Banker popularity is right up there with terrorists

By TOM BRENNAN

Retired bankers often run for political office thinking they have charisma, but their popularity is like that of the whorehouse doorman who thinks it’s his cheery personality that makes customers glad to see him.

Banker consternation at the brickbats being thrown their way lately is unsurprising. They just don’t understand public opinion or the need to earn good will, especially after accepting a measly $700 billion or so in federal bailout money.

It’s hard to understand how the big-bank community could be stupid enough to take large government checks to keep them from bankruptcy and then hand out fat bonuses to their top employees.

They made no noticeable effort to explain why such bonuses might be necessary, like the money being a big part of the employees’ earnings for the year. To the public, it looked like the big banks simply took the government cash and doled it out to their people celebrating what a great year they had.

As a reformed spin doctor, I can tell you that’s not the way sensible business people behave. If you don’t explain yourself, especially when under the glare of negative publicity, somebody else will do it for you and you’ll lose the public relations war. You may lose it anyway, but being hated is not always necessary.

At the recent World Economic Forum in Davos, Switzerland, a Wall Street Journal reporter asked Donald Moore, chairman of Morgan Stanley in Europe, which groups have had similar unpopularity in the past. His wry answer: “terrorists.”

Alaska saw the problems caused by a banker without finesse during the reign of Frank Murkowski as governor. Murkowski was a good senator for 22 years and a very fine governor for four years. He did well in Washington, where selling his fellow Alaskans on his ideas was not a critical part of the job requirement.

But when he moved to the governor’s job in 2002, Murkowski was in a position where salesmanship was absolutely essential. He bought a small jet plane, which makes perfect sense for a state spread over vast distances, but his critics made it look like an expensive luxury.

Murkowski and his executive team negotiated with the North Slope producers for construction of a gas pipeline — a deal that could well have meant a pipeline would be under construction right now — and supported a line through Canada when many voters were enthralled with the idea of an “all-Alaskan” line. (The line through Canada and the line to a new LNG port in Valdez would have had about the same length of pipe laid within Alaska, but that fact got lost in the furore.)

Murkowski also took the advice of the state’s oil and gas policy consultant, Pedro van Meurs (one of the world’s best) and fought to keep oil production taxes down. He was trying to make Alaska an attractive place for industry investment, a job-creating policy.

Those and many other of Murkowski’s policy initiatives were controversial and required that they be explained and effectively sold to the electorate. But before Murkowski entered politics, he was a banker. When people questioned his decisions, he essentially fell back on the banker/stern parent response: “because I said so, that’s why.” It didn’t wash with voters deciding who should be governor in 2006.

For a while, it seemed everything Murkowski did got somebody mad, but the governor never got out in the trenches to fight for his decisions. By the time election season rolled around, the way was prepared for Sarah Palin, former mayor of Wasilla, to challenge him. Palin was Murkowski’s exact opposite in virtually every way and she capitalized on the differences, vowing for one thing to sell the jet and travel in the coach section of airliners. (Now she flies in private jets while her minions ride in a bus.)

She was elected that year, swamping the hapless Frank, and set about undoing as many of Murkowski’s policies as possible. She sold the jet (at a significant loss), tossed out the deal negotiated with the producers and fired Pedro van Meurs, using state bureaucrats as her primary source of advice on oil and gas policy. That brought us disastrous measures like the ACES tax hike, a huge increase in production taxes that has taken Alaska out of the competition for oil investments.

A BP spokesman in Anchorage said the other day that his company can make more on its investments these days by putting them in the Gulf of Mexico, rather than Alaska. Once upon a time the governor or the Legislature could have asked Pedro van Meurs or another of the state’s outside consultants whether or not that was true. Van Meurs is gone and I’m not sure whether we have anybody left for such advice except government employees. And those are the people who pushed for ACES in the first place.

The problem of bankers with a shortage of common sense is acute on the national level right now. Some changes are undoubtedly needed. One big cause of the near implosion of the national financial system was the 2002 legislation mandating that everyone should have a home whether they could afford one or not — and whether they intended to pay for it or not. Liars loans and many of the underpinnings of the real estate bubble resulted from that law, in which then Sen. Barack Obama and Rep. Barney Frank played key roles.

That law threw blood in the water and the sharks in the banking system went into a frenzy, nearly bursting the walls of their tank. The structure of the financial system needs to be looked at, especially whether we should allow some banks to become “too big to fail,” so big that Washington must bail them out when they make mistakes.

But such changes should be made cautiously. In trying to punish the bankers, Congress could hurt those whose money the bankers are playing with (you and me). Since the bankers have infuriated everybody, sensible policy decisions are an iffy proposition.

Keep your fingers crossed.

Tom Brennan is author of The Snowflake Rebellion, Murder at 40 Below, Cold Crime and Moose Dropping & Other Crimes Against Nature. His Website is: http://arcticternbooks.com/

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