UNIVERSITY OF THE EAST

Caloocan

CASE STUDY ANALYSIS

BayBank Boston

Franco, Rose Ann M.

BMG 114 - 2M
3:00-4:00
Time Context
1992
Summary/Abstract
In 1992, the Federal Reserve released a study of mortgage lending patterns in Boston. It concluded
that even when credit factors were taken into account, black and Hispanic applicants experienced
higher rejection rates. Richard Pollard, chairman of BayBank Boston, had to decide how to respond.
Over the past three years, he had led efforts in BayBank and the Massachusetts Bankers Association
to address community concerns raised by earlier, less conclusive studies. Some innovative programs
had been established through the association. The new study raised questions about whether existing
programs would be adequate to address the problem.

I. Statement of the Objectives

 To identify specific strategies the company should implement to assess whether or not the denial
of loan applications result from racial differences.
 To improve fair lending performances and other banking services

II. Statement of the Central Problem

After thorough investigation and study of mortgage lending patterns by the Fed, racial discrimination
still remained in Baybank Boston's lending services. How should Richard Pollard, chairman of Baybank
boston, address the problem? What else needed to be done to provide equal access to banking
services and resources?

III. Areas of Consideration (SWOT Analysis)

Strength
 Strong regional presence
 Diverse electronic banking programs and services
 Good customer services
 Aggressive corporate marketing
Weakness
 Little experience in suburban area
 Failures in the savings and loan industry
 Named as financiers of questionable lenders
Threats
 Complex set of social and political issuues
 Environmental regulations can impact the cost structure
 Consumer activism
Opportunities
 Flexible lending criteria
 Participation in government-insured lending programs
 Improve advertising and marketing efforts

IV. Alternative Courses of Action
1. Develop a Diverse Workforce
Advantages
 Ethnic and racial management diversity

 Diverse opinions and perspective

 Widen the talent pool

Disadvantages
 Can creat communication problems

 can lessen the amount of trust that exists

 initiatives are usually left to a single person to implement.

2. Develop a Formal Mission Statement

Advantages
 staffs understand the goals they are trying to achieve

 can help shape a company's philosophy towards its customers and clients

 Helps to resolve conflicts and arguments

Disadvantages

 Ineffective statements may lack specificity and provide no direction for employees to follow
  if a company's mission statement is too grand and ambitious, it can harm its employees ability
to meet stated goals

 Focused more on short term issues and internal in Nature

V. Recommendation
I therefore conclude that the best solution to the problem is alternative course of action #2, develop a
formal mission statement, because the company lacks a clear goal, mission statement, and lending
policy statement.

VI. Plan of Action

1. Implement a clear goal and objectives
2. Change decision-makingpolicy
3. Create an integrated fair lending plan.
4. Implement new pay systems.