As if the prolonged collapse of the housing market wasn't enough, our economy is being smacked hard once again by the meltdown of the mortgage-backed securities market and by new, horrifying revelations regarding overly aggressive home foreclosures and the lack of oversight mechanisms in the nation's mortgage servicing process.
Overhauling and remediating these complex and arcane processes will take time, to be sure. The culprits who created and caused these crises are easy to identify. Whether these institutions go unpunished remains to be seen. But let's not forget to ponder two important lessons for us as communicators and public affairs counselors for our clients:
• In the post-“too-big-to-fail” environment, it's OK to be “small” again. It's important to remember that there are plenty of level-headed, clear-eyed banks and financial institutions that didn't jump feet-first into sub-prime mortgages or that didn't take part in the churn-and-burn repackaging and bundling of loans, many of which had hazy paper trails and questionable veracity.
Indeed, many midsize regional banks, as well as most credit unions and community banks, survived the storm by sticking to their core businesses and remaining risk-averse during the go-go years of the economy. The public affairs challenge for these institutions will be in making sure that Congress and the financial regulatory agencies treat them as a separate class of institutions from their Big Bank counterparts and don't saddle them with onerous regulations that might cripple them. The ones who acted responsibly shouldn't pay for sins they didn't commit. Here, the “power of small” can be a great differentiator in this environment.
• If you are a big organization, then react quickly, innovate, and embrace the new sobriety in the marketplace. Being an organization of change and flexibility is a corporate philosophy that's making a lot of sense during this prolonged hangover period in our economy and our history. That means staying abreast – and ahead – of the legislative and regulatory changes that impact your sector or industry. It's imperative, then, that companies adopt clear-eyed public affairs and government affairs strategies.
And adopting this temperate attitude is not just taking place in the financial services sector. Defense and aerospace companies, taking their cue from remarks made by Defense Secretary Robert Gates about more austere DoD budgets and programs in the future, are re-tooling their R&D priorities and developing products and services that have civilian applications that appeal to non-governmental customers and to users in other countries and markets.
These lessons are important ones to consider as we counsel our clients on navigating in a toughened regulatory environment, recovering from our stumbling, punch-drunk economy, and meeting the challenges of 2011 and beyond.
Robert Tappan, a former senior official at the US Department of State, is president of The Tappan Group, a public affairs firm based in the Washington, DC area. His column looks at issues advocacy and related public affairs topics. He can be reached at: firstname.lastname@example.org.