Little PR could do to save Bear Stearns, but lessons to be learned for other bank bosses

Pictured: Alan Schwartz, president and CEO of Bear Stearns. (Daniel Acker/Bloomberg News /Landov)


In a post titled 'The Cost of Incredulity', Jim Horton examines the Bear Stearns' acquisition by JP Morgan for just $236 million and asks what PR could have done to save the bank:

"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...

Mark this event in your memory. Use it whenever corporate executives question the value of what public relations should be doing."

This analysis comes off the back of an interesting article by Robert Peston, arguing that banks may be too private and that as the power of global companies is perceived to be increasing, it is arguable that those who run them have a greater responsibility to explain themselves in public forums:

"Even if a chief executive insists on sticking to the traditional view that it’s only shareholders that really have the right to put him or her on the spot, those shareholders are the many millions of us via our pension funds."

Applied to the weekend's events, Bear Stearns' employees are losing hundreds of millions of value in their shares, their jobs, their culture and their future and it is the bosses like Alan Schwartz who have to explain why it's happened.

Peston went on to ask a couple of bank bosses why they and their teams were being so shy:

"The reason they gave was that conditions in money markets remain exceptionally difficult, the confidence of bankers remains fragile, and the outlook for their businesses is hugely uncertain. And in those circumstances they and their executives have to weigh their every word with care. Given that they can’t yet predict all the consequences of the unwinding of years of excessive lending, they are fearful of talking to millions of people through a medium they can’t control."

Some important lessons will be learned from those seeking to avoid the dramatic plunge that Bear Stearns has taken: trust, transparency, and strong communication with stakeholders - big and small - are vital in this time of economic upheaval. As Jim Horton says:

"In banking, trust is everything and loss of it, ruinous."

Update - Some text that appears on the Bear Stearns careers' website probably needs taking down:

"Welcome to Bear Stearns. If you're really good at what you do, you probably have a lot of choices when it comes to taking the next step in (or starting) your career. But if you can tackle complex challenges with creative solutions, and want to be able to make your mark quickly regardless of title or tenure, we think your only real choice is pretty clear."