These are the people who largely, though not exclusively, have refused to engage in any public relations because they have seen no reason to explain themselves. Hedge funds apply a risk-reward ratio to all their actions and believe the risks of talking to the press are more obvious than the rewards. Investment banks have in-house public relations expertise, but rarely give them proper support to cope with the monstrous egos that surround them, because as one of the top bankers put it, he has all the access and influence he needs direct with the Treasury. He sees no point in communicating with a press (and hence a public) that may well not write things the way he wants them to be written.
They may be coming to regret this arrogance as their losses mount. Many seem still in denial – claiming, for example, that the meltdown is a ‘once in 100-year event’, as if this excuses them wiping out their clients’ funds. Clearly it does not happen once every 100 years, because credit derivatives have only been around for five years.
If it does not occur again for another 95 years then they will turn out to be right, but meanwhile it is better to look for other explanations. They could start with the computer models they built that indicated this was a 100-year probability and confess they built them wrong.
The bigger issue, however, is the way some of them are beginning to press for a public policy change that they hope would stabilise markets. Central banks could cut interest rates, a gesture that has calmed markets in the past, so why not? The argument against is that the hedge funds and others thus shielded from losses then carry on as if nothing had happened. The core problems of readjustment and imbalance remain unaddressed.
This is where they will pay a price for that secrecy. Were they understood by the public, if what they did was seen as beneficial rather than exploitative, if the rewards were less excessive and more evenly shared, then there might be some public support for a bailout. As it is, the public view is that they should be left to suffer.