PR Man Richard Edelman Says Banks Have a Perception Problem. Wrong
Financial services companies have poor public relations, says Richard Edelman, who should know, since he runs the largest independent PR agency in the world. His solution, noting that banks and insurance companies rank at the bottom in terms of public trust, is for financial pros to educate us on what they do:
It is necessary for bankers to understand the need to explain the "how and why" of specific financial instruments (eg credit swaps) and the benefits of their activities. There is also public demand for shared sacrifice; the risk of populist backlash at the end of the year is substantial given that 2009 bonus accruals at Goldman Sachs are now at 2007 levels.In other words, Edelman wants financial companies to talk their way out of a jam. To draw on his example, that might entail AIG chief executive Robert Benmosche waxing lyrical on the subject of credit default swaps. Or perhaps we could draft ex-Countrywide Financial CEO Angelo Mozilo to explain the "how and why" of subprime mortgages. I'm sure Ken Lewis, soon to be unyoked from Bank of America, would be pleased to enlighten us on the finer points of retention bonuses.
Edelman also says that all businesses are "affected by the negative perceptions of Wall Street" and that financial "innovation," such as securitization, is "now regarded with suspicion."
Touché. Global financial collapses will do that. And that's because, as has been made amply clear, Wall Street isn't so much a dark, rather charmless street in downtown Manhattan as a chain of causation that links directly to Main Street, and on into the global village. It's no doubt smart PR to try to pin these negative perceptions on reliably unlovable traders and investment bankers. But such distortions mask a deeper reality.
One of those realities is that the problem in financial services isn't a matter of perception. Nor does the solution, if one exists (and I have my doubts), involve tamping down the "populist backlash." What it does require is a re-balancing of public and private interests. Despite homilies about "shared sacrifice," that really amounts to withdrawing power from the latter sphere and returning it to the former.
There should be no talking your way out of this one.