Think back two years. The financial crisis hit its gallop around this time in 2008, when the U.S. government sold Bear Stearns to JP Morgan Chase before its wrecked hull could breach and take the global economy down to Davy Jones’ Locker. But that was just the beginning of a wicked huge bear market brought on by inflated real estate prices, preposterous mortgage loans, complicated and unregulated investment vehicles, and a collapse in confidence by everyone from global investors to your local school custodian.
Those of us who watched from a courtside seat (and wished we were in the bleachers, one bank CEO said) remember it all too well.
That’s why I thought twice about hearing University of North Carolina-Chapel Hill’s David Remund, a doctoral student, present his paper, “Crisis of Confidence: News Coverage of America’s Largest Banks During the 2008 Financial Crisis” at the 13th Annual International PR Research Conference.
Remund did a content analysis of news releases and national and local newspaper coverage of the 10 largest American banks for the second half of 2008, looking for some kind of systemic understanding about how these banks used crisis communication techniques to spray some pain-killer on the daily parade of negative information marching down Main Street.
Two crisis communication theories applied: Image Restoration Theory, which holds that if you’re at fault, you admit it and share the steps you’re taking to address the situation and prevent it from recurring. Situational Crisis Communications Theory says that you need to show concern for people who’ve been hurt by your crisis. Remund’s hypotheses offered that banks that acknowledged the financial crisis and showed concern for consumers in their media relations efforts would enjoy a higher proportion of confidence-building news coverage as a results.
Whoops. Remund’s findings were the exact opposite, with neither hypothesis supported.
Instead, the media pretty much held that banks’ actions contributed to the financial crisis, and the quietest banks got the greater proportion of positive coverage. So, what happened?
As I wrote in my own research covering one company, the crisis had so many contributing factors, was so broad and so extensive that we got to the point where facts and data simply didn’t matter. It was a mob, running headlong down the street screaming, “Run! Run!” Everybody had to run, even as they asked what what happening. Secondly, Remund’s research drew from a rather small batch of news outlets and from only the largest banks.
Finally, by the third quarter of 2008, the news media wasn’t about to trust pretty much anything that banks had to say. Washington Mutual raised capital and swore up and down that it was solvent, even as its capital dwindled away toward federal seizure. Lehman Brothers didn’t think it had any problems in the summer and was dead by September. IndyMac, Countrywide, Wachovia, National City… all positioned themselves as in good shape — but what else could they say?
We PR people are always recommending the most transparent approach — the article of crisis communication faith seems to be , “Tell it first, tell it fast and tell it all.” Aside from a recent study, all the literature calls for that type of approach. I believe it’s far more situational — once you’re in a systemic crisis that reaches past you and your world, your ability to affect its course gets a lot more difficult. Sometimes, you just have to wait it out.
The Remund study reveals more about the limits of crisis communication, than about bank public relations in a crisis.