That was the question an indignant senator asked Federal Reserve Chairman Ben Bernanke at a packed public hearing in the Fall of 2008. The answer it invited was no mystery.
Politicians, pundits, and impoverished investors have been demanding that the leaders of fallen financial institutions drop to their knees and beg for forgiveness. The calls have been coming not just in Washington, where such political theater is common, but worldwide. In the London-based The Daily Telegraph, Tracy Corrigan wrote an opinion piece with the headline: “Financial crisis: It would be nice if someone said ‘sorry’.” In May 2008, the German President Horst Köhler complained in the weekly magazine Stern: “I still haven’t heard a clearly audible mea culpa.”
So far, the demand for apologies has exceeded supply. That said, Lehman Brothers CEO Richard S. Fuld Jr. told Congress that he felt “horrible” about his firm’s bankruptcy. James E. Cayne, Chairman of Bear Stearns, stood in front of a group of employees and declared: “I personally apologize.” And in London in mid February 2009 a parade of banking leaders issued mea culpas before a Parliamentary Select Committee investigating the banking crisis. But there is a much longer list of banks, asset managers, rating agencies, insurers and accounting firms, among others, that have resisted demands to express contrition.
There is no getting around it: apologies are hard to make. They are humiliating. They cause reputations to sink and liabilities to soar. In the US, and to varying degrees elsewhere, they can be turned against companies as evidence of wrongdoing.
But although apologies can be costly, they can also be enormously valuable. There is no more effective way for a disgraced company to restore its reputation. An apology can sometimes mean more to angry customers, regulators, and shareholders than a financial payment. And it can make a stronger statement about a corporation’s values than a lavish rebranding campaign.
Apologies allow a company that is suffering through a bad chapter in its history to do something that is incredibly difficult: write an ending to the negative news story, turn the page, and move on. Apologies have been successfully used by a wide variety of companies facing serious PR threats, including drug makers that exposed patients to unsafe products, airlines that forced passengers to spend the night sleeping on terminal floors, and tire manufacturers that sold products which exploded.