Both have resigned as a result of the scandal. JPMorgan Chase chief executive Jamie Dimon delegated authority to Drew, and she delegated authority to Iksil. In an organization, authority flows downward and can be seen in the organization chart . The chain of command is an unbroken line of reporting relationships that extends through the entire organization and defines the formal decision-making structure. This way employees know who their boss is, to whom they are accountable, and where to go with a problem. Authority is the legitimate power of a manager to direct subordinates to take action within the scope of the manager's position. Formal authority in the organization can be traced all the way back to the U.S. constitutional right to own property. The owner of the organization has the authority to make decisions. Owners (stockholders) hire managers and hold them accountable for the results of the corporation. Dimon told "Meet the Press" host David Gregory that "there's almost no excuse" for the bank's $2 billion trading loss. In essence, the chief of the unit and the trader have been fired. But, Dimon was convinced by them (Drew and her team) that the risk was manageable. Who do you think should be fired?

Bank of America's acquisition in 2008 of Countrywide Financial, the largest mortgage lender, has turned out to be one of the worst business deals in history. It has resulted in tens of billions of dollars in losses for Bank of America. In addition, Countrywide has become a symbol of the housing boom and collapse. "Countrywide's actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream," said Thomas E. Perez , Assistant Attorney General for the Civil Rights Division. The Justice Department announced the largest residential fair-lending settlement in history on December 21, 2011. Bank of America will pay $335 million in compensation for victims to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers in their mortgage lending from 2004 through 2008. This was before Bank of America purchased Countrywide. The Justice Department determined that from 2004 to 2008, Countrywide did not have a system to comply with fair-lending rules. Countrywide's policy gave loan officers and brokers the discretion to alter the terms for which a particular applicant qualified. Lending data showed that Countrywide charged Hispanics and African-Americans more, on average, than white applicants with similar credit histories. Furthermore, brokers and employees "steered" applicants who qualified for regular mortgages into riskier, more expensive subprime loans. Bundling and reselling subprime loans as securities was one cause of the 2007 financial crisis. Attorney General Eric Holder said, "The department's action against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation's largest, for lending discrimination. These institutions should make judgments based on applicants' creditworthiness, not on the color of their skin. With today's settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation." Federal civil rights laws, including the Fair Housing Act and Equal Credit Opportunity Act , make a lending practice illegal if it has a disparate impact on minority borrowers. What is disparate impact ? What can a manager do to discourage disparate impact in lending practices?

Edelman is the world's largest independent public relations firm and publishes the Trust Barometer from an annual survey it conducts in 20 countries. Respondents are described as "opinion elites" (affluent, college-educated, and well-read). The 2011 Trust Barometer indicates that American consumers distrust business. Six in 10 Americans respondents doubt business will do the right thing. Trust in U.S. business was just five points ahead of last-place Russia. In addition to business, Americans distrust government, nonprofits, and the media, with media distrusted the most. In the U.S., trust in banks dropped from the No. 3 spot in 2008 (71 percent) to second from the bottom in 2011 (25 percent), tied with financial services. The most important corporate reputation factors are quality products, trust, transparency, and employee welfare. Richard Edelman, president and CEO , said, "Trust has transformed the license to operate for business. Company actions must deliver on the expectation for a collaborative approach that benefits society - not just shareholders, transparency about how it makes money, and communication in surround-sound through all forms of media - from mainstream to new to social to owned." What do you think managers can do to increase business trust?

Bank of America Corporation changed its plan to charge customers a $5 a month debit card fee . The customer fee was to replace merchant fees lost from tightening regulations. Charging customers for debit-card transactions proved to be very unpopular. Customers felt that the banks benefited from government stimulus and should not charge customers in this soft economy. The fee was to start in January 2012. Many customers were very upset over the new fees, left the bank and took their money to credit unions. Furthermore, competitors JPMorgan Chase & Company and Wells Fargo & Company decided not to implement a debit-card transaction fee. Sun Trust Banks, Inc. and Regions Financial Corporation decided to drop the debit card fee. In a press release David Darnell, co-chief operating officer, said, "We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee. Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so." Environmental scanning is the process of collecting information about the external environment to identify and analyze trends. The external environment includes economic, technological, legal/political, and sociocultural forces. Could Bank of America have used environmental scanning to identify customer feelings on the plan and the moves by rivals?

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