For example: during the mortgage bubble, no one was happier about bank behavior than bank investors, retail or otherwise. In 2005, Citigroup posted net income of, wait for it, $25 billion, one of the highest public-company profits in absolute terms in US history. The reality distortion was so great, and the investor perspective so mesmerizing, that Fortune would ruminate in 2007 that Citi’s Charles Prince was in trouble because of the company’s “less-than-stellar” earnings in 2006—a mere $21 billion. As we all know now, such profits were tied to behavior by the banks—predatory lending turned into toxic debt—that would end in catastrophe.
Given the Savings and Loan Wreck, the Tech Wreck, and, most especially, the Mortgage Wreck, one could argue that investor-oriented business news doesn’t help investors much either. And I would, to a point, agree. But it should at least be clear that investor-oriented news—no matter how well executed—is not the same as public-interest business reporting. If we do nothing else, let’s get that straight.
I would argue further that CNBC-ized reporting—granular, hurried, insider-dependent, and riveted on the (short-term) needs of investors—should be thought of less as coverage of the financial system than an extension of it.
In 1995, around the same time Lipin assumed the M&A beat, another pivotal moment in the evolution of business news came when the New York Stock Exchange, for the first time, allowed a journalist to report live from the exchange floor. Maria Bartiromo, a Brooklyn native, had worked for Lou Dobbs on CNN’s MoneyLine when she was hired away by Roger Ailes, the Republican political consultant-turned TV executive, who put her on the air at CNBC. The deal with the NYSE came two years later. The pretty, well-coiffed, twenty-seven-year-old reporter presented an arresting TV image: equipped with headset and clipboard, she stood on a busy floor amid bristling technology and milling traders. Occasionally brushed and jostled, she stood her ground, coolly rattling off information—analysts’ calls, earnings estimates, company news—with an air of steely competence and a hint of vulnerability. Sex, power, money—a heady brew in a single frame. The combination was not lost on New York’s tabloids, which dubbed her the “Money Honey.”
Like Lipin, Bartiromo was unknown at the time, and so, for that matter, was her network. But something was changing in the culture.
As recently as the 1950s, the very words “Wall Street” carried such negative and parochial associations that Kilgore, the Journal’s chief, more than once considered changing the paper’s name (World’s Work and Financial America were kicked around and, thankfully, discarded). But by the 1980s, middle-class Americans were moving into the stock market, driven by many factors: 1970s-era inflation, which outstripped savings-account interest rates; the abolition of fixed-rate commissions in 1975, which lowered the cost of trading; the bull market that began in 1982; the marketing prowess of Fidelity and its ilk. The percentage of Americans who held stocks jumped, from 13 percent in 1980 to 32 percent in 1989.
By 1994, Joseph Nocera could write A Piece of the Action: How the Middle Class Joined the Money Class, which declared that the America middle class had pushed aside elites to join in the stock market:
The financial markets were once the province of the wealthy, and they’re not anymore; they belong to all of us. We’ve finally gotten a piece of the action. If we have to pay attention now, if we have to spend a little time learning about which financial instruments make sense for us and which ones don’t, that seems to me an acceptable price to pay. Democracy always comes at some price. Even financial democracy.
Interesting idea, Dean. I wonder how it fits in the FONosphere though, given the idea, near universal, that anything other than market-actionable "scoops" are a generalized commodity, worth nothing at all.
Also, you call Pearson PLC's $160 million expansion, which gained the company 91,000 new readers, "a success." Really? At $1,700 per?
#1 Posted by Edward Ericson Jr., CJR on Tue 10 Jan 2012 at 03:56 PM
Dean - if M&A reporters jobs is to cozy up to dealmakers to get deal term scoops 1st (so readers can trade off it) than isn't the reporter just working for a few on Wall Street and not the reader. AR Sorkin's fail was to warn that any of those levered up 05-07 PE deals might also mean a fail for PE investors when the credit bubble burst. I didn't see Sorkin doing his main street investor readers(most of NYT Biz readers) any service by promoting his banker sources deals with out a few warnings on how the deal terms might bite shareholders in the rear.
#2 Posted by Teri Buhl, CJR on Tue 17 Jan 2012 at 01:17 PM
Most financial reporting can be summed up in a single word - "infomercial".
#3 Posted by Hugh Akston, CJR on Sat 21 Jan 2012 at 02:03 PM
Dean,
Quite agree. However there have been a few voices crying out in the wilderness. \
For years reporters have been pointing out that the rating agencies in the USA were corrupt; the companies being assessed are paying the rating agencies. Also the press pointed out the conflict of interest that Paulson had being a Goldman Sachs loyalist and yet working for the administration in the last crash. But the tank just keeps on rolling. Why? Most of the financial reporters are New Yorkers and steeped in that culture; accepting of Wall Street and its mores and unable to cast a critical eye over it. Like the money honey from Brooklyn, they just tell it how it is. Actually getting stuck into Wall Street is not on their radar. To get a good and aggressive business press, I suggest using more aggressive outsiders e.g. Harvard economics professors and Stanford experts too. It was a Stanford academic, a doctor with alzberger syndrome who finally worked out the mortgage CDO plot by going over k10 reports from 1 am to 5 am., according to a long piece in Vanity Fair.
But why did the press allow Pres. Clinton to abolish the Glass Steagall Act without a word? I think Americans are too much in awe of the office of President and the 'sacred' Constitution. Ridiculous. Clinton was a flawed as the rest of us. He only did it to allow the merger of Travellers and Citigroup( making along the way former Travellers CEO Sandy Weill rich beyond the dreams of avarice).
#4 Posted by Pamela Griffiths Clark , CJR on Tue 21 Feb 2012 at 07:51 AM
Hugh Akston called financial reporting an “informercial.” So it’s not really reporting. The financial media is now a trade publication, not journalism. They repeatedly interview propagandists (from Koch funded groups). It would be nice to have journalism.
Even the MSM now functions as press agent, he said she said, race barkers, and gotcha, rather than journalism. The media tells us we live in a globalized world, and then their Wall Street owners cut out investigative reporting and foreign correspondents.
Journalism is closely related to science. Throughout history, the arts and sciences have often been supported in some way by the state. They and journalism are essential public services that the market does not always support. (The cure for bad science is more science, for bad journalism is more journalism, etc.)
Successful nations have always managed their affairs and pursued their interests. Our important use of the free market is only one function. Laissez faire theory, that we should have ONLY a market, has no support in the historical record. “You can’t pick winners” is also false. Many technologies and products started with some gov’t support. We need both public policy and private entrepreneurship in a free market. A public private partnership may be needed to create business journalism.
On the issue raised by Pamela Clark, in the 1990s, the mantra of Republicans and Texas Gov. Bush was self-regulation. We saw how that worked out. Regarding deregulation under Clinton, since we do not have public funding of elections, another essential, Democrats serve business. They agreed to deregulation because the banks were doing so well, and the deal was that there would still be adequate regulation. They had no way to know that Bush/Cheney would run an orgy of deregulation, due their appointees. (Some states tried to regulate the growing subprime mess and were block by the Bush administration.)
Recall the other deals that Bush violated?
(It wasn’t a war act, it was a war powers act. Hank Paulson would not need to use what he called his bazooka if we gave it to him. Limit CO2 and other similarities to Gore. Be a uniter, instead of appointing extremists.)
#5 Posted by Harry Thorn, CJR on Thu 8 Mar 2012 at 10:15 PM