John Thain, the CEO of CIT Group, recently was honored by a Manhattan charity and had some interesting things to say about public perceptions of the financial sector.
Thain was chief of Merrill Lynch in 2008 and presided over its death-row sale to Bank of America amid massive losses on toxic mortgage securities. He is no stranger to unflattering media coverage, but in remarks to reporters at the charity event he said antipathy toward banks was overblown:
“The demonization of Wall Street and bankers is very much a function of the press and of Washington, and not much more broadly held.”
Negative views of banks are “not much more broadly held?” Can he really mean that?
John Thain
Let’s look at the data. For the second year in a row, the financial services industry was the least-trusted of all business sectors, according to the 2012 Edelman Trust Barometer, a global survey of more than 30,000 highly informed adults. In the U.S., a Gallup survey last November found that just 15% of Americans had confidence in the U.S. banking system, an all-time low.
Besides being detached from reality, Thain’s comment is telling for another reason: It suggests that the industry’s recovery strategy should focus on better communication to media editors and Washington policy-makers. For him, it’s a matter of correcting misperceptions rather than changing business practices. So that argues for more lobbying, advertising and feel-good media opportunities (like charity award galas), and less effort on improving transparency, rebuilding market safeguards and fixing compensation and governance practices. On other words, less of the things that really would build public trust.
Thain and other bank CEOs surely hope that the industry’s reputation will soon recover, but until they acknowledge the depth of their problem and take meaningful steps to address it, little will change.