The semantics of sin

18th July 2012

For most people the archetypical banker is not someone who is shy of giving their opinions or frightened of an argument. Indeed such characteristics would be positively incongruous with the swagger, the suit and the salary.

Yet since the onset of the financial crisis, bankers have taken great care with their presentation and their language to suggest a due sense of humility. Even the famously pugnacious Bob Diamond, former chief executive of Barclays, claimed to have been left "physically ill" over the recent Libor scandal.

The question, however, is whether this public relations strategy has served not to reconcile these individuals and institutions with the public but rather cut them further adrift.

Take, for example, the Treasury Select Committee hearings on the banking crisis. Below is a short transcript of the hearing in February 2009 attended by Sir Tom McKillop and Fred Goodwin, respectively the former chairman and the former chief executive of RBS, and their counterparts at HBOS, Lord Stevenson of Coddenham and Andy Hornby.

 

Chairman: The Oxford English Dictionary definition [of a bank] says: "an organisation offering financial services, especially the safe keeping of customers' money until required and making loans at interest"…Did your organisation live up to that definition?

Lord Stevenson of Coddenham: We certainly aspired to. As our evidence to you made clear, we got hit by…

Chairman: Could I interrupt you? Just a word here: has it lived up to it?

Lord Stevenson of Coddenham: In everything we tried to do, yes, and we hit the first major market failure in wholesale markets, as did virtually every other bank in the world.

Chairman: Andy Hornby, did it live up to that definition?

Mr Hornby: Clearly, there is a definite need for banks to focus on simplicity going forward, no-one would argue with that. That is the clear message of what has happened.

Chairman: I am just asking a simple question. Did it live up to the definition of the safe keeping of customers' money?

Mr Hornby: We have worked extremely hard to provide the safe keeping of customers' money. We have already agreed that the loss of liquidity in the market–

Chairman: I want to get on with other questions. Did it live up to the definition?

Mr Hornby: I would say we certainly aspired to and we clearly did not foresee with enough clarity–

Chairman: But there is a question mark there, is there not?

Mr Hornby: Because of the clarity with which we did not see the complete closure of wholesale markets.

Chairman: Sir Tom, a straight answer? You come from Irvine, a straight answer.

Sir Tom McKillop: Dreghorn actually but near enough! I think as events have turned out, we required help to fulfil those obligations.

Chairman John McFall's difficulties in getting an answer, even to what he considered a fairly simple question, speak to a broader problem of how responsibility for failures at the banks can be apportioned. Nowhere do these individuals admit to personal failings but instead they answer in the third person "we", as if the errors in judgement were committed by the body corporate rather than its constituent members.

Joe Brewer, founder and director of Cognitive Policy Works, says the passage offers some insights into the public relations strategies being employed by the participants:

  1. Note how the bankers avoid making definitive statements.  They all position their actions — and thus their moral culpability — within contextual influences that shape outcomes beyond their control.  This is a tactic that allows them to be congenial and yet noncommittal.
  2. They do this by placing the emphasis "out there" in their field of vision.  Note the use of the metaphor Knowing is Seeing.  Several of the responses reference a lack of clarity or an inability to see.  They are using the tactic of claiming visual inadequacy — just as a driver who crashes his car might say "it's not my fault I ran the stop sign… it wasn't clearly visible and I was unable to discern it in time."  This achieves two things: (1) placing responsibility out in the world (and not in the hands of the bankers); and (2) makes the fundamental issue one of judgment about foresight (ability to predict the future) rather than judgment about ethical violations of trust with investors or the public.
  3. Care is taken to avoid responsibility, through the selection of these metaphors, thus allowing the bankers to follow due process without admitting guilt.

 

This avoidance of responsibility during Select Committee questioning marks a stark contrast to the attitude presented by the industry before the full extent of the banking crisis had become apparent. Only six months before his appearance in front of MPs McKillop told the BBC that a crisis should offer strong institutions the chance to prove their worth:

"Maybe you have to be a bit of a masochist, but it's when things are tough that you really, really do see organisations perform. I'm a great believer in adversity sorting out who the long-term winners are going to be."

Here he makes clear that the success or failure of an institution should be seen as a reflection of their management. The inability to "see the complete closure of wholesale markets" as a threat, for example, might demonstrate a lack of management foresight rather than mitigating circumstances.

Certainly his suggestion that bankers should be masochists makes for an interesting interpretation of events. Is all this public self-flagellation merely demonstrative of an industry in the raptures of adversity?

Having been tracked to his country retreat by an enterprising Reuters journalist, Dick Fuld, the former head investment bank Lehman Brothers, described how he was approaching the first anniversary of the firm's collapse.

Evidently upset by his treatment in the press he told the reporter he had been "pummelled" and "dumped on". Nevertheless, he assured them, he could "handle it" noting: "You know what they say? ‘This too shall pass.'"

Perhaps in the past few years the confidence has been eroded among the banking elite. Or maybe the PR strategy is to avoid responsibility and evade more widespread public censure until the worst of the storm is past. If the latter is true, then it will do little to dispel the doubts surrounding the integrity and the balance sheets of the industry for investors.

 

More on Mindful Money

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Is it time to redefine emerging markets?

Towards a language of banking

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