Major news outlets so far have not trained their resources on the question, a drive-by or two by Howard Kurtz notwithstanding. The American Journalism Review, quoted above, did take a look and found in the business press’s favor. With all due respect to our cousins in Maryland, I find AJR’s approach—in effect, sticking a thumb into several years of coverage and pulling out some plums—inadequate. Of course somebody did something. And a few did a lot of things. But did the coverage even come close to reflecting the radical transformation of the mortgage industry and Wall Street in 2004, 2005, and 2006? Tellingly, “Unheeded Warnings” contains a disturbing number of examples from 2007, when warnings were about as useful as a garden hose during the Tokyo fire bombings. It also dwelled on coverage of Fannie Mae and Freddie Mac, which, odious as they were, followed the private sector into subprime.
In this debate, the business press has the advantage because the public cannot be sure whether in fact it did miss something. Being sure would require reading the entire record of what was printed on the topics of lending and Wall Street in several outlets over many years—hundreds and hundreds of stories. Who in their his mind would do such a thing?
Well, somebody had to.
It struck us that it is impossible to avoid trying to assess the business press’s performance in the run-up to the meltdown. The business press is the sole means by which normal citizens would know of goings-on in the lending industry and on Wall Street. It is the vital connection between the public on one side and regulators and financial institutions on the other. It is the only instrument capable of catalyzing the virtuous cycle of reform that emerges when dangers and abuses come under the public gaze. If readers screwed up, so be it. But if it is the business press, readers are going to have to insist on identifying weak points, cultural problems, skewed priorities, and areas in which the business press’s institutional interests might be out of alignment with those of the broader public. If members of the public must go elsewhere for warnings, they need to know that, too.
It is true that few sectors of journalism, with the possible exception of the Washington press corps, are as infected with the extreme form of know-it-all-ism as the business press, which wields the complexities of its subject area like a cudgel against non-cognoscenti. But readers should not shrink from asking relevant questions merely because they don’t know the precise mechanics of a credit default swap and don’t read Fortune as closely as they might, say, the Torah.
The fact is, you don’t need to be a media critic or a quant to assess whether proper warnings were provided. What’s more, I suspect most rank-and-file reporters would welcome scrutiny, as long as it’s fair. And so we undertook a project with a simple goal: to assess whether the business press, as it claims, provided the public with fair warning of looming dangers during the years when it could have made a difference.
I’m going to provide a sneak preview of our findings: the answer is no. The record shows that the press published its hardest-hitting investigations of lenders and Wall Street between 2000-2003, for reasons I will attempt to explain below, then lapsed into useful-but-not-sufficient consumer- and investor-oriented stories during the critical years of 2004-2006. Missing are investigative stories that confront directly powerful institutions about basic business practices while those institutions were still powerful. This is not a detail. This is the watchdog that didn’t bark.
To the contrary, the record is clogged with feature stories about banks (“Countrywide Writes Mortgages for the Masses,” WSJ, 12/21/04) and Wall Street firms (“Distinct Culture at Bear Stearns Helps It Surmount a Grim Market,” The New York Times, 3/28/03) that covered the central players in this drama but wrote about anything but abusive lending and how it was funded. Far from warnings, the message here was: “All clear.”