Should managers of financial institutions be concerned about other stakeholders (i.e. regulators, depositors, uninsured debt-holders, community, employees, customers)? Explain how problems for corporate cultures for financial institutions contributed to serious problems for financial institutions and their customers and other stakeholders giving a recent example.

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The Answer is Financial institutions have obligations to consider repercussions of their strategies and actions for all stakeholders that determine their reputation and success including stockholders, regulators, depositors, uninsured debt-holders, community, and customers. This is particularly the case for depository institutions that are chartered to serve their communities and to abide by federal and state regulations. The U.S. Subprime Loan Crisis is an example of the serious repercussions when financial institution managers fail to have good corporate governance, and corporate cultures that value all stakeholders that add to the success and reputation of a financial institution.
By having cultures that encouraged short-term profits and provided bonuses for making quantities of loans versus the quality of loans and ability for borrowers to repay loans, for instance contributed to huge numbers of bankruptcies when housing prices collapsed. Wells Fargo's scandal in September 2016 is another example where managers did not consider customers as stakeholders and a corporate culture was created pushing employees for sales goals versus serving customers' best interests. Wells Fargo managers imposed a high-pressure tactics on employees to push products on customers to hit sales goals. This led to fraudulent behavior by employees, where 2 million customer accounts were opened without customers' knowledge. When this scandal was uncovered, Wells Fargo's stock price plunged, and Wells Fargo had serious reputational damage losing major clients and customers. Wells Fargo was given a $185 million fine, and 5,300 employees were fired, and a new CEO put in place. Under the Sarbanes-Oxley Act, Wells Fargo also violated the requirement that executives personally required to certify that a bank has financial and operational controls in place.

Should Managers of Financial Institutions Be Concerned About Other Stakeholders