In the heyday that preceded the crash, banks did not take the public sentiment about huge bonuses seriously, but what’s surprising is that since the crash they haven’t figured out a way to reward risk takers without risking their reputations. When the gap between public expectations of corporate behavior, and the actions taken by corporations to address those public expectations becomes too wide, no matter how much corporations lobby, some form of restrictive regulation is created to address what the public views as unacceptable behavior. This observation was first proposed by Howard Chase who coined the term issue management in 1976, and over the last decade failure to mind the gap has clearly driven an onslaught of regulation. While regulating the size of banker’s bonuses won’t fix the financial system, it could change bankers’ behavior and take off the table a public policy issue that is clouding financial system reform.
by French Caldwell | January 11, 2010 | 1 Comment