Should "too big to fail" financial firms seriously consider slimming down, given public opinion of banks has fallen to record lows? Should they voluntarily reduce the size and scope of their operations? Not only to repair their image, but to streamline management and oversight of their companies?
The way things are going, even in an improving economy, negative fallout from the Great Recession will continue to have an impact on public opinion of big banks. Financial firms will continue to take a pounding from a host of public figures, such as Sens. Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio) and Jeff Merkley (D-Ore.). Even retired bankers like John Reed, former Citigroup chairman, have joined with Federal Reserve Bank of Dallas President Richard Fisher and others to call for breaking up the banks.
There's momentum, for sure. And let's face it, lots of people just have a negative impression about big business, believing large companies to be too powerful, too overreaching and – yes – "too big to fail." Positive press about big business is hard to find. Big energy companies, big box retailers and big health insurers have been the target of negative publicity as well.
Even if mega-financial firms can battle the forces demanding their corporate downsizing, should they fight this fight? In all likelihood, they'll win battles, but at what risk? Will they wind up losing the war?
In defending the megabank model, bankers will, of course, argue the value of full service banking, delivering everything customers need – and more – under one roof. The convenience of one-stop shopping at multifaceted firms is a compelling talking point, one of the key messages that possibly tipped the scale in favor of repealing the Glass-Steagall Act in 1999.
But considering the role big financial firms played in the Great Recession, the court of public opinion has decided megabanking just isn't what it's cracked up to be.
With large financial institutions so closely identified with the recession, the resulting sluggish economy and economic hardship, they will need to act boldly to salvage their image by breaking up, even if it's hard to do.
Winning hearts and minds is challenging – if not impossible – when you are "too big to fail," and it is doubtful the megafirms will be able to reverse negative opinion of their companies going forward. Over time, negative opinion can undermine brand image and business results. In this day and age, downsizing might be the most viable PR option for financial industry giants.
Harvey Radin, an independent public relations consultant, was a senior vice president at Bank of America. He also served as head of western region corporate communications and media relations at Bank of America and was a PR consultant for Greater Bay Bancorp and Wachovia Corp.