Dangerous Thoughts Dumb And Dumber--And Dumbest Dan Gerstein 11.26.08, 12:00 AM ET
As I predicted last week, the four-door farce that the auto industry conducted on Capitol Hill brought no clarity to the Big Three's future. But those jet-setting, tone-deaf CEOs left no doubt about the true nature of the crisis of confidence plaguing the American economy. We don't just have a mass liquidity problem. We have a mass stupidity problem. I know that's a harsh statement. But there's really no other way to describe the inexplicably callous, clueless and trust-destructing behavior we have recently seen from so many big businesses that have been central players in this unprecedented economic meltdown. That's behavior, I might add, that is arguably doing more to feed the rising anti-bailout sentiment across America than any philosophical aversion to government intervention. It's also behavior that is helping to strangle the recovery in its super-expensive crib. Just consider collectively these examples of dubious decisions made by supposed captains of industry--and made at a time when millions of Americans are not only losing their jobs and homes and investment portfolios but also their faith in our nation's leading institutions. Dumb: AIG bungles its way to the brink of collapse, begs for an $85 billion bailout from the Feds and shortly thereafter sends its sales force on a $440,000 junket to a luxury resort in California. Congressional investigators found that the Marie Antoinette of the credit crunch set spent $150,000 for food, $23,000 for spa charges and $7,000 for golf. In a minor victory for common sense, AIG, under pressure from federal regulators, announced Tuesday that it would bar any bonuses or raises for its top executives this year and would dock its CEO's pay to $1. Dumber: Nearly four weeks after nine major Wall Street banks received angry letters from House Oversight Committee Chairman Henry Waxman--strongly suggesting that it would be obscene to give themselves multimillion-dollar bonuses after putting our entire economy at risk and getting a $700 billion bailout--only one of them has announced any significant change in their payout plans. That one, of course, was Goldman Sachs, former home of Treasury Secretary Henry Paulson. And Goldman is still on track to pay bonuses averaging $4.5 million to its 400-plus partners. Dumbest: Facing much public skepticism and hostility to begin with, the CEOs of GM, Ford and Chrysler decide to come to Washington to warn us that they are on the brink of a "catastrophic collapse" by flying separately on their own G4 corporate planes. According to ABC News, GM CEO Rick Wagoner's private jet trip cost his ailing company an estimated $20,000 round trip. In comparison, seats on a Northwest Airlines flight from Detroit to Washington were selling online for $288 coach and $837 first class. Asked to defend this excess, GM and Ford's first instinct was to say that it was a corporate decision to have their CEOs fly on private jets--and that is non-negotiable. Some will write off these decisions and many others like them as bad PR instincts or cheap symbolism. No less an ego-busting cynic than Jon Stewart dismissed the Big Three jet scandal as "tangential" the other night on The Daily Show. But I would argue this behavior is indicative of something much more troubling, and that these displays of classic insensitivity are really a form of 21st century incompetence. They show how out of touch much of America's business elite is, not just from the lives of many of their customers and investors but also from the demands of running a public company under intense public scrutiny in a constantly wired, totally integrated, collapsing economy. This is, as Barack Obama would say, about judgment. And to drive home that point, consider this scenario. Your son-in-law owns a small hardware store. He calls you to say he is about to go under and desperately needs a $20,000 loan. He arranges to come to your house to show you his books and make his pitch. Then he shows up in a $50,000 BMW he leased a few days ago. Would you trust your hard-earned savings with that guy? Well, these days that's how the American people feel about the head of GM--and the other CEOs who refuse to change their high-flying habits even when they say the economy is on the verge of a depression. "I may not understand everything, but I do understand common sense, and when you lend money to someone, you don't want to see them at a new-car dealer the next day,'' Ken Karlson, a 61-year-old Vietnam veteran and freelance marketer in Wheaton, Ill., told Bloomberg News. "The bailout money shouldn't have been given to them in the first place." And that's the danger point where the liquidity problem and the stupidity problem come together. With the credit markets seized up, the American people, including many who can't pay their bills, are being asked to be the bankers of last resort. The proposed $351 billion Citigroup bailout is just the latest example. These anxious health aides and construction workers are watching big banks and big car makers plead for their money, and, more and more often, their response is: "Are you kidding me?" That's not resentment or outrage speaking so much as distrust. They are convinced that these big CEOs don't deserve our help. Forget about whether the credit-seekers in question are bad people. They have proven themselves a bad investment in both their pre- and post-meltdown profligacy. Talk about the wisdom of crowds. That last point is essential to understanding the crisis of confidence. The public is clearly making a cumulative assessment. The recent epidemic of stupidity in the marketplace is not happening in a vacuum. It's coming on top of revelation after revelation of shortsightedness and recklessness--often fueled by extravagant, at times unimaginable, avarice--from our top business leaders in the run-up to the September meltdown. It's the kind of breathtakingly poor management at Citi that moved the New York Post--hardly a banner-carrier for the Nader Raider types--to run a rare front-page editorial yesterday branding the destitute bank "Citi of Fools" and demanding the resignation of its board of directors. That wouldn't be a bad first step for the bank. But if we're going to really relieve this crisis of confidence, Wall Street and Detroit are going to have to do more than relieve a few figureheads of their positions. It's time for them to terminate the stupidity tax they are making all of us pay. Most immediately, fire your public relations firms and hire some small businessmen who can relate to normal Americans as advisers. These entrepreneurs will have the common sense to insist that you cut your salary and eliminate all--ALL--bonuses when you are taking taxpayer handouts. That's just what a group of college presidents did when their relatively exorbitant salaries were recently published. Join them in demonstrating that shame is not totally absent in America. Second, when the new president, who is trying to save your bankrupted bacon, publicly calls on the car makers to come up with a smart restructuring plan and make some painful but necessary sacrifices, don't delay or deflect. The Big Three need to take "Yes, but " for an answer. That means coming back quickly with a program that holds the current executive teams accountable for driving their companies into a ditch, streamlines operations and positions Detroit to compete effectively against their foreign-owned rivals operating here. Ultimately, you need to produce a plan that meets the political sniff test so that members of Congress can justify an investment in your future. Lastly, and most importantly, stop hiding from the American people (except when Congress calls you on the carpet) and start living up to your titles and honoring your responsibilities as leaders. Use your platform to make statements on major TV shows and deliver speeches that respond directly to the public's deepening doubts. Apologize for the mistakes you have made, show you understand that changes need to be made and the way we do business in this country and reassure your creditors--who are now the Joe Six-Packs, not the Morgan Stanleys--that you deserve their confidence. This is one case where silence is far from golden. Put up some intellectual and moral collateral and you will get a lot more credit in return--both for your budget and from the public. -- Dan Gerstein, a political communications consultant and commentator based in New York, is the founder and president of Gotham Ghostwriters. He formerly served as communications director to Sen. Joe Lieberman (D-Conn.) and as a senior adviser on his vice presidential and presidential campaigns. He writes a weekly column for Forbes.com. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;207172674;29440083;f Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:281521 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
