We’ve seen some pretty good panels on the financial collapse, but the one we hosted the other night on its lessons for financial journalism was, if we do say so ourselves, a cut above.
Convened by The Columbia Journalism Review, with support from The Nation Institute, the panel asked a simple question: “What Now?”
What set the panel apart had something to do with its cast: William Ackman, the noted investor; Gretchen Morgenson of The New York Times; economist and author Jeff Madrick; and our Dean Starkman, CJR’s Kingsford Capital Fellow who runs our business-press operation, The Audit, and just wrote a lengthy critique of pre-crash business-press performance. Bill Grueskin, a former deputy managing editor of The Wall Street Journal and now the dean of academic affairs at the Columbia Journalism School, moderated.
But mostly it was the ideas that emerged: Ackman on how the access game distorts business news and leads to a pro-management bias and the reflexive dismissal of alternative viewpoints, most glaringly, those of short sellers; Madrick on reporters’ and especially editors’ internalizing prevailing ideological biases; Morgenson on the failure to question conventional wisdom and on finding alternatives to the access-oriented approach; Starkman on the press’s failure to take on big financial institutions and the good things that happen when it does. Grueskin stirred the pot with provocative question, and audience members chimed in with their own.
Excerpts are below, but it’s well worth a listen. To download an mp3 of the conference,
Here’s the video, but be forewarned, the audio quality of some parts is not excellent. In fact, it’s pretty bad. We’re working on a better version:
Here are excerpts from the panelists’ opening remarks:
Gretchen Morgenson is an assistant business and financial editor and a columnist at The New York Times:
I think that this economic crisis and the way the press covered it…is not so unlike the way the press approached other past bubbles that burst. This one just seemed a lot bigger because it involves people’s homes, which is generally speaking, people’s biggest asset…and, certainly, much more money was lost in this debacle…but I would say it’s been similar transgressions in the years leading up to this.
The first casualty in any kind of a boom is a predilection of the press to really buy into the conventional wisdom…When I worked at Forbes magazine, I worked for an irascible editor whose name was Jim Michaels … and he was a guy who was very demanding, and one of the things he taught me how to do was to question the conventional wisdom. That is a very, very important thing to do for journalists, particularly journalists who are at all covering Washington, and I think it is exceedingly difficult because Washington is very much an access-journalism beat, and a lot of this story did emanate from Washington because housing finance is so very heavily regulated that a lot of what really drove this crisis and drove us off a cliff [came from there].
So there there was a real desire to buy into this concept that home-ownership was good for everyone, that you don’t need a down payment because it will be okay because housing prices will go up. So there was a lack of questioning of conventional wisdom that was very problematic this time around. And that’s sort of the big picture [problem]. In terms of smaller-bore problems, I would say this particular crisis, because it involved very complicated securities, structured finance products, collateralized debt obligations, residential mortgage-backed securities—these are things that are not necessarily as transparent as, say a share of common stock in a public company. It’s hard to really research what’s in a mortgage pool. In fact the very investors who own these things don’t know exactly what’s in the pool. So for a reporter covering these things, it’s very hard to know how many of these loans were no-documentation, NINJA loans, no-job, liar loans, those kinds of things…It was a failure to question the conventional wisdom as sort of the big picture but then a smaller, closer to the ground viewpoint it was very hard to cover some of the securities that were really at the heart of this problem.