alt Hacker NewsWhile Hanes's actions were criminal, another big story is about systemic failures in their banking controls and how they contributed to this failure:
Board allowed a single individual to wire tens of millions without additional approvals
No automated systems flagged the unusual transaction patterns
Previous red flags from Hanes's 2011 firing for questionable loans didn't lead to enhanced oversight
Board continued considering his requests for more money ($18M) even after learning of the initial theft
Reliance on personal trust and reputation substituted for proper institutional controls
No separation of duties or multi-party approval requirements for large transfers
Community banks need strong governance regardless of size or personal trust relationships.
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I respect the spirit, but I can't think of a system of controls, or a matroyshka doll of sign-offs, that ends up with the small bank CEO not being able to give orders, at least, without the bank being O(1000s) of employees as opposed to...10s, optimistically.
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"personal trust and reputation" often means back-room shenanigans.