On September 14, the face of Wall Street was permanently altered, felled by the growing US financial crisis. Lehman Brothers filed Chapter 11 and some assets might be sold; Merrill Lynch was gobbled up by Bank of America; and American International Group (AIG) is just hanging on.
Meanwhile, the pundits – and public – are speculating about who will be next as the stock market crashed more than 500 points on September 15, the day after the Lehman-BoA-Merrill-AIG saga broke. It was the worst closing since the 9/11 attacks.
Although financial communicators have been adjusting to other factors – the impact of the Internet, globalization, and the transformation of media – the way in which they respond to the now more than year-old credit crisis is taking on greater importance and immediacy in their work. The latest meltdown came directly on the heels of the federal takeover of Fannie Mae and Freddie Mac, which also happened over the weekend; the bailouts of smaller banks; and the Bear Stearns fire sale to JPMorgan Chase in March on another late Sunday evening.
PR pros that work in the financial services sector say that more and more, they have to be ready to go early on a Monday morning after such news breaks to stop any rumors or misinformation from taking hold and ruining already fragile Wall Street reputations.
“Figuring out a way to manage that instant mobile news and the word of mouth that follows is an interesting new challenge,” says Jennifer Prosek, a partner at CJP Communications. “It underscores the need for communicators to figure out what the reverberations of the news are immediately.”
Mark Kollar, another CJP partner adds, “Sundays have become the new Mondays.”
“You must be ready to go Monday morning,” Prosek emphasizes. “[You must] analyze and absorb the news and have a game plan.”
The Bank of New York Mellon, which was mentioned in early press reports as one of Lehman's largest unsecured creditors, worked quickly to refute that story, noting in a Monday press release that it was “a trustee for certain Lehman Brothers bond offerings” and that “we have no outstanding loans to Lehman.”
Jeep Bryant, the bank's EVP, says part of the communications efforts were geared toward allaying fears of its clients and staff.
“The news demanded global messaging about the strength of our company, as well as detailed Q&As for every business line where clients might be concerned about their own exposure to Lehman and other troubled names,” Bryant notes via e-mail.
“In an environment where some firms are quickly losing the confidence of their stakeholders, the demands on the communications function are greater than ever,” he adds. “Financial services firms in particular are engaged in a battle of perceptions. The best communications teams are having to spend a lot of time engaged in rumor control and acting as truth squads.”
In addition to dealing with the immediate crises, communications pros working amid the Wall Street battle of perception must also address the long-term health of the organization with frank, senior-level talk.
“All financial companies have to consistently and aggressively communicate their long-term stability,” says Steve Frankel, partner at Joele Frank, Wilkinson Brimmer Katcher. “CEOs are clearly recognizing that their role as chief spokesperson... is in some cases a life-or-death issue for the companies they manage.”
Claire Koeneman, co-president of the Financial Relations Board, notes that while the recent news might have been surprising, her team has been preparing clients in advance given the US' lingering economic concerns.
“We were very methodical in reaching out to clients individually, asking, ‘What exposure do you have?' and ‘How can we craft a message to investors,” she says. “A good financial communications practitioner has been having this conversation for months. We're [telling] clients that transparency is essential.”