Steven Alschuler in Pittsburgh Business Times
“Businesses need new voice to educate public”
Article Source – Pittsburgh Business Times
What do the August Wilson Center for African American Culture and the financial collapse of 2008 have in common?
Both received significant media, government and public attention — the August Wilson Center locally, the financial collapse globally. Both were the subject of high-profile commentary by elected officials, civic leaders and a range of community advocates, most of whom were playing exactly the role they were supposed to play, advocating for the people and interests they represent.
But neither included an effective campaign to educate the public about the sometimes complex business and financial issues at play.
Six years after the Great Recession, what percentage of Americans could describe what mortgage-backed securities are? What percentage believe mortgage-backed securities are inherently bad? In the wake of countless headlines about what was, in effect, the bankruptcy of the August Wilson Center, what percentage of Pittsburghers could describe the rights of creditors in such a situation and why creditors’ rights in a bankruptcy are protected in ways that other stakeholders may not be?
Having handled communications on behalf of many companies in bankruptcy or financial or operational distress, I was not surprised by the level of public lobbying that took place in connection with the August Wilson Center’s sale. Elected officials and foundations did as they should: They advocated aggressively for what they perceived as their interests and the interests of their constituents. The main secured creditor seemed intent on maintaining a relatively low profile, and the unsecured creditors never had a clear, consistent, unified voice.
Lost completely in all this was any effective public discussion of the business principles underlying the decision-making process of the court or the court-appointed receiver. The receiver in particular took considerable criticism simply for doing what the law required of her.
When a bank lends someone money, whether it’s a business, an individual or a community organization, it expects to be paid back according to the terms of the loan. When a contractor does work for a client, that contractor expects to be paid according to the agreed-upon terms.
Investors and funders are in a different category. Investors understand that while they may share in future profits, they also may lose their investment. They know at the outset they are taking a risk with their capital. When a foundation gives an organization a grant, while it may do careful due diligence and strongly believe in the organization’s future, the funder understands it has no guarantee that the organization won’t fail and the grant money disappear.
That’s why creditors normally are at the front of the line in a bankruptcy proceeding and investors or funders are farther back.
Public education is something that requires a clear and sustained effort by a group that is committed to maintaining that focus over time. Business and financial institutions need to join together to form a coalition that can both speak out and act as a buffer for individual entities. A “business information coalition” could generate information for dissemination to the media and the public and act as a spokesperson when issues arise in the news.
When an organization takes over a public park and demands bankers be prosecuted, the coalition could respond. When an elected official advocates for limiting bonuses or compensation at private companies, the coalition could respond. There are a whole host of issues where the business community has ceded the field in the public debate and where the public is being poorly served because it is hearing only one side of the story.
Business interests and public interests are, in fact, closely aligned in our economy, and we should not allow ourselves to be forced into opposite corners by political expediency or a paucity of accurate information.
Article Source – Pittsburgh Business Times
