StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



What We Have Here Is A Failure To Communicate

30 Sep 2008
Posted by Stan Collender

Several of the readers who commented on Andrew's post from yesterday said that the House didn't pass the Paulson-Frank because supporters had failed, miserably, to communicate the need for the plan to those who needed to be convinced.

I'm a managing director at a public relations firm and a former national director of public affairs at one of the largest global PR agencies, so please believe me when I say that it's hard, or actually impossible, to argue with this.

From a communications perspective, this has been done about as wrong as is possible.  There have been no credible spokespeople, the messages about the plan have been wrong or incomplete, the plan's supporters failed to understand the different audiences that had to be reached, and few people validated the claim that the plan was needed.

As I said earlier in the week, President Bush has been completely ineffective as a communicator on this situation.  His statements have failed to close the deal and he has yet, including the statement he made this morning, to make a personal appeal that rings true. 

It also hurts that his overall credibility at this late point in his administration is as low as it has ever been in the eight years he has been president.  Some surveys show his approval rating at 26 percent. In other words, three out of four Americans don't like what he has done and is doing.

But it's a much larger communications problem than just the president at this moment.  No one else in the Bush adminsitration has credibilty on economic issues. Hank Paulson may be the most effectve of the three people who have been Treasury secretary in this administration, but that doesn't say much (Does anyone remember Paul O'Neil and John Snow?).  Paulson is obviously smart and tough, and my impression is that he's great in one-to-one conversations.  But he's not a good mass communicator and his appearances over the weekend on the Sunday talk shows were not convincing.

In addition, Paulson has pretty much been out there on his own on this issue.  Why hasn't the White House included its other economic spokspeople in this conversation?  Why haven't the chairman of the Office of Management and Budget, the chairman of the Council of Economic Advisors, and the Commerce secretary actively and very openly advocating for this plan?

The spokespeople, or lack thereof, have been only one part of the problem.  Supporters of this plan only communicated with one of the key audiences -- Wall Street -- when several others needed to be included.  As of 9:30 am EDT on Tuesday, September 30, I still haven't heard anything that explains to someone not on Wall Street why this plan is important to them.  That information exists; it just hasn't been communicated.

Supporters also failed to appreciate that politics would be one of the keys to this.  As a result, almost no one explained why passing a plan like this would be better politics than not passing a plan.  As a result, voting against the plan became an acceptable alternative.

Finally, where were the validators, that is, where were the outside people who, by saying that Paulson, Frank, Dodd, and Bush were correct, would convince others to support it.  This is not something that happens by accident; a typical PR effort would try to arrange such statements.

I'll have more about this later.  In the meantime, let's see if the supporters of this plan communicate differently in the next few days. 

Two Questions

When I bought my house there was a credit crisis on--my choice, with excellent credit and 25% down was: 19% fixed or 15 1/2% variable rate.

1) If the credit markets have frozen up because of the bad debt on the books, why hasn't supply & demand shot the interest rates through the roof?

2) Why will getting bad loans off the books make banks more likely to lend money? Shouldn't they be wanting to make good loans now to generate income? What's going to change after the bad loans are removed--will the banks go back to making risky loans? I guess that's 3 questions.

I'm simply confused. Forget PR-- I just don't understand at all what's going on.

(And re: the Mets-- the great thing about living in NY is that there is always the next sport--Mets gone? Let's Go Jets!)


Answer to question two and two a

Tony,

The problem that the banks have now is a lack of confidence in other banks. These bundled mortgage securities are severely discounted in the market because with the decline in house values, everyone is assuming that there will be an extremely high level of mortgage defaults in the securities. Until the housing market stabilizes, no one is able to make reasonable estimates of the value of these securities. That is one of my problems with the bailout. Should the US Government be buying these securities when no one knows how to value them? If we couple that with a plan to stabilize house values then we would have a sound plan.


Too many audiences

Stan - Bush has been without influence since New Orleans drowned. His philosophy of staffing government with ideological idiots or cynics who use it just to enrich corporate donors has come home to roost...he has few capable people in positions of authority, and no credibility.

But all that said, this is still a difficult job. You can't say what you need to say to the bankers ("don't worry, you'll still be rich next week if you agree"), the taxpayers ("don't worry, we'll get those damn bankers, and it won't really cost you too much"), and the politicians ("here's a bone to throw to your voters; Now keep the rich bankers rich so that they keep donating") all at the same time. There's too much coverage, and all of a sudden the press is pointing out faults in statements of the powerful.

It's like trying to do a magician's trick with people standing behind you...they can see what you're doing and no longer trust you.


Numbskull Nancy did her part

Bush has always been a poor communicator, but I think that if Harold Ford Jr. had won the battle to succeed Dick Gephardt, the bill would have passed.

I think there was probably an agreement that the Republicans would provide just enough votes to pass it. However, when Nancy got criticism from the Kossacks for making a deal with the devil Bush, she shot her mouth off for cover, and angered the Republicans.

Unless she really didn't want it to pass. In which case she's a genius.


Credibility?

How could a government spokesman of either branch have any credibility until they can come up with a convincing story about how they let it come to this, and some kind of reason to trust them not to make it worse? Even if one accepts the argument that it's not the right time to assign blame - and I don't - it is surely time for a few mea culpas from the folks whose watch it was.


Hey, some people know how to sell a bailout!

~~~ quote ~~~

Auto Bailout Passes: Big Three to Get Big Check from Uncle Sam

Congress members working through the weekend provided $25 billion in aid to the struggling U.S. auto industry.... The Senate voted 78 to 12 to pass a broad, must-pass spending bill that includes $7.5 billion to start the loan program. The House passed the bill earlier in the week...

Chrysler Vice Chairman Jim Press told ABC, "It's not a bailout. It's a good investment between industry and government."

[Though by that measure, so were the government's $85 billion loan to AIG at 11% interest, secured by the right to purchase 80% of AIG's stock ... and its taking stock ownership of Fannie and Freddie in exchange for guaranteeing all their debt ... and, yes, the proposed purchase of up to $700 billion mortgage backed securities. No?]

Economics Professor Peter Morici of the University of Maryland said "Oh, I'd call it a bailout. They are having increasing difficulty borrowing money in the private credit markets because there's a high risk of default. In that environment, giving them a government loan is a bailout."...

[But what's Congress upset about this time? That the gov't isn't bailing fast enough!]

Still, the loans may not come as quickly as the Big Three want ... Congress members are already criticizing that aspect of the plan. Sen. Debbie Stabenow (D-Mich.) told reporters, "It's absolutely unacceptable for them to take six months or longer to implement this program"...

If presidential politics are any indication, the domestic auto industry might be able to count on more federal help. [In their public statements, the McCain and Obama camps are] competing with one another over who wants to give Detroit more money. On that front, the Big Three couldn't be happier. [US News]
~~~~~

So, yes indeed, it looks like Paulson and Bernanke could've used some lessons in marketing. Well, maybe given their backgrounds that's understandable.

But what's the excuse for Bush and all the political geniuses on the White House staff?


Ghost of Tom Delay

The Wall Street Journal provided the best laugh today (much appreciated over morning coffee and the headlines).

It opined that Nancy's trash talk last night on the House floor reflected her emulation of Tom Delay's leadership style, but without his charm.




Recent comments


Advertising


Order from Amazon


Copyright

Creative Commons LicenseThe content of CapitalGainsandGames.com is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License. Need permissions beyond the scope of this license? Please submit a request here.