Institutional and Commercial Banks Still Have PR Battle to Wage

The past year has seen an unprecedented series of events for the United States and the world economy. As big banks repay their bailout money and business begins to return to normal, they still have a huge public relations battle to wage, not only with the American public, but also with lawmakers with angry constituencies back home. The commercial banks have a slightly different need, to win back the hearts and minds of customers who they have inadvertently or deliberately alienated over the last year.

Many banks with commercial divisions, including Bank of America, Citigroup, and Wells Fargo, responded to the recent extraordinary circumstances by raising rates on their consumer credit cards. Anecdotal evidence has revealed scores of stories from loyal, decades-long customers who had their credit card rates increased to 20% or 30%. While these customers may not have the ability to leave right away (they may be carrying balances on their credit cards), many are incensed with having their rates raised in such a difficult time, and many have vowed never to use these banks again, even when the good times return.

The large institutional banks like Goldman Sachs, Morgan Stanley, and JP Morgan have just as much, if not more, of a public relations deficit to make up, though they have less of a battle for a customer base than in the court of public opinion. Bonuses paid to investment bankers by firms that benefitted from TARP (Troubled Asset Relief Program) money have been high on the list of public scorn for quite some time. And the government tap still hasn't been turned off. The little known Temporary Liquidity Guarantee Program (TLGP) is still providing low interest loans from the government to big banks. You can read more about this under the radar program.

Wining back the hearts and minds of America isn't the only concern for big banks as they also have to worry about the specter of additional unwelcome government intervention. The Financial Crisis Inquiry Commission is probably the first of many official government inquiries into banking practices, and the Obama Administration has made reform of the financial system a high priority for the near future. Time will tell what new regulations are passed and how public sentiment changes as the market rebounds, and credit markets return to normal.

Banks will likely use a multitude of marketing tools, charitable giving, and local efforts to try to win back customers and increase goodwill. Their efforts, combined with the notoriously short memory of the US consumer, will return us quickly to the status quo.