Polishing a tarnished, subprime image

Steve Tripoli Oct 3, 2007

Polishing a tarnished, subprime image

Steve Tripoli Oct 3, 2007


KAI RYSSDAL: We’ve got one for drugs, we’ve got one for the war… And now the majority party in Congress wants one for the mortgage industry. Democrats lined up behind the microphones on Capitol Hill today and called on the president to appoint a mortgage czar.

It’s not so much about the credit crunch, they said, as it’s about the homeowners likely to face foreclosure in the coming months — and having somebody at the federal level to coordinate the government’s response.

House Financial Services Committee chairman Barney Frank agreed something should have been done long ago.

REP. BARNEY FRANK: First, it is a legitimate question people ask, “Why did Congress not act?” And I want to give the straighforward, honest, non-partisan answer: Because the Republicans were in control, and they didn’t want to do that.

There’s plenty of blame to go around, and who should have done what, when, as the subprime mess bubbled to the economic surface. But a special dose of scorn has been reserved for mortgage companies.

One of them in particular: A company that media investigations say treated its customers like cash cows, whose CEO pulled down hundreds of millions of dollars, which has laid off 12,000 people and has seen its stock price tank.

So America’s biggest mortgage company has called in the PR guys. The Wall Street Journal reported this morning Countrywide’s gearing up for a major public-relations campaign.

It won’t be the first time a big company’s asked for help when its hit big trouble. But Marketplace’s Steve Tripoli reports Countrywide needs to take care how it deploys the PR playbook.

STEVE TRIPOLI: Damage containment is a hot and growing niche in public relations, says longtime New Jersey PR man Alan Caruba.

ALAN CARUBA: There are any number of firms that specialize in what is called “reputation management” and crisis control.

If a PR firm’s resume is any indication of a company’s woes, it looks like Countrywide fears it has trouble — it’s hiring Burson-Marsteller, a veteran of Johnson & Johnson’s poisoned Tylenol debacle. The firm also handled the U.S. Postal Service’s anthrax crisis and recent corporate embarrassments over Chinese toys.

Boston PR executive Larry Carpman says the standard playbook for companies in crisis has three elements:

LARRY CARPMAN: They need to explain what happened. Two, they need to try to make people whole. And the third thing is to create a plan, to show customers and regulators that this won’t happen again.

But today’s Journal says Countrywide’s taking a very different tack: digging in its heels. The company’s reportedly going to claim that it’s scrupulously ethical, and simply on a mission to help more Americans own their homes. Alan Caruba says in that case, they’d better be able to show that the allegations of sleazy tactics are hogwash.

CARUBA: There’s an old expression that just because you put lipstick on a pig, it doesn’t change the pig. And there is really no amount of public relations that can reverse the facts.

But PR exec Larry Carpman says even if the facts make Countrywide look bad, all’s not lost. I asked if a firm can overcome very negative publicity, when it’s true.

CARPMAN: Can you spell Tylenol? Not the same thing, but the answer is “yes.”

But Carpman still insists that coming clean about anything that did go wrong comes first. I’m Steve Tripoli for Marketplace.

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