Monday, March 17, 2008
The Cost of Incredulity
$236 million. That is the price J.P. Morgan Chase & Co. is paying for investment bank, Bear Stearns, that was worth $3.5 billion as of Friday and $20 billion little more than a year ago. In banking, trust is everything and loss of it, ruinous. It is sad to see a scrappy, 80-year-old firm disappear, but it is a reminder how much reputation counts. Bear Stearns employees are losing hundreds of millions of value in their shares, their jobs, their culture and their future.
It is rare today to see such a dramatic and swift bank run, but as we are learning, runs can happen, and the financial system can melt. There is no ultimate safety net, as much as we would like to think.
How much could public relations have done to save Bear Stearns? Little, it turns out. The bank tried to calm investors, but fear and greed ruled. The bank did not have enough friends to stand by it in the end.
In the 1930s, there were movies about bank runs. Frank Capra made two that I know of, and I saw one again recently. I thought then what a quaint document it was of a time long past. Little did I know. The impact of the Bear Stearns failure will slam New York City's finances and radiate through the community. It is unclear still how much damage it will do.
Mark this event in your memory. Use it whenever corporate executives question the value of what public relations should be doing.
It is rare today to see such a dramatic and swift bank run, but as we are learning, runs can happen, and the financial system can melt. There is no ultimate safety net, as much as we would like to think.
How much could public relations have done to save Bear Stearns? Little, it turns out. The bank tried to calm investors, but fear and greed ruled. The bank did not have enough friends to stand by it in the end.
In the 1930s, there were movies about bank runs. Frank Capra made two that I know of, and I saw one again recently. I thought then what a quaint document it was of a time long past. Little did I know. The impact of the Bear Stearns failure will slam New York City's finances and radiate through the community. It is unclear still how much damage it will do.
Mark this event in your memory. Use it whenever corporate executives question the value of what public relations should be doing.
Comments:
Post a Comment