Friday, May 26, 2006
The Next Guy's Problem
This kind of story makes one feel sad for the current management and communications staff of Fannie Mae. The company was out of control. Its management got fired. It's new management is still cleaning up the mess. There is little the company can say that gets rid of the taint. From a PR perspective, the company will have at least one strike against it for years, maybe two. It's worse because of the first paragraph of the news story:
Fannie Mae's senior management promoted an image of the company as one of the lowest-risk financial institutions in the world and the "best in class" in terms of risk management, financial reporting, internal financial controls and corporate governance — an image that was false.
The company was apparently built and run on a lie with enough political backing to get away with it. That means embarrassed politicians, media and others will be watching for any misstep for years to come.
Now to the part that angers me. Previous management got away with what it was doing for a long time. It would take hours to count the adoring stories about Fannie Mae until the company hit the wall. In defense of the reporters who wrote this claptrap, they didn't and couldn't know the state of its accounting. So, like Enron, image was everything.
It worked for awhile until it was the next guy's problem.
Fannie Mae's senior management promoted an image of the company as one of the lowest-risk financial institutions in the world and the "best in class" in terms of risk management, financial reporting, internal financial controls and corporate governance — an image that was false.
The company was apparently built and run on a lie with enough political backing to get away with it. That means embarrassed politicians, media and others will be watching for any misstep for years to come.
Now to the part that angers me. Previous management got away with what it was doing for a long time. It would take hours to count the adoring stories about Fannie Mae until the company hit the wall. In defense of the reporters who wrote this claptrap, they didn't and couldn't know the state of its accounting. So, like Enron, image was everything.
It worked for awhile until it was the next guy's problem.
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