If AIG, whose business was assessing risk, couldn’t correctly calculate the risk of insuring in this market, says Grant, figuring it out in advance of a crisis may be “asking a lot of people who might have had an economics course on the way to a degree in journalism or social work.”

It’s not that the growth in these markets went unnoticed. There were multiple stories over the years remarking on their growth, the lack of regulation, and the possible risk. One Post story in 2000 noted that the market for over-the-counter derivatives had “grown 400 percent from a decade ago, 50 percent from five years ago.”

But most of us probably didn’t try as diligently as we should have to understand why they were growing and what the risks were. “To my mind, the beau ideal of a financial journalist would be modeled after the slouching and ill-dressed police lieutenant who kept saying, ‘Can you say that one more time? Because I’m not very smart,’ ” says Grant.

Look forward. It’s hard to do, especially when you’re still deep in the wreckage of the previous disaster. And it will be harder given the shrunken ranks of reporters and editors. One thing that might help is systematically discussing whether and how developments on one beat might relate to something happening on another beat. For example, in many newspapers, the real-estate section is considered separate from the main business section and more frequently viewed in terms of the local rather than the national economy. Maybe the real-estate reporters and the reporters covering national economic news should have been having lunch together, discussing what was happening at either end of the housing bubble.

The scramble over how to regulate financial markets is already under way. There will certainly be a major realignment. All players in the financial industry will be fighting tooth and nail to protect themselves as much as possible from regulation. That will include hedge funds, banks, and the rating agencies that decreed some of today’s toxic assets as reasonably safe. Huge sums of money are at stake and will be spent. That’s an obvious place to watch. The financial press should be all over that story, and should be putting teams of well-sourced reporters in place to cover the battle and the new regulatory agencies.

But even as the current crisis unfolds, something else, in some corner we aren’t watching, will be gathering.

“By their nature, crises surprise us,” says Greg Ip, now of The Economist, formerly of The Wall Street Journal. “But we should still try to report on risks even if the risks we choose to investigate aren’t the source of the next crisis. They might still be dangerous, and our reporting on them can mitigate that danger.”

Ip has a good idea about how to encourage such reporting. Noting that Pulitzers are awarded for work done in the previous year, he suggests a prize for prescience that would look back even further.

Just because something is unregulated or deregulated doesn’t mean that journalists should stop paying attention. Regulation is good for journalists because it guarantees that someone other than self-interested players will be watching and, even better, will have the ability to pry loose records that we don’t. In the twenty-five years after the Reagan Revolution, journalists got so accustomed to deregulation that we didn’t look hard enough at all the issues and problems it obscured.

We used to joke in the newsroom that we didn’t need an antitrust reporter anymore because there was no such thing as antitrust. In fact, we might have done better to ask ourselves whether any of the ills that antitrust regulation was supposed to prevent were occurring. For instance, were more and more companies “getting too big to fail”?

Even where there was regulation, there wasn’t always enough attention paid when it was relaxed.
In an excellent piece in “The Reckoning,” the New York Times series I noted earlier, Stephen Labaton took a backward look at an sec decision to loosen requirements on how much capital the brokerage units of investment banks needed to protect against risk. The banks wanted the money cut loose in order to invest in “the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.” In return for loosening the rules and agreeing to use the banks’ computer models to monitor how risky investments were, the sec was supposed to get a stronger supervisory role and more insight into investments in mortgage-backed securities, although “the agency never took true advantage of that part of the bargain.”

Martha M. Hamilton , CJR's Audit Arbiter, explores complaints about fairness, accuracy, and other issues arising from business-news stories. Send possible story ideas her way at the link on her name. A former reporter, editor, and columnist at The Washington Post, she is a writer and editor for PolitiFact.com.