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Impressions Management 101
By Victor Porlier
March 17, 1999
On March 10, some two hundred journalists assembled at a two-hour breakfast meeting in Manhattan hosted by The Media Studies Center. The reason? To hear John Koskinen, Chair of the President's Council on the Year 2000 Conversion, Edward Kelley, a member of the Board of Governors of the Federal Reserve System, and a panel of print and broadcast journalists address the issue of "The Press and Preventing Panic."
If Lewis Carroll had been there, he would have reported being asked to believe "six impossible things before breakfast" -- make that during breakfast. Koskinen and Kelley were the two Y2K point men of the Wall Street/Beltway Nexus "helping" the press in their search for "the right voice on Y2K" as the Media Studies Center Moderator, Kerry Brock, aptly phrased the purpose of the meeting.
Governor Kelley began his remarks by saying that he has reached the conclusion "now that the country is at last aggressively addressing the problem, the most important single element in our successfully navigating through the challenges presented by the Millennium Bug is how the public responds to it. There are few places in our national life where the statement 'attitude can affect outcomes' is so compellingly demonstrated as in the banking sector, particularly as we work to address Y2K." The reality is that the remediated systems either work or they don't work and no amount of attitude is going to change that.
John Koskinen said that a central Y2K problem is panic and overreaction and that failure to report on facts of progress can lead to a self-fulfilling prophecy. He said, "As it becomes clear our national infrastructures will hold, overreaction becomes one of the biggest remaining problems." The problem here is that we have no proof that the national infrastructure will, in fact, hold. And in the absence of facts, we must prepare for problems, perhaps very serious ones.
The underlying baseline assessment was similar to Peter de Jager's recent comments -- "Most, not all, companies are working on this issue. They are fixing, or have fixed their systems. They have examined, or are examining their embedded systems. We are, for the most part, no longer ignoring Y2K." Though not there in person, he was on the dais in spirit. In sum, "Doomsday avoided, a low to medium possible bump-in-the-road may be coming to your locale." The Press should, in the words of Governor Kelley, "suggest calm attentiveness to preparations" - presumably of the two to three day variety suggested by FEMA.
John Koskinen also said that reports are snapshots that are out of date by the time they see print because the situation is too dynamic and that Y2K reports are often self reports and can be misleading. As one consultant told him, "The higher up you go in an organization, the better they are doing." - to which one wag in the audience quipped, "Aren't you pretty high up in the White House's organization?" Smiles all around.
He also asserted, "the less you know, the more you assume the worst," - a statement which I found to be seriously misleading. A large number of Y2K remediators and project leaders, "know more" and are assuming something far worse than a bump-in-the-road. Many top managers in corporations or government agencies and investment analysts "know less" than the remediators and are assuming the best. The general public "knows less" and is all over the spectrum of assessments and intentions to prepare or not to prepare.
Governor Kelley enumerated what he believes to be the critical components of public confidence in the banking system. They are:
* ready access to cash and other funds and bank services * secure bank records * competent and energetic supervision being conducted by the government * deposit insurance in place and inviolate
He assured us that all four concerns are well in hand. He knows this because "the overwhelming majority of institutions are reported by our examiners to be doing a thorough preparatory job, and they will be fully ready well in advance of December 31, 1999."(emphasis added) Somewhere in the back of my mind there surfaced the memory of the S& L debacle when bank audits showed that all was well until the banks began suddenly to implode. Perhaps it was the S&Ls that Governor Kelley had in mind when he added, "No one can say there won't be glitches." He had no guarantee, but an "educated confidence" that our financial system will not seize up or crash. He expressed hope that "the media will carefully check out these assertions, and if they prove to be reasonable, report the story that way."
It would have been more persuasive if he had suggested not so much assessing the "reasonableness of his assertions," but rather how to get at the facts and inferences upon which those assertions are based. Bank depositors and Y2K analysts report widespread stonewalling by banks across the country. No facts on inventories completed, numbers of systems - mission critical or otherwise remediated, status of testing internal to the bank and electronic data interchanges among the bank's branches, project milestones - past and future. The only answers being given are that they are ready, compliant, or on schedule. Will Governor Kelley and the authorities in the other regulatory agencies be willing to require banks to open their books on Y2K project plans and progress to the Press? This would go a long way towards helping the Press do as Governor Kelley urged. He also said, "Let's not let 'experts' making unproven assertions, or offer personal opinions as facts, without challenging the basis for them." I assume that Governor Kelley would include himself among such "experts."
After expressing heightened confidence in the domestic banking system, Kelley went on to say, "We don't have as much information about preparations internationally, and some countries are apparently only now beginning to seriously address the issue. We do not believe this will seriously affect worldwide financial activity, but it could result in some disruptions abroad."
His statements about international finance struck me as airbrushing given the facts we do know. Every international survey -- Gartner Group, World Bank, CIA, etc. - has forecast an overseas disaster. I pointed out that the organization which provides over 6000 institutions in 174 countries a secure network over which financial information is exchanged, S.W.I.F.T., is very concerned about the failure of global telecommunications. Banks in Thailand and Russia are cutting IT budgets and other countries including Japan and Germany are way behind. He responded by saying something about S.W.I.F.T.'s remediation being in good shape. Non sequitur. In short, he offered no facts to support his unproven assertions about international finance.
One of the attendees, Charles Halpern of the Nathan Cummings Foundation made a plea to the speakers and panelists to stop using demonizing terms such as "Chicken Little" and "Doomster," but to little avail.
Within a few days, The Los Angeles Times headlined, "Y2K Doomsters Tone Down Gloom: Panic Subsiding Due to Good Repair Statistics." The LA Times apparently got the Koskinen/Kelley message, not Mr. Halpern's. The journalist even went so far as to falsely represent the current forecasts of noted economist, Dr. Ed Yardeni, to bolster her upbeat reassurances. How many other journalists will megaphone the meeting's message remains to be seen. As we watch the TV sound bites and read our newspapers in coming months, we can assess the coverage to determine if the reporters did, indeed, find "the right voice."