Weekends have turned into a time when once-proud financial institutions are vaporized. Usually, they don’t go completely to zero, so “vaporized” may be too strong. But they are banished to someplace far from their former glories. They move from Wall Street to Zero Street.
The new residents of Zero Street already are too numerous to name. We don’t know who else may move there, or if any will come back.
For public companies accustomed to enjoying financial support from Wall Street, walking down Zero Street looking for capital won’t be much fun. The credit crisis and bear market are real and dangerous. Wall Street already was changing before 2008, but by the time 2009 arrives, we will be dealing with a dramatically different financial community.
As investor relations professionals, we need to be studying these changes and thinking through implications for our companies. Among the trends we might consider:
… Shrinking sell-side. Already consolidating before the crisis, the future Wall Street will not have nearly the number of I-banks and analysts. Whether the survivors are more powerful or less, we’ll see.
… Bruised buy-side. The universe of investors, institutional and individual, will surely be more cautious, distrustful and risk-averse going forward. At least for awhile.
… Growing government. Washington is becoming an owner and lender to so many big institutions, we can expect a push for massive expansion of regulation in banking and investment relationships.
… Punitive actions. Bear markets always lead to nasty hearings on Capitol Hill, allowing Congress to place blame somewhere else, plus criminal prosecutions for behaviors that might be civil matters in better times. Not that wrongdoers should ever get off, but justice can turn into vengeance.
… Real economic impact. For most of us, the biggest concern is not what the market does near-term, but what the debt and equity crises (and reactions to them) do to our companies’ ability to compete and grow in the future. And we can’t predict that.
Text & photos © Copyright 2008
Johnson Strategic Communications Inc.