Whither banks’ PR?
Steven Pearlstein makes a good point today about corporate PR shenanigans:
In their version of corporate reality, lawsuits are always without merit, executives leave only for “personal reasons” and regulatory actions are settled not because anyone did anything wrong but simply to avoid the cost of litigation.
Over time, this cynical game has become so ingrained that investors, analysts and business reporters now simply take it for granted that they are being spun or misled. Whenever bad news comes out, investors assume they are being told only half the story and overreact, leading companies to be even less candid next time. The result is a vicious cycle of deceit and distrust.
I’m not entirely sure why this should be a vicious cycle, though. If corporate spin causes investors to overreact, then isn’t the obvious response to spin less, rather than more?
But there’s a bigger issue here, which is that over the course of the financial crisis, as a general rule, the spin from banks, in particular, got much worse. This is a relatively common theme when I talk to financial journalists: before the crisis, we often believed what bank PRs told us. Now, we don’t. How and whether banks are ever going to be able to regain that trust is far from clear — they might need to wait for a whole new generation of financial journalists to come along, who weren’t involved first-hand in reporting this crisis. And in the mean time, one can reasonably expect the media in general to continue to be quite harsh when it comes to banks and banking.