Image source: Mike Mozart via Flickr
Bank of America reacted quickly and successfully to dodge an oncoming PR crisis.
Its trouble started when California Gov. Gavin Newsom announced at a press conference last week that banks, including four of the nation’s five largest banks, agreed to a 90-day waiver for mortgage payments for those impacted by coronavirus.
Newsom Knocks Bank of America
The governor singled out Bank of America as out of line. The bank had agreed to only a 30-day waiver, Newsom said, saying he hoped that Bank of America would reconsider and join Wells Fargo, U.S. Bank, Citibank, and JPMorgan Chase.
“It is significant that we have some consistency,” Newsom said, according to media reports. “It’s significant that we don’t have a patchwork one bank to another. That’s what happened in 2008 — credit unions doing one thing, banks doing another, state banks doing something altogether different.”
Media outlets reported his criticism and posted links to their articles on Twitter. Talk show host James Corden then promptly retweeted a journalist’s tweet to his 10.7 million followers, Bloomberg reported. Bank of America was evidently monitoring social media and took quick action to calm Corden and extinguish an emerging PR crisis.
Within about an hour, the company told Corden it would defer payments on home loans on a monthly basis for as long as the crisis lasts. Corden responded: “Thanks for doing this. I know nothing is easy right now, and all of it is complex, but this is a good thing you have done and it will help a lot of people at this time. Way to go”
The bank also rushed to tell media outlets that the governor was mistaken. It isn’t capping its offer at 30 days; it will consider delaying payments on a monthly basis that could extend beyond 90 days depending on the length of the crisis, as US News reported.
More PR Challenges Expected
Bank of America and the banking industry in general may soon face more PR challenges.
“Across the nation, bankers are on edge. Publicly, they’re emphasizing that unlike the last downturn in 2008 they aren’t the cause of this collapse and they intend to help America get through it. Privately, they worry they’re destined to get cast as villains,” Bloomberg reported.
While the $2 trillion stimulus bill Congress passed doesn’t include financial aid to banks, it requires mortgage companies to allow homeowners to delay mortgage payments on federally backed loans for up to a year.
But banks and non-bank mortgage servicers must still pay borrowers’ mortgage insurance, property insurance, real estate taxes and forward funds to mortgage investors. If high employment drags on and loan delinquencies spike, banks will need to reduce new lending. Many may go bankrupt. The Federal Reserve may need to intervene to save the financial system.
The banking industry may face a difficult public relations task trying to explain why they can’t lend more and why they need billions of dollars in aid. For now, the industry is praying the economy will quickly bounce back.
“If we get to a situation where this goes longer than two months, absolutely there’s going to need to be a bigger solution” Mark Calabria, director of the Federal Housing Finance Agency, a mortgage industry regulator, told Politico.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said some mortgage servicers won’t even last a couple of months if they’re located in hard-hit regions.
Bottom Line: Bank of America dodged a PR crisis by quickly responding to criticism. However, banks and other financial services companies will probably face greater PR challenges as the economy comes under increasing stress.
Michael Kling is manager of public relations, marketing and social media at Glean.info, a media monitoring and measurement service that provides customized media monitoring and PR analytics solutions.
