“Stress Tests” Communication

Posted by Matt Purdue

We’re on the verge of one of the most significant moments for communications professionals in this decade. As the New York Times reports, the White House is preparing to announce some of the results of the “stress tests” imposed on the 19 largest banks in the country. As you might recall, banks were forced to conduct these tests in an attempt to find out just how their balance sheets would perform under various adverse economic scenarios. The banking system has been crippled over the past 18 months as banks have had to lower the values of the assets they hold. This trouble has spread from the banking sector into the overall economy, prompting a global recession (check out the link for an intriguing article on what defines a recession).

To attempt to get to the bottom of just how bad things could get, the Obama administration ordered these tests. Since the government made this decision, it’s been unclear about how test results would be disseminated to the public. Naturally, some observers fear that revealing the results will cause multiple bank runs (a la “It’s a Wonderful Life”) and send depositors scurrying from “bad” banks to “good” ones. Ironically, this is exactly the kind of terror the government is trying to avoid. 

 

So how will the government and the banks balance the need for distributing accurate, relevant information with the need to keep any negative news in context? They’re going to have to come up with some way to quickly educate American consumers about the true health of our banking system in an era marked by incredibly irrational market behavior. Let’s keep in mind that this is the same American consumer who acts like this: Carlos walks into a store looking for a candle. He spots a $25 monster (yes, $25 for 14 ounces of scented wax, a wick and a cheap glass jar) and gets sucked into a buy-two-get-one-free offer. Carlos then walks out of the store $50 lighter, but patting himself on the back, thinking he just saved money because he got a free candle. This is an incredible communications challenge, and will be very interesting to watch.