When restoring reputation is a long-term goal
Written by Jim Walsh
PR professionals are well used to devising strategies to rescue clients who have had their reputation threatened or damaged.
But when the consequences of the actions by a business sector are so severe, it is difficult to see how any strategy can recapture a positive reputation or indeed trust in the short to medium term.
The financial community, in particular banks and investment companies, have not had a good reputation among the general public for many years.
But any semblance of positive feelings towards them exploded in the past seven years.
Certainly not all banks or investment companies were reckless or criminal in their lending or investment policies but those that were, wrecked lives and brought years of austerity to thousands.
Some of the actions which have infuriated the public and others which may have gone unnoticed, are encapsulated in two excellent articles in the current issue of Vanity Fair magazine.
One is ‘The Wrecking Crew’ by William D. Cohan and the second ‘Wall Street Flash Mob’ by Michael Lewis.
Cohan writes about CEOs who led Wall Street to the brink of collapse in 2008 and provoked the financial crisis that spread across the Atlantic following the crash of Lehman Brothers. Many of them received huge payouts as their firms went under. Lehman’s CEO Dick Field earned over $500m in the seven years before it went into bankruptcy. Stan O’Neill, CEO of Merrill Lynch, who is credited with ratcheting up the firm’s risk-taking, lost his job in 2007 but came away with a severance package worth $161.5m. Jimmy Cayne who was CEO of Bear Stearns for 15 years before its collapse, also left with a cushion of $61m from the sale of his shareholding after its acquisition by JP Morgan.
In his article ‘Wall Street Flash Mob’, Michael Lewis writes about an element of the greed that permeates the investment markets. The article is based on his book ‘Flash Boys’ which angered some of the richest people on Wall Street as it exposed High Frequency Trading (HFT). This is a system using sophisticated technology to prey on investors by detecting stock market orders and jumping ahead of the order causing the price to rise. According to Lewis this practice cost investors $240m on US stocks bought and sold in 2014.
The banking crisis that spread like wildfire around the world in 2008 has caused probably irreparable damage to the reputation of the banking and financial sector, but the political and social consequences have been felt by thousands of organisations and millions of people.
It is inherently unfair and morally wrong that those who recklessly loan money, those who over-leverage their projects and those who defraud the system and consequently millions of people, should appear to pay no penalty for their excesses or crimes.
The damage caused by these people will take a long time to be forgotten and makes it difficult for the sector to recapture any semblance of a good reputation.