Imagine Barney Frank Barking at You
Be careful with those TARP funds.
In our July issue, Florida Trend quoted banking analyst and consultant Ken Thomas in a story about Florida banks and the federal TARP loan program. Thomas advises banks not to borrow TARP funds because of the adverse publicity surrounding the program and the government strings that come with the federal money. Interviewed by Trend’s South Florida Editor, Mike Vogel, Thomas said he tells bank directors who are considering borrowing TARP money to imagine Massachusetts Rep. Barney Frank in one of the chairs at board meetings.
The telling thing about Thomas’ reference to Frank is that any business person these days understands, without further explanation, the nature of his warning. Frank, the powerful chairman of the House Financial Services Committee, has become an icon both for the federal government’s machinations to save the financial system and also for the toxic, anti-business rhetoric that has flowed out of Washington as a side dish to the policy pronouncements. Frank is noteworthy because he’s both powerful and more than a little hypocritical. As he’s attempted to forge macro-policies that many in business see as unfriendly, Frank plays old-fashioned micro-favorites. He lobbied for an unsteady bank — in his district, of course — to receive TARP money, which was supposed to bolster only healthier banks. More recently, Frank elicited a round of “I-told-you-so” commentaries when he called GM’s new CEO, Fritz Henderson, and essentially strong-armed Henderson into keeping open a distribution plant in Frank’s district that GM had planned to close as part of its reorganization. The federal government’s 60% ownership stake in the bankrupt company, many had predicted, would open the door to exactly the kind of meddling in which Frank indulged.
Rightly or wrongly, Frank’s name also has become synonymous with a puritanical view of many corporate expenditures as inherently wasteful. Some cases — former Merrill Lynch CEO John Thain’s $1,200 wastebasket and $87,000 area rug — are clearly obscene. But the stigma attached to real excesses now extends in many cases to legitimate marketing and philanthropic expenditures. And businesses, amid the very real pressures of the recession, have become gun-shy about any spending that could leave themselves open to criticism that they’re somehow profligate.
One example: Selling corporate sponsorships for teams and sporting events is much more difficult than usual — the economy is largely to blame, but companies are also worried about being criticized as spendthrifts. In one story I heard, a company agreed to support an event but wouldn’t allow its name to appear at the venue. The state of the economy has created “a very challenging corporate sales environment,” says Eric Woolworth, president of business operations for the Miami Heat and American Airlines Arena. “Marketing budgets have been slashed. There’s been a general tightening. But part of it is that businesses fear being open to criticism if they pursue some of the longtime marketing and ad channels they’ve relied on, even if they know those channels have been effective.” Skyboxes and ad displays may be expensive, he says, but companies know they’re useful in cultivating business, closing deals and rewarding existing customers and employees.
Another example: Miami Art Museum Director Terence Riley says the museum continues to receive support from corporate donors, but, in a change from previous practice, two recent donors asked the museum to refrain from publicizing their gifts. “The donors are caught between a rock and a hard place,” says Riley. “They understand their vital role in supporting the communities where they do business, but they also need to project an image of absolute fiscal responsibility. Underlying this turn of events is an even bigger problem for art museums: The public continues to perceive us as charities and/or luxuries, rather than opportunities for not only education but economic development in creative economies.”
Yet another: Criticism of some ailing companies like AIG that spent heavily on lavish meetings has, together with the economy, chilled the entire meeting industry — a particularly heavy blow for Florida’s economy. The speech by President Obama last year about “meetings” and the “AIG effect” has hurt Florida’s travel industry, says Suzanne Willis, director of public relations for the Ritz-Carlton in Sarasota. Willis says even healthy companies worry about appearing extravagant and points out the ultimate effect on her industry: “It’s the hourly employees that feel it the most.”
It’s unfair to lay this all at Barney Frank’s door. Most companies simply have less money to spend these days. And, to be frank, some businesses simply need to find their spines — to ignore the rhetoric, tell Frank to jump in a lake (at least metaphorically) and get back to doing business effectively. Philanthropy, meetings, sponsorships, advertising and other forms of marketing are all part of doing business, and all help create the fabric that connects businesses to each other — and to their communities.
Business needs to get down to business. As for the rhetoric, Woolworth expects it to recede. “Hopefully, that’s a short-term situation,” he says. “As politicians realize that all the criticism is self-defeating in terms of what they’re trying to accomplish with the economy, I think they’ll back off.”
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