Word: belled
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Dates: during 1980-1989
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...Bell's report criticized 15 executives in particular, and Hutton promptly announced plans to discipline 14 of them. Three senior officials will leave the company: Thomas Lynch, a vice chairman; Thomas Rae, chief legal counsel; and Thomas Morley, a senior vice president in charge of cash management. Lynch, however, will keep his director's post and continue to receive full pay; Rae will retire early. Two mid-level executives will be officially reprimanded, three regional managers will be suspended for 30 days without pay, and six branch managers will be fined between $25,000 and $50,000. The payments from...
...They issued a flurry of overdraft checks in order to obtain no- interest loans at a time when rates were about 20%. For 20 months beginning in July 1980, the company obtained as much as $250 million a day in freebie loans on which it could earn interest. Bell termed the overdrafts "so excessive and + egregious" that "no reasonable person could have believed that (their) conduct was proper...
...Bell's report concludes that Hutton's upper officers put excessive pressure on branch managers to boost their cash-management income and then failed to monitor how it was being done. One senior vice president gave underlings envelopes containing play money equal to how much extra profit he thought they could be bringing in. But in attempting to trace the blame for the check-kiting scheme as high as possible on the corporate ladder, Bell discovered a "peculiar management structure" at Hutton with fuzzy personal responsibilities. No one, for example, was willing to admit being the immediate boss of Morley...
...very top officers at Hutton, though, escaped any charges of wrongdoing in Bell's report. These include Fomon and former President George L. Ball, who is now head of Prudential-Bache. While the investigator deemed that Ball contributed to Hutton's "overdraft culture" because he "constantly exhorted" branch managers to boost their earnings, the president's job description made him responsible largely for sales performance rather than banking or legal questions. As for Fomon, Bell did not hold him accountable because the chief executive had hired qualified underlings and "was entitled to rely on the decisions, judgments and performance...
Hutton pledged to take all the remedies that Bell prescribed to prevent recurrences. Until now, Hutton has been largely run by insiders; only four of its 27 directors are from outside the company. But to provide additional controls, the firm's board will be recast to include a majority of outsiders in place of corporate officers. Hutton will restructure its management chart so that diverse number-crunching departments will answer to a single top financial executive...