The Wall Street Crisis and Public Relations
This last week has seen the United States’ stock market take a serious hit. Many companies have lost the confidence of American investors and the restructuring of our policy is still a matter of public discussion. While financial solvency can be restored through government buyouts, trust in these organizations might not come as easily. How do you think the last few weeks events have changed the public¢s perception of Wall Street and the banking industry in general? As a public relations practitioner, what advice would you give to these companies going forward? Do you think they’ll be spending more money on PR in the future?
9 thoughts on “The Wall Street Crisis and Public Relations”
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I feel the last few weeks have changed the public’s perceptions on Wall Street and the banking industry. A great amount of the public has lost trust in these institutions and a plethora of work is going to have to be done to recover confidence in the industry. For this reason, I feel PR is going to become even more crucial to Wall Street and other financial institutions. Wall Street and the banking industry are going to need to recover the public’s trust through different and creative campaigns. Whether or not the banking institutions want to spend money on PR in the future, they will have to if they want to survive.
I’ve been a big booster of PR in the financial crisis for the last year, but I think we’re all toast at this point. The problem isn’t that the banks and companies don’t want or even need PR – they can’t afford it. The nexus of this crisis is that it’s not easy to find money anymore. Overnight intrabank lending rates shot from ~2.75% to 6.5% in one day, the dow slid almost 7%, and government T bonds are posting almost no return, making them nothing more than a place to park your money.
Wall street and banking don’t need the public trust because their investors are huge institutions – municipalities, pension funds, governments, corporations – not some guy with a 401(k) or a middle age person who is looking for an alternative to Ameriprise. At this point, wall street cares about surviving, not what widows and orphans think of it. Banks are insolvent and are collapsing at a stunning pace. How many readers of this blog banked with Washington Mutual, Wachovia, Indymac, or Wells Fargo? What about the smaller banks that have gone under? When organizations are struggling to comply with federal regulations on marginal reserves in the face of 1930’s-style bank runs, they’re really not to concerned with public relations. We’re near the tipping point of public panic and already across the threshold in some areas. Charlotte and Southern California are toast. Call your congressional representatives, oppose the government bailout until Paulson cedes some power, and look for some creative destruction you can profit from. Everyone wants different things, so here are some resources.
-Read dealbreaker.com – it’s a financial log that is surprisingly clear, clean prose about the troubles we’re facing. It broke the Lehman failure story and liveblogged the entire event.
-Read Peter Schiff’s books, especially “Crash Proof.” It’s less than $20 on Amazon and will be of more value to you than any textbook you buy this semester. It’s cheaper than a few trips to starbucks or one or two nights out, and provides a lot of good information about what to expect over the next few years. Since 2005, Schiff has been prophetic about market behavior and predicted this exact scenario.
-Work abroad. Plenty of large firms like Fleishman, Edelman and H&K are entrenched in more resilient (although still at risk) markets in the middle east and pacific rim. Do a two-to-three year tour there, build your resume, and then come back when our economy is a bit more sustainable.
-TAKE ECON AND FINANCE CLASSES. I cannot stress the value of this enough. Many of my classmates are interviewing in this climate without understanding any fundamental concepts of either. Many have told me they wish they took even some Econ 101 classes over fluffy “Society and ___” courses. If you read “6 am,” Richard Edelman concurs.
I personally had my own moment of disillusionment with the fall of these iconic businesses. Other similar companies will have to work very hard to promote a positive image, but even beyond that, public relations alone cannot fix the distrust. There have to be changes to the very structure of how they do business. I listened to a “This American Life” program on NPR that examined the causes of this major crisis. Businesses were not being careful, and it wasn’t only their money at risk. People are very sensitive about money, and I’d almost venture to say that you could be dumping toxic waste and get away with it easier than being reckless with an investors’ money. Public relations will be necessary to help financial institutions say what they’re doing to reform their own practices to ensure that peoples’ money is safe.
I have a professor who likes to say that we can’t just put whipped topping on a pile of dung and call it good PR–the businesses have to be doing good things before we can tell the public that the company is doing good things.
An interesting take on the situation is in this article from MediaPost http://www.mediapost.com/publications/?fa=Articles.san&s=91596&Nid=47819&p=458568
I concur. The banking and financial industries will need to execute campaigns based on integrity and empathy to win back citizens’ trust. Public relations professionals are destined to play a quintessential role as the Wall Street troubles start to hit “Main Street.” Practitioners now face the difficult task of formulating and targeting these campaigns to a disheartened and distrustful public. I don’t doubt that the banking industry will recognize the importance of public relations. My questions are: “What lessons can we as students learn from the recent crisis, and in what ways can we influence our future clients to pursue open and ethical practices?”
Today MediaPost’s headlining story was about a insurance giant that avoided the crisis by reforming before this all came to a head–Zurich Group. They’re currently working on a campaign to regain public trust. It’s a good read: http://www.mediapost.com/publications/?fa=Articles.showArticleHomePage&art_aid=91697
These last few weeks in the economy’s downfall have made lower to middle class U.S. citizens think twice about how they spend their money and where they put it. Additionally, people have s seemed to foster a distrust for corporations and Wall Street … getting angry at company leaders and viewing them as money-hungry mongrels. It’s amazing how many criminals go to jail or prison for stealing money/products from businesses and consumers, but leaders who make bad business decisions that heavily damage the economy get a helping hand to continue doing what got us in this crisis in the first place.
As a public relations practitioner, the only advice I could offer is for them to invest their time in adopting, upholding and enforcing ethical standards. However, the reality is that it’s hard to encourage the “Big Bad Bully” to stop beating up others until you get an authority figure or a bigger bully to set the “Big Bad Bully” straight. It’s always difficult to convince those in power to look at, discipline and criticize themselves. Socrates would have a handful if he were alive today.
If these organizations in particular don’t spend more money investing in the Corporate Social Responsibility sector of PR and enhancing their standards, they’ll end up hurting themselves right along with the consumers and investors they depend on.
I feel like these last few weeks have brought about fear, uncertainty and insecurity to the people that used to believe in Wall Street and the golden opportunities it held. Trust has been lost and it will take more than just a few good words to get it back. Words must be followed by actions and actions by results. Perceptions have been skewed and as a result of the hard hits the stock market has undergone they are going to have to work ten times harder than other organizations to get back to where they left off.
These companies must provide the funds to build a strong and resourceful PR committee within their organization. If not the process of moving forward will take much longer and their stability and ability to rebuild for the future will still be questioned amongst the consumers who used to have full faith in them. Not only must they put money into this committee, they must choose good people who are also good leaders. Communication is key, and doing it well is the key that will set you apart. PR is the bridge to recovery!
Yes The demand for PR will continue to grow in the future, because they need people like us to advocates for the public interest and PR profession is build up on good ethics. As Pr professions we should pragmatic about certain situations in history that will not allow us Americans to repeat the same mistakes like what is happening in Wall street. It is sad that government is bailing out big companies. I think it was so unethical for banks to give people more than what they can afford, but at the same time it is the consumer fault as well. But it is a responsibility ethically to tell our companies and institutions we have mutual relationships with that a consumer with that income can not afford a certain loan. This crisis the banks are in I know they will be more strategic about who they issue loans to and if they can truly afford it. We as pr professionals and major should prepare our counterparts to think more strategic what they do and how they plan. You have to implementation along with a plan to build success and it is our responsibility to build good relationships. Chinnaill Parker, PR major, University of Arkansas Little Rock