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NEW YORK (TheStreet) -- Two elections and millions of shattered lives later, the history of the financial crisis is still being written, as the November recent release of All the Devils Are Here clearly shows. That estimable book by Bethany McLean and Joe Nocera underscores the virtually limitless blame that can be assigned to every involved sector, from the brokerage houses and mortgage companies to the regulators and home owners blithely abandoning their 30-year fixed mortgages.

Beyond the causes of crisis, there was the mismanagement of the crisis after it occurred. Among the fundamental deficiencies was -- worse than a failure to communicate -- a palpable unwillingness to communicate on the part of those who lumbered at the switch as our system disintegrated. The following commentary on that deadly silence is excerpted from the recently published book,

The Communicators: Leadership in an Age of Crisis, by Richard S. Levick and Charles Slack.

Anybody who boards commercial airplanes knows that sinking feeling inside a crowded jetliner when something unusual happens and the pilot says...nothing.

If the plane starts bouncing around in turbulence...or the engines make funny sounds...or you descend to the runway only to zoom back up into the sky, you feel the tension rise as uninformed passengers speculate on what the problem might be. But whatever the situation is, everyone instinctively imagines something far worse.

Up in the sealed-off cockpit, of course, the flight crew knows what's happening. They're using all their skills to guide the plane safely through the flight. Unfortunately, by the time the problem is solved and the plane lands, there are 120 angry, confused ambassadors of bad will just itching to relay their awful experience to anyone who will listen, including

The Associated Press


When the financial crisis broke on Wall Street in late 2008 and early 2009, most (not all, but most) leaders of major financial firms behaved exactly like pilots sealed off in steel and glass cockpits, says John Lovallo, President of Lovallo Communications Group, an investor and financial communications firm.

Having started his career as an investment manager for several Wall Street firms, Lovallo is dismayed but not particularly surprised by that response.

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"They had a real opportunity to first acknowledge the depth of the problem and then quickly come back and communicate, explicitly, how they were going to formulate and implement policies, processes, and practices that were not only going to restore trust and brand loyalty but also strengthen the business over the long term," Lovallo says. Instead, they relied on what had always worked during past times of turmoil -- staying out of sight until the storm passed and self-restoring their credibility by turning profits.

"I don't think it's that easy anymore in this new era of communications and activism as stakeholders want to see the character of a corporation validated by its leadership," Lovallo says.

This time, it wasn't just investors or depositors on the hook for poor decisions made by the banks and investment houses. Taxpayer bailouts created a whole new class - a massive public class - of passengers on that plane. But no matter: except for a few token appearances, most of the CEOs stayed mum as public wrath grew.

Lovallo singles out one bank that was "teetering on the edge, losing massive sums of money, losing credibility with all stakeholders from the retail banking customer to the powers of Washington. But they basically said, 'Everything's under control, we're doing the right thing, just trust us'"

Alas, the specifics were few and far between. "They never changed the broken culture," says Lovallo. "They weren't really transparent nor did they deliver a definitive plan. And I don't think they'll ever have the chance to fully rebuild trust."

Now think of the last time you were on a plane and something unusual happened and the pilot did talk to you. He got on the intercom right away and told you exactly what he knew. Then, for as long as the event lasted, he updated you every few minutes. Your worries didn't go away entirely, but you felt a thousand times better simply because, as the old saying goes, "information is power." And some information is better than complete impotence. Silence breeds discontent. Your audience will tolerate problems and even mistakes, but they will not tolerate arrogance. And silence is arrogance with the volume turned down.

It's the special knowledge of the pilot that allows him to tell you not just what the problem was, but, just as important, what it wasn't. His calming voice assures you why, specifically, the plane can withstand these conditions. Translation:

we aren't going to crash.

Financial institutions might have used such special knowledge of their own to calm the worst public speculations post-collapse, Lovallo says. "You need to be able to take control of your own story and define it under your terms, because you're the only people who really know what's going on." Your silence only means that someone else will control the narrative. And once that narrative has been written, it is difficult, if not impossible, to change.

"If you let misinformation dominate the marketplace, then shame on you."