Banks Need to Communicate

Treasury Secretary Timothy Geithner spoke yesterday about the Obama Administration’s financial-rescue plan and the market tanked, dropping 5%, the biggest downturn since the new administration took office.  The reason was that Geithner did not go into specifics about the plan and instead touched upon the various facets of the program in broad strokes that had previously been covered.  The market was looking for details.

 

Last night I happened to meet with my financial planner, Brett McNamee of the McNamee Group, part of Citigroup, in Shrewsbury, New Jersey. As we reviewed my plan, we spoke about the paralysis that set in last October, when credit evaporated and banks pulled back.  We discussed the apprehensions many corporations faced, as they made decisions to cut back and sell off assets, worried that their lines of credit would either be cut or disappear entirely.

 

Brett gave a great overview of how this has kept everyone waiting and watching for signs of something positive.  As we discussed the potential impact of the stimulus bill on the economy and what industries may benefit from the funding, Brett brought up how banks were indeed using the TARP funding, but you wouldn’t know it from reading the news reports.

 

It was interesting getting the perspective of someone working in the financial sector to how he felt the industry was being portrayed by the media

 

He cited the recent (Feb. 3) quarterly progress report that Citi had released outlining the deployment of the $45 billion in capital that the U.S.Treasury had invested in the company as part of the TARP funding.  It is posted on the Citigroup web site and available for download for anyone wishing to read it.

 

Other financial institutions that have received TARP funding are also seemingly making their use of the funds public.  The Obama administration has promised an era of transparency and the American tax payers, who are now helping to prop up these financial institutions, are worthy of such accounting from them.

 

What banks need to do is not just post the results on their web sites and issue press releases. They need to fully outline every major step they are taking to use the funds allocated from the TARP bailout.  Local press campaigns should be developed to highlight the mortgages, business and educational funding that is being distributed locally, statewide and across the nation. 

 

This morning, many leading bank CEO’s are testifying before the House Financial Services Committee to discuss their use of TARP funding.  It will be interesting to see how detailed they will be about what they have and haven’t done yet with the bailout money.

 

If banks want to change the news cycle from they have to create positive news. Using public relations will be vital for how their efforts will be received.  This is certainly the time for banking executives to listen to their corporate communications representatives and aggressively promote what they are doing.

 

The country is waiting for details.  Just ask Tim Geithner.

 

Tom Cosentino

 

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