5 Crisis Questions for the Press

Including what happens if we say "no"?

1. What happens if nothing happens?

If the government doesn’t bail out Wall Street and the banks, will we all be in bread lines and Hoovervilles, planning our trips west to Californy? Or will we just face a deep recession or something more moderate even?

I’m not asking for fortune-telling here, just some scenarios.

2. How better could that $700 billion be spent?

Why not spend it on shoring up shaky homeowners, who are ultimately the wobbly foundation causing the debt edifice to collapse? More like this type of reporting, from yesterday’s Washington Post, is in order—and fast.

3. Whither the banks?

It wasn’t so long ago we were hearing about what bad shape the banking industry was in—Citigroup, Wachovia, Washington Mutual, etc. Now they’re being presented as pillars of strength and saviors to Wall Street’s investment banks. Wachovia is in merger talks with Morgan Stanley and the latter and Goldman Sachs have converted to commercial banks, effectively meaning the end of Depression-era law that split I-banks from commercial banks.

But surely the Big Bailout is more about rescuing the regular banking system than it is about anything else. Banks aren’t lending to each other. We’re officially in a Panic of ’08. Why is it now considered good that Goldman Sachs and Morgan Stanley will now be able to spread their risk to consumer deposits, rather than relying on short-term borrowing?

How does such a model endanger commercial banks and the deposits of Americans? We’re all ears, biz media—and no, this WSJ story isn’t good enough.

4. Why have politicians and regulators let institutions get “too big to fail, and why not put such firms on a diet?

The press should ask why companies whose collapse would threaten economic apocalypse aren’t being slimmed down and split up until they’re not so scary. Instead, we have Bank of America, the nation’s biggest commercial bank, swallowing Merrill Lynch, the second biggest investment bank with nary a peep from the press about whether this is a good idea. B of A was already too big to fail. Now it’s something worse.

Why isn’t anyone writing about slimming these companies down? Bigger is not better here.

5. What happens if hedge funds and private equity fall, too?

The hedge fund and private-equity industries are on the verge of collapsing like the late great investment-bank industry, says none other than Mr. Been Right All Along, Nouriel Roubini. What will that mean for markets and the economy?

Hedge funds and private-equity use tons of debt to goose returns, but aren’t regulated at all and are serious dangers to the financial system and to the economy. Seems like a good time to do a story on how the next regime will regulate them.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.