Ethics Quiz: The No-Tolerance Catch 22


Should you trust this guy to be reasonable?

The Des Moines Register reports on a jaw-dropping example of “no-tolerance” management at its saddest, and the astounding fact that it did not, in fact, occur at a an educational institution, but at a bank.

Wells Fargo Home Mortgage  fired 68-year-old Richard Eggers because in 1963, when he was 18, he put a cardboard cutout of a dime in a Laundromat washing machine and was duly convicted of operating a coin-changing machine by false means. Since that time, after spending two days in jail (they were strict in Iowa back then), Eggers has been on the straight and narrow. He is a Vietnam veteran, and tells the press that he can’t remember his last speeding ticket. He has also been a loyal and effective employee of Wells Fargo for seven years. So why fire him over a stupid and trivial crime he committed when Kennedy was President, TV was black and white, Mary Tyler Moore was exciting male viewers in her Capri pants on the brand new “Dick Van Dyke Show,”and people trusted Uncle Sam?

Big banks like Wells Fargo think they have a good reason to fire low-level employees like Eggers since the issuance of new federal banking employment guidelines in May 2011 and new mortgage employment guidelines in February, 2012. The new, tough rules subject financial institutions to stiff fines—like a million dollars a day— if they the employ anyone convicted of a crime involving dishonesty, breach of trust or money laundering—obviously part of the “locking the barn door” exercise of regulatory over-reaction to the financial melt-down.  Before the stricter regulations, banks ignored minor traffic offenses and some minor arrests. In other words, they could exercise common sense, proportion, fairness, and discretion. The rules, after all, were intended to get rid of untrustworthy executives with a record of serious crimes, not customer service reps like Eggers.

If you set out to design a case where all the features of a rule conspire to make its application unfair, you could hardly do better than Eggers’ dilemma. The Federal Deposit Insurance Corp. provides a waiver process employees can follow to show they’re still fit to work at a bank despite a past criminal conviction, but it takes six months to a year to work. An automatic waiver process is quicker, but only those who were sentenced to less than year of jail time and never spent a day there qualify. The FDIC did not include a “really stupid crime involving a cardboard dime” exception, and Eggers, who was jailed two days remember, doesn’t qualify for the exception that exists.

There was an alternative, of course. Wells Fargo could have done the right thing and left Eggers alone, and counted on Federal government regulators to do the right thing too, and not fine it. After all, the government is so reasonable about such things, is known for its efficiency and good judgment, isn’t looking for money, hasn’t been the source of inflaming rhetoric impugning financial institutions and hasn’t been at all hostile toward the banking industry.

So here’s your Ethics Quiz:

Is Wells Fargo’s conduct in firing poor Richard Eggers unethical, no-tolerance idiocy, or is the bank behaving responsibly under the circumstances?

Did I betray my point of view, mayhap?


No, I don’t see how Wells Fargo can responsibly avoid no-tolerance action in this case, when it is faced with large fines and an implacable bureaucracy overseen by people who blithely endorsed Occupy Wall Street. Would you risk a million bucks on the gamble that this time, the Federal government will be reasonable? If you were a bank executive, would you stake your job on the obviously correct decision to leave Richard Eggers be, knowing that if the Feds came knocking, your  board would ask, “Let’s get this straight: you knowingly risked a huge fine for regulatory non-compliance for one low-level employee who we can replace in a heartbeat, on the theory that the Feds ‘would be reasonable‘ ?”

This is Bizarro World, friends. In an ethically warped world where nobody believes in ethics, compliance is everything, and the people in charge believe that all problems can be fixed by more regulations, what seems reasonable isn’t. In the business world, it is completely irresponsible, misfeasance in fact, to risk large fines on the assumption that regulators will not act as if they sat hard on their own heads. In the business world, risking big bucks to avoid being unfair to one employee is absolutely wrong. Managers cannot risk the business to be fair to one employee.

Or to put it crudely, if the guy that has you by the short hairs has no tolerance, you can’t have any either.

Sorry Richard.


Facts: Des Moines Register

Source: SF Chronicle

Graphic: Engineer of Knowledge

Ethics Alarms attempts to give proper attribution and credit to all sources of facts, analysis and other assistance that go into its blog posts. If you are aware of one I missed, or believe your own work was used in any way without proper attribution, please contact me, Jack Marshall, at

16 thoughts on “Ethics Quiz: The No-Tolerance Catch 22

  1. The ethical thing would be for Wells Fargo to stand by him and make an issue of it with the Feds. Real men, and women, real leaders do the right thing even when its easier and maybe even smarter not to do so.

    • I would generally say the same thing. But that’s not the duty of those in charge of businesses and organizations. The organization’s welfare trumps that of the individual. It has to. This time, an innocent is being sacrificed.

      • Sorry I disagree. The people of a company are the organization and they should be given the same loyalty and respect that the company expects from them.

        • While I think people should show loyalty and respect, the board members also have a fiduciary obligation to the owners of the company. In this case, the expense of fighting bad law would pretty clearly be a breach of that fiduciary duty.

  2. Talk about being caught between the rock and the hard place. Had the offense/conviction been discovered at the time of his hiring it could not have been reported to the potential employer by a background investigating agency because Federal law (and state law in CA) state that convictions older than 7 years cannot be reported for hiring, retention or promotion decision. If discovered at hiring the employer could not have acted on it, but years later the 50 year old conviction caused his dismissal. Only in America.

    Maybe this should be cross-linked to your earlier post about intelligence testing for office holders.

    • I would agree that it could be cross-linked to the post about intelligence testing if it were used to debunk the idea of intelligence testing as a rational idea. Intelligent people are now trying to design a system of regulations to impose ethical actions on the banking system. Clearly not working.

  3. Last time I checked, we actually had laws and regulations against the fraud that occurred in our financial sector, they just weren’t applied. I hate it when (so often) people decide that since the current laws and regulations were ignored, we will pass more laws so that it looks like we are doing something about the problem. Federal government regulation should always be a last resort because it results in people dumping their garbage trucks into the drinking water (to comply with clean water standards) and firing tellers over decades-old petty infractions.

    I think the best they could have reasonably done under the circumstances is try to get him a job somewhere else and give him a good and apologetic letter of recommendation to take with him on his job hunt (and possibly a high-level reference).

  4. There was a third option.

    Sue for declaratory relief stating that the new guidelines do not require Wells Fargo to fire Richard Eggers, and in the alternative, are unconstitutional as applied to Richard Eggers.

    Declaratory relief would have settled the issue of whether keeping Eggers would have subjected Wells Fargo to fines.

  5. The bank should give Eggers a severance at least equal to his pay, plus benefits, that would have accumulated for however longer the bank would have expected to employ him. But, I suppose there would be some federal regulator somewhere who would cite that as a violation of some law.

    Are Eggers and Hunter, that 3-year-old terrorist-with-sign-language in Nebraska, related, perhaps?

  6. It’s at times like this we should all be extra thankful for those stalwart freedom fighters in congress who’ve given us enlightened laws like this that protect us from monsters such as Richard.

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