The SEC’s civil suit against Goldman charges that, through a partner company, the investment bankers packaged particularly troubled mortgages into collateralized debt obligations, the now notorious CDOs.  After Goldman sold the allegedly designed-to-fail instruments, the partner shorted them.  Goldman collected fees for assembling and marketing the package (later offset, the firm contends, by larger losses).  The partner reportedly netted a billion dollars on its short positions.

The Wall Street Journal front page story characterized the SEC’s charges as the biggest Wall Street-Washington confrontation since the Michael Milken-Drexel case at the end of the 1980s.  The Journal might have added that Milken’s was the most prominent of a larger package of investigations targeting the investment community.  Despite a parade of so-called perp-walks, when financiers were led into custody as cameras clicked, almost none of those actions produced convictions.  The Milken case led to a fine and prison time but remains controversial to this day.  Many, myself included, believe justice was miscarried.

The public perception point here is that major financial players face a formidable communications obstacle when they become the targets of such sweeping legal actions. Most attorneys — both prosecutors and their own defense attorneys — and journalists don’t actually understand what investment bankers and securities traders do.  The complexity of modern finance bewilders them.  And they are predisposed to assume that complexity equals opacity and opacity equals fraud of one stripe or another.

As I write, the weekend after the SEC’s charges hit the papers, I am not offering a judgment on the  case against Goldman, though the purchasers of the CDO were among the most experienced and sophisticated players in the financial world.  If any buyers were capable of being intelligently beware, it was they.  But I am saying that Goldman must learn to explain its business with unprecedented clarity, otherwise, the legal, political, and journalistic worlds will judge the company guilty and exact huge penalties long before any trial.

Morgan’s term “glass pockets” suggested passive transparency.  Pull back the fabric; let in the light.  Goldman will need actively to project the light outward, making the complex both simple and comprehensible.  For an institution unaccustomed to talking to non-experts, the task is sure to prove formidable.

Posted weekly, the program usually features Roberts interviewing a distinguished economic thinker.  On February 8th, Roberts broke from this format to discuss his own thinking about why trade is good.  Drawing on Adam Smith and David Ricardo, 18th and 19th century respectively giants of economic thought, he explored how trade increases personal productivity by a factor of a hundred and more.  As he summed up, “Self-sufficiency [in a person, a tribe, or a country] equals poverty.”

While listening, I found myself thinking of the campaign against Wal-Mart, which is essentially a campaign against productivity and global trade.  Wal-Mart’s enormous price advantages are based on harnessing the interplay of enormous global sourcing of product and advanced information technology to lower costs and, with costs, prices.  This is the dynamic the Roberts explains in his podcast.

Why am I talking about economics and a retailer on a communications website?  Because Wal-Mart is running an ad campaign that conveys precisely the same ideas as does Professor Roberts, but in the compact, anecdotal, and personal language of advertising.  Its slogan — “Save Money. Live Better” — condenses Smith, Ricardo, and Roberts into four words.

When writing for Ronald Reagan, I noticed that the President did something very similar.  He would sketch out the thinking of Adam Smith or Alexis d’ Toqueville or some other major thinker.  But he would rarely refer to the thinker by name.  Like Wal-Mart, he framed his discussion in compact, anecdotal, and personal terms.  Listening to him, you felt you had heard something very simple, when in fact you had heard an argument of high sophistication.

Companies facing the kind of agenda-driven challenge that Wal-Mart faces would do well to look at both the retailer and the former president as examples of how to communicate.

It looks simple.  It isn’t.

Typically companies in Toyota’s position clam up.  Statements are defensive and evasive.  Maintaining such a posture during the long life of a litigation will leave a company’s reputation in badly compromise.

Yet public opinion studies have shown that companies that publicly speak to their problems — that defend themselves but also acknowledge faults and both pledge and work to fix them — build the trust of customers, suppliers, and potential jurors.

Toyota was slow to grasp its problem and engaged in denial for too long.  But now it has put corporate reputation first.  It is right to do so.  And it likely to do better in court as a result.

First a note about history.  This being the music industry, we are talking about ancient history — 2001.

Fans will recall in that year’s Grammys a moment similar to tonight’s, when Sir Elton paired up with the rising rapper, Eminem.  The ostensible reason for that year’s duet was to save Eminem’s career.  Eminem had taken heat for a recently released song that included lyrics some judged anti-gay.  John is gay.  That he was willing to appear with the young star quelled the criticism.  But it did more.

Before that night, Eminem — though highly popular — was in many respects a niche player in a niche space.  Many saw him as something of a thug, which limited his potential popularity.  ”Stan” — the song that he and John performed and that Eminem had co-written — was a tremendously sensitive, evocative piece that transcended the style of its music and lyrics.  Eminem’s appearance with an artist as widely respected as Elton John led audiences that would never have looked twice at him to tune in and listen with an open musical mind, and they came away seeing Eminem as himself an artist who deserved attention and admiration.

Lady Gaga occupies in a similar place tonight, though without the homophobic baggage.  She, too, is a highly popular performer in a niche space.  Like Eminem, she, too, has the potential to reach a much larger audience.  Appearing with Elton John in such a high profile event will win her open-minded attention from a wide range of people that would otherwise dismiss her as a passing musical fad.

The public affairs lesson here?  You don’t always need people — third parties — to speak for you.  Sometimes it is enough that they simply stand with you.  That very fact opens otherwise closed ears to what you have to say.  Eminem used his opportunity brilliantly.  We will see tonight if Lady Gaga does as well.

When targeting elites, we at WHWG are big fans of policy dinners.  We gather between 10 and thirty of the kind of people our client wants to reach.  They may be D.C.-based journalists, or part of the Washington policy world (usually not current office holders but people office holders consult), or industry elites around the country (high tech or financial leaders for example), or even policy and political leaders in London or Brussels.  We hold the dinners at private clubs or fashionable homes or in the private dining areas of first-class restaurants.  We attract guests with a featured speaker (usually the client’s CEO or a globally acknowledged expert on the issue we want our guests to think about).  At least one member of the client’s staff is present, too.

As a dinner begins, the speaker presents 10 to twenty minutes of reflections on the issue at hand.  An open discussion follows.  One of our members is present to insure that the discussion moves smoothly and from time to time to offer observations.

The result: by evening’s end, a highly targeted audience has received in-depth exposure to a question of intense interest to our client.  They have participated in a sophisticated discussion informed by the client’s perspective, and at least some guests and the client have begun to develop personal relationships.

How effective are these dinners?  One prominent organization has made them an anchor of their communications with Washington.

What are the downsides?  Knowledgeable people must assemble the guest list.  The setting must be appropriate to the seriousness of the discussion.  The speaker must be properly briefed about the purpose of the evening.  The moderator must keep the discussion sufficiently focused to put across the client’s message… but sufficiently open that the debate and exchange of views are genuine.

Do it wrong and you’ve wasted time, money, and the good will of your guests.  Do it right and you will find no more powerful vehicle for communicating sophisticated thoughts to sophisticated and influential people.

As the Financial Times reports, the site’s stable of voluntary editors has not grown apace with its increasing volume of articles.  The result, says the FT, is that entries “will be harder to monitor quality — and vested interests will find it easier to make alterations that reflect their own views.”

Not that the site lacks for accuracy challenges now.  The FT notes that “even optimists… agree with the more skeptical observers on this: that in terms of reliability and service, Wikipedia still has along way to go.”  Yet attempts to “subject changes by newcomers [i.e., new contributors] to approval by more experienced editors and flagging any revisions” have run into intense resistance in the hyper-egalitarian Wiki-corps.

The communications problem here is a familiar one:  The world has changed.  The organization needs to adjust. But both members of the organization (those most involved with Wikipedia are volunteers, not employees) and many of those it serves see the adjustments as violating the values and standards that got the organization where it is today and that they believe in.  Part of leadership in a time of change is to communicate how fundamental values are being preserved, not thrown over, by recognizing that circumstances have changed.

The result: His company’s troubles with the commission continued for years.

Remember two things in dealing with Brussels.

First, the commission staff is made up of genuine experts in their fields.  If you talk to them knowledgeably and with clarity, they will listen and they will hear.

Second, treat the staff with respect.  Don’t sweep in like the king of the world.  Show some humility.  The staff knows you have your job to do.  Show that you know they have theirs.

We don’t wait until the week before the trial or the oral arguments to brief key reporters.  We go to them months before and walk them through the issues in the case.  We get them fully up to speed — early.

Then we keep in touch.

This way, when the action heats up, they will already know our side of the story and our chances of favorable or at least balanced coverage go way, way up.

Even reporters inclined to dislike our corporate clients appreciate being treated with professional respect and, in most cases, respond accordingly.