It’s a Thankless Task Communicating in a Financial Crisis

Sang-froid is a big asset in a financial and economic crisis — if one is able to manage it. You can have all the government backstops and monetary engineering you want. Unless communications are mastered, the panoply of measures rolled out either ad-hoc or system wide will never reach their full potential. It’s as much how something is conveyed as the substance. Sometimes what is left out matters.

Unfortunately, this is easier said than done. It is tough to pinpoint the start of crises, if that is what this banking upheaval is. Should officials keep their heads down, be cautious or punch the glass? It’s a tricky space, made for missteps. US Treasury Secretary Janet Yellen knows this, but got a reminder last week when stocks tanked after she played down the prospect of insuring all US bank deposits. Yellen recovered the next day by stating regulators would be prepared for further steps to protect the banking system. But for someone once in charge of the Federal Reserve’s communications subcommittee, the episode wasn’t encouraging.