PR Blunders Have Made the Financial Crisis Worse

As we lurch toward either a massive federal bailout of Wall Street or a deep economic crisis caused by the credit crunch (or both), you can't help noticing the terrible PR job most players in this fiasco have done.

Let's start with the Administration, namely Treasury Secretary Henry Paulson. Granted, he has been under enormous strain and has done an admirable job of being visible. But his messaging is all screwed up.

As a former Wall Street CEO, Paulson only sees the crisis in his terms: investors who made some massive investment mistakes that could imperil the global economy. But of course, there are lots of other stories to tell, from struggling homeowners to stressed-out business owners to small and large businesses across the country. And that's just about the impact of the crisis.

The Administration has done a terrible job explaining the essential issues of this crisis, and why a bailout is needed, in simple terms that people can understand. I know that it involves some complex securities, but I also know that a) it can be explained in simple terms and b) people are hungry for this information and would stretch their brains to understand it.

All the other players have done a bad PR job as well. Again, I know that it's a stressful time, but they're asking us to swallow a massive and risky bailout. They needed to do a better job. We need to be reassured, to be talked to as adults, and to hear from other leaders in the country and the economy who a) understood it better than the average person and b) could explain why it was needed in terms we all could understand.

The result of this PR failure has been on display this week, as the House voted down the bailout plan and citizens began to speak out loudly that they didn't support it. Whether or not it is a good idea, I doubt that many of the citizens who have said they were against it really understood why it was being proposed.

I was prompted to write this post after reading a post by Richard Edelman on the subject. Richard does a beautiful job laying out the PR problem and what could have been done better. It's highly recommended reading.