The public outcry against the AIG bonuses seems endemic of widespread and deep-seated resentment against Wall Street fat cats in general who "don't get it."
Two questions: Is this the beginning of a class revolt? And who exactly defines what "it" is that "they" don't "get"?
Monica Langley's page-one WSJ piece provides useful perspective on how the rhetoric of the Obama Administration has changed recently. Having vilified Wall Street bankers and cheered on Congress in its outrageous anger-drunken response to the outrageous AIG bonuses (see previous post below), the Administration woke up to the realization that it needs Wall Street participation in the "public-private" partnership to buy up the toxic loans clogging the economy's arteries.
So in a positive development, the Administration has persuaded Congress to slow walk the clearly un-Constitutional "seize the bonuses" bill and hopes to "channel" public anger to more useful ends. (Good luck channeling an angry mob.)
This whole episode was foreshadowed in October, shortly after "Joe the Plummer" helped make Obama's "spread the wealth around" comments a campaign issue. Obama responded to Republican attacks by accusing John McCain of spending too much time with "Joe the CEO." It proved to be an effective applause line. But the specter of a Presidential candidate villifying CEOs as a class was unsettling to those of us who believe that America's business -- small and large -- is the engine of prosperity and that its leaders are by no means all villains.
The next day, Obama amended his punch line to accuse McCain of spending too much time with "Joe the hedge fund manager." That wasn't quite as rhythmic but it was a change you wanted to believe in. (No one feels any sympathy for hedge fund managers.)
But it remains to be seen if the public will make the distinction between business leaders and corporate raiders. Some see the seeds here for revolution. If the populist anger in this WRSGD turns against the haves as a whole, it could turn ugly.
I suspect that the American people are smarter than that. They want business leaders to be ethical and prudent, they want business to be transparent and honest, but I don't think they really want to put the brakes on capitalism.
However, the AIG anger bubble should serve as a wake-up call to PR folks with responsibility for financial communications. We're getting close to proxy season and annual meeting time. Get an early read on your top executives' compensation. If it's out of line with your company's performance and especially if the company had "involuntary terminations," you are going to have to ask some tough questions -- before news media and shareholders direct those same questions to your top execs.
Let's end on a hopeful note (and I'll take up the question of who decides who "gets it" in my next post):
The nice, mini-rally on the NYSE the last two weeks has breathed a little life back into our 401ks and provided some hope that the market has bottomed and that this "bear market rally" might be the start of a long bull run, albeit with plenty of hiccups along the way.
Look for some of our economy's stronger businesses to begin acting like the sun might actually come up tomorrow, and make some investments in a future that will surely someday come, preparing to gain share in the recession's upslope. Look for more and more confident leaders to plan for a recovery, including putting in place a recovery plan they can pull the trigger on as soon as they see enough daylight ahead. If you're fortunate to work for such a company, start working on the communications components of that recovery plan.
Better days will come, maybe sooner than you think. You heard it here first.
- Jon Harmon