1. Farrow started out as an outspoken critic of usury (Hollow, 2014, p. 5). He thought that the banking sector was too eager to give loans to poor people who could not pay them back and from whom the banking industry could earn a great deal of interest. He even wrote a book about it. Then he established his own bank that focused on people of small means. Based on the beginning of his career, one would think Farrow to be an ethical man who was trying to help poor people save money or borrow money if they needed to. With his feelings about usury being made known in his book and wherever he decided to talk about it, one would also think he would not practice usury in his own bank.
Perhaps because Farrow wanted to appeal to the non-traditional customer of banks, women, poor people and Jews (for some reason), it was successful. His idea to appeal to the nontraditional customer brought him success as a banker despite his lack of education or training in finances or economics (Hollow, 2014, pp. 5-6). Farrow’s Bank opened 72 branches all over the United Kingdom and the shareholders were receiving excellent dividends. However, as the bank increased in number and size, Farrow’s hubris did too. He began to think that he was pretty smart about many aspects of life.
Farrow’s ambition also grew (Hollow, 2014, p. 6). He started thinking that because he was such a successful banker, his ideas were also important to politics and legislation. His image and presentation became important to him. He began to use more and more grandiose verbiage to talk about himself and his bank, and began to promote the bank as living entity rather than the business it was. He thought the bank was some humanitarian mission and thought that his interests aligned with both shareholders and customers alike. Farrow started using the royal “we” when he talked about his bank (Hollow, 2014, p. 8).
2. Farrow clearly thought that his ideas of helping poor people, women and Jews, who were unable to bank in the other banks that were around at the time his was, was such an ethical thing to do that his methods did not matter. He allowed an untrained bookkeeper to keep the books without outside audit for decades. When the bookkeeper retired, his son who had no experience in accounting took over. It was only the two of them who managed the books for all of Farrow’s bank branches (Hollow, 2014, pp. 8-9). If Farrow had been as clever and as good of a business person as he claimed to be, and that in his hubris he thought he was, he would never have allowed such an unprofessional practice to occur. However, he actions show utter disregard for the safekeeping of his customer’s money.
Banks are audited to prevent them from straying off the ethical and legal path. The website, N Contracts (2019) says, “A bank audit is a routine procedure designed to review the services of financial institutions to ensure they are in compliance with laws and industry standards. . . .The focus of a bank or credit union audit is on compliance. Its purpose is to discover if the institution’s financial activities are accurate, legitimate, and complete” (N Contracts, 2019). An auditor is not affiliated with the bank. That way, if there is someone inside the bank, such as the accountant, who is doing something illegal, that person can be caught. The auditor also provides and independent assessment of the bank’s activities.
Farrow’s right hand man, Crotch, did not know anything about banking and was basically Farrow’s loyal brown noser rather than a managing associate as his title said he was. He never even looked at the accounting and did not have any education in accounting anyway (Hollow, 2014, p. 10). Crotch was just riding Farrow’s wave of hubris. Farrow and Crotch were so overconfident in Farrow’s abilities that the invited another bank to purchase shares and that is how their mismanagement and fraud was discovered.
3. The board that should have overseen the business management at Farrow’s Bank were all friends and admirers of Farrow. They probably all stroked his ego and he liked that, so he appointed them to the board of shareholders of his bank. They all wanted to be Farrow’s friend because he seemed confident, and people like that often attract other people. None of his appointees ever wanted to admit to Farrow’s flaws because that would have ended their fabulous ride on his hubris train pulled by the seeming success that was all just a smoke screen for many bad business decisions, mismanagement and fraudulent business dealings.
Farrow also detached himself from the employees of the bank and never checked the expenditures or any other documentation that would tell him about the day to day dealings at the bank (Hollow, 2014, p. 11). He became removed from the operations of the bank pe
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