Sylvain R. Raynes, a structured finance expert, described it well: “When you buy protection against an event you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”
Well, in this case, you can replace the word “arson” with collusion or fraud and you’ve pretty much distilled the situation down to a tee. Sound familiar? We’ve seen it before, in scenarios ranging from the Michael Milken/Drexel Burnham Lambert junk bond fiasco, to Enron’s energy grid collusion scandal. But this, of course, quite possibly, and single-handedly, catalyzed the collapse of all the world’s financial markets.
And here’s the really scary part. Goldman Sachs knew about this as early as 2006, and started packaging and trading its toxic product as early as October of 2007. The bank had a solid two-year window with which to create a wildly profitable business for itself, while people lost their homes because they had to ultimately make good on crappy debt, and trading institutions made a run on other reputable banks (such as Bear Stearns), who eventually couldn’t hold themselves up under the weight of bad securities and rapidly depleting liquidity... Which also meant that the people who lost their homes had no backup options (and of course, the U.S. Government issued bailout money to Goldman, of which it also profited handsomely from... But that’s another topic for discussion altogether).
As we know, in today’s world, two years is a lifetime of opportunity. But history doesn’t have to keep repeating itself.
So imagine this. Imagine that as things started to unspool and the signs were revealing themselves, we could create a platform whereby anyone affected had a voice, a real voice, and they could inspire others could tell their stories as well. Even further, what if Tetsuya Ishikawa, one of the key players on the inside of this whole mess, felt compelled enough and supported enough to speak out and effectively stop the bank’s terrible run on the global market?
It turns out Ishikawa did write about this, but well after the fact. Another guy, a Deutsche bank employee, actually issued T-shirts to memorialize the experience.
Ishikawa’s book could’ve just as easily become a graphic novel or a multimedia piece in which bankers, homeowners and lending institutions (at least those who were forced to defer to their integrity) would contribute to an ongoing narrative about financial responsibility, and, one that would actually provide peer-to-peer lending options for those in crisis. Major banks and financial services companies, such as Wells Fargo, Bank of America or Charles Schwab, could’ve ‘sponsored’ the narrative, even running campaigns inside or alongside of it, promoting relevant, solutions-oriented programs.
Beyond that, the ‘mortgage-lending phenomenon’ could’ve just as easily translated into a documentary-style narrative, in which local communities would tell their unique stories and even sell these as properties to TV Networks or IPTV content hubs or publishing houses... Or all of the above. Where could those profits have gone? Back into the communities and local banks, as well as new opportunities to build infrastructure. You see where I’m going with this.
For those of you who might think this is far-fetched, or that hindsight is merely 20/20, in the book, Groundswell, Forrester pointed to a great case study of how a French bank, Credit Mutuel, enlisted the help of the community to deal with the country’s own recessionary period by giving people a direct purview into what it’s like to be a lender/credit institution. Granted, the context was considerably smaller that the one we are talking about here, but if my memory serves me correctly, this wonderful ‘little’ example of content, context & community happened right around 2006 or 2007.
The larger point is that US & Global banking brands should take careful note: we may not be able to reverse the damage done (at least not in the shorter term), but we can take a strong position and align ourselves much more closely with consumers who need the mental, spiritual and financial support. It’s about time that all of us marketers took a real and resounding stance.
As for men like Lewis Sachs (who oversaw C.D.O.’s before becoming a US Treasury advisor) and John Paulson (whose company made millions from the market collapse), Karma will likely give them a swift kick in the ass, if it hasn’t already.
An interesting aside regarding Karma, Goldman may lose millions as a result of an ex-programmer who stole and redistributed its proprietary trading software.
That said, nothing can make up for what has happened. And destroying Goldman is not the answer. But transforming perspective is.
This is the power of transmedia. This is our immediate future.