BulletProofBlog the blog on crisis communications

As the nation slowly emerges from its recession, one of the most telling indicators of that progress is the reputational quotient of our financial and industrial brands. That even the most platinum brands were damaged last year isn' t new news, but that they continue to ebb amid persisting public distrust and distaste is extremely significant.

Consider what was once the bluest of blue-chip names. Even as Goldman Sachs was paying off its TARP debt and posting enormous profits last month, new research released by the Financial Times measured the credibility gap that still yawns before us. Brand Asset Consulting, which conducted the survey of 17,000 Americans, found that "Goldman Sachs still has that Gordon Gekko look to it," as survey manager Anne Rivers put it, referring to the villain of the 1987 film Wall Street.

While the survey also found that Morgan Stanley suffered a reputational decline, respondents said they liked and respected that firm more than its long-time rival. The fact that Goldman announced huge executive bonuses so soon after accepting the taxpayers' largesse has left a bitter taste. The notion that all the banks really want is to return to business as usual has been rapidly reinforced, subjecting their reputations to even more downward pressure.
The mainstream press responded vituperatively. Last month Rolling Stone described Goldman as a "great vampire squid wrapped around the face of humanity." Last week New York magazine asked: "Is Goldman Sachs evil?" Their response was altogether in the affirmative as the search for villains goes on and on.

Yet the huddled masses are not Goldman' s perceived stakeholders and many on Wall Street simply do not to care what Joe Public thinks. Once TARP monies are repaid, that presumed indifference is again unfettered - and not without support from some market pundits. One top blogger wrote that "the media circus surrounding Goldman's sliminess makes for a pleasant diversion, but it won't have any measurable effect on the way the company behaves."

The old saw says those who ignore history must repeat it, and history does show the danger of ignoring populist backlashes. In 1933, the equally hoary house of Morgan, while safeguarding its investor base, was simply broken up after a series of Congressional hearings (named after Committee counsel Ferdinand Pecora) was fueled by negative public opinion. Four years after the fact, Morgan misdeeds, some real and some exaggerated, were in part blamed for the 1929 crash.

Six decades later Wall Street must still learn that its stakeholders are not limited to investors and analysts. Those clock punchers may not have significant portfolios but they certainly do vote.

Michael W. Robinson is Senior Vice President of Corporate and Finance at Levick Strategic Communications and a contributing author to Bulletproof Blog.