In a recent interview in the Financial Times, Lloyd Blankfein: chairman and CEO, said “I am doing Gods work”. This is by far the funniest line I have heard in a long time. In fact, nearly all my relations in the financial sector fell off their chair laughing. After, regaining consciousness from laughter, I started to think more carefully about Goldman and the other mega banks that survived directly and indirectly via taxpayer bailout.
Warren Buffet said ““It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Reputation is the basis for all companies, particularly those operating in the financial sector. It is about trust. It seems that we often forget, with respect to financial bubbles but also with respect to reputation meltdowns.
If we think back the the Vietnam war, Dow Chemical comes to mind. They manufactured weapons of war like Napalm, Agent Orange and defoliants. Their reputation and association with the Vietnam War was so entrenched that very few college students wanted to work for Dow. The brand experienced a meltdown, and needed to be addressed in order to assure the continuity of the company. Now, Dow Chemical is seen as a sustainable leader in the chemical sector. In the late 90’s, Shell experienced a similar reputation destruction that impacted their ability to hire staff. Brent Spar and its activities in Nigeria hurt the Shell brand so badly, that the best and the brightest didn’t want to work there. Top cvs weren’t flowing, and those who did work there were not ambassadors for the company out of fear and shame. Shell woke up.
Goldman Sachs, Bank of America, RBS, JP Morgan, ABNAmro, ING, and dozens others will experience the same reputation meltdown as Dow Chemical and Shell. There is a difference this time. These companies received massive support, directly and indirectly from taxpayers, who will be paying the bill for decades to save the financial sector. On top of that, these same banks are paying out billions in bonuses, again directly and indirectly from taxpayer bailouts. The best and the brightest won’t want to be associated with “servants of the lord” . Governments under pressure from the electorate won’t allocate lucrative financial engineering jobs to them for government projects, and bond offerings. If this group of “valueless banks” are seen to have profited, supported and facilitated the financial meltdown they will have a hard time to get customers. Going forward the gang to which you belong will say as much about your own reputation as your own direct actions.
Watch the financial reputation Tsunami hit. It will have massive impact, and no amount of commercials or social entrepreneur sound bites, or minor “green” asset allocations will change perception. We need farmers and not hunters to turn this around. I don’t even thing that Lloyd’s boss (God) can help him.