Audit Interview: The FT’s Lionel Barber

"We got a piece of the puzzle [but] we don't tend to go grassroots up. There's an important lesson for all of us."

Among the discomfiting changes sweeping through the financial news business in the U.S. has been the rising influence of what we here at The Audit call the Anglo-Australian model.

The most jarring manifestation was the 2007 purchase of The Wall Street Journal’s parent, Dow Jones & Co., by Rupert Murdoch’s News Corp., which within months had jettisoned the paper’s incumbent editor and installed its own, mostly Anglo-Australian, team led by Robert Thomson.

Almost as important has been the steady rise here of the London-based Financial Times. The salmon-colored broadsheet has seen its circulation (paid print and online) hit 542,000 as of last August, up 3 percent from a year earlier in a bad year, while its U.S. edition has grown to 143,000 from zero when it was first introduced in 1997. In 2001, a Dow Jones executive could still dismiss it as a “a fashion accessory” in this BusinessWeek story; not anymore.

The FT has an outsized impact on the U.S. financial conversation with its scoops, long inside-the-paper analyses, and columns; we’re particular fans of Martin Wolf. Its influence has been most clear, perhaps, in the FT-like innovations the Journal itself has adopted, including a heightened emphasis on breaking news and scoops, shorter stories, fewer in-depth front-page features known as “leders,” a section-front devoted to corporate news, and a transformed “Heard on the Street” column that is now similar to the FT’s Lex section (subscription required; the FT has also attracted attention for its paywall). Thomson, it should be noted, is an FT alumnus.

Lionel Barber has presided over much of this. An FTer since 1985, he headed the U.S. edition from 2002 to 2005, then was named editor of the FT overall. He is credited as a pioneer of the so-called integrated newsroom, in which reporters file continuously across print and digital formats, and for presiding over a shop that is unusually collaborative. An Oxford man, he speaks fluent French and German, has interviewed premiers and presidents, appears on “most influential” lists in Europe, and in a pinch might be a decent stand-in as 007 if it ever comes to that.

It must be said, however, The Audit, while handing out praise, has also faulted the paper in particular instances and remains an overall skeptic of the British journalism model, particularly because of its lack of American-style investigative reporting. For us, this is not a detail. Indeed, our study of pre-crisis coverage found the absence of investigative reporting on rogue lenders and Wall Street was the main reason the business press and the public were caught so off-guard by last year’s calamity.

Barber, who clearly respects American journalism traditions, ruminated on the Anglo-American journalism divide, as well as his stint working at The Washington Post during the height of the post-Watergate Bradlee era, in the FT last October.

I sat with Barber recently to discuss these and other issues, including his speech last April at Yale in which, with surprising candor, he grappled with the question, “Did financial journalists miss the financial crisis?”


The Audit: Why did you give the Yale speech?

Lionel Barber: The immediate trigger was that I felt that everybody else was being blamed—the bankers, particularly the regulators, Alan Greenspan, economists. They’re all taking heavy criticism. But it was appropriate, enough water had flowed under the bridge, for us to look at how we, us journalists, had done. I decided to give this speech in America because, I’ve spent ten years of my life as a working journalist in America, including a stint which was seminal in terms of its influence, at The Washington Post in 1985 when I spent four months on the national staff working with alongside some really great journalists. These are really brilliant journalists, serious journalists, and they take the business of journalism seriously, and that’s why I wanted to give the speech in America.

TA: When did you think this crisis was going to be the big one?

LB: I can identify almost to the day. It was in late January 2007, and it was in Davos, and several of the top bankers of the world were there. And [Blackstone chief] Steve Schwarzman gave a breakfast presentation in which he described—and I can remember writing it down in my little black diary—how [easily] they could borrow money…how they got better financing terms than everybody else. And the message I took away from it was, We can borrow, and we almost don’t have to repay. And I thought, this is unsustainable. Something is going to give.

In fairness to Blackstone and other private equity firms, they were raising billions of dollars. You had the [Blackstone] IPO shortly thereafter, and everybody was performing very, very well. But the message that I took away from that January, from Davos was, this is going to blow up.

Then I started to talk to several of my staff, particularly Martin Wolf, who had been raising concerns in his weekly economic columns. And then Gillian Tett [who covered derivatives and since wrote a book about them]. And although we weren’t putting her stuff on the front page at that point, she was warning about the level of toxic debt, and leverage, and in particular the enormous build-up of credit derivatives. That then began to build a picture of the gathering storm so I then, and this just to make things fit together, I had insisted that we boost our markets coverage.

TA: How does the FT cover Wall Street?

LB: We’re now twelve years into our American expansion. [In the early days], our presence was minimal. We had four or five journalists in New York, one in San Francisco, three or four in Washington. Now we have 55-60. In ‘97, there were people who said these guys are crazy, they’re not going to get anywhere, they’re going to be crushed by the Journal, the [Washington] Post, the Times. The crucial insight, which I think evolved fairly quickly, I absolutely drove this message home, was, Look, we’re not competing head on with these big beasts. We’re just going to take a slice of their market, and we’re going to take the most lucrative slice. We’re going to go for the decision-makers. We’re going to be absolutely must-reading for the top level of bankers. We’re going to make a push in Washington, into the Congress, for the lawyers and the eco-system here, if you like, on Wall Street. We’re not going to be a general newspaper. We’re going to be a business and financial newspaper, and this is the key, we’re going to bring the world to America. The FT is going to be the newspaper of globalization—that was the slogan; that’s what I said. Therefore there was a tremendous focus to our editorial coverage, and we made a virtue of being a global newspaper, a global perspective.

We don’t have a lot of people, but we can cause a lot of mayhem with a small number of people, they each have their missions, they work together, we’re not lumbering. I don’t want to say that American newspapers are overmanned, but they have a lot of journalists. We’re a lot nimbler! And if you’re nimbler you can be more focused.

TA: Is it wrong to think that American investigative reporting traditions are unique here and not necessary part of the British DNA?

LB: [Refers to his column comparing British and American journalism and adds,] I think that there must be a role for investigative journalism. I think it takes two forms. One, we name the guilty man; two, arrow points to the defective part, i.e. explanatory. There’s a role for both. And I would argue that arrow pointing to the defective part is what we’re doing a lot of. I can give you examples—the [British Petroleum] investigation. I put a reporter [Sheila McNulty] in Houston and she worked for six months on that. She won a double [British] Press Award, the equivalent of two Pulitzers. Maybe not quite as good as a Pulitzer, but pretty good.

But our libel laws are a lot tougher than yours. There are serious legal risks. It’s harder.

And maybe journalists have gotten too obsessed with five-act tragedies. One I thing I thought was just sensationally good was the [2005] series—[Walt Bogdanich et al.] won a Pulitzer for it—in the New York Times on why there were so many deaths on railway crossings. Just amazing. And this is something which I’d love to do and clearly will have an impact, calling people to account, and what you’ve done, and other people have done on corruption. That, I don’t know whether we would do that, but I tip my hat to it, we do some of it in the U.K., and in America, it’s on another level. And it would be a very sad day if we saw the end of it.

TA: Our pre-crisis press study found a big gap: the financial press had trouble confronting Wells Fargo, Ameriquest, Bear, Lehman, etc. Is that a fair critique?

LB: [While] we would not really do Countrywide, what we should have done, we should have followed through on Fannie Mae and Freddie Mac. The level of leverage, and Greenspan had said it on the record, in terms of their statuses as GSEs, half-private, half-public, de facto government guarantee, the remuneration, the links with Congress. Steve Shurr, he was constantly going on about Fannie Mae, [as well as] John Dizard, he’s a columnist, and he was right. The great message I think for us to learn, and as an editor you should learn, is people have short memories. You may have to say things more than once. That may not mean you have to do three, 5,000-word stories; it means you have to stay with the story and not move on with the caravan.

TA: Reading backwards over what the press said before the crisis, the FT stood out for its coverage the mortgage aftermarket. The Tett stuff was a revelation because, just covering a beat, she was saying “CDOs are through the roof right now; boy, there’s lots of them.” But we noticed there were very few mentions of the word “subprime.” One major gripe about the business press is a lack of connection to the “real world.” If people knew what a subprime borrower was, and how strapped they actually were, all of this derivative stuff would have become a lot more interesting.

LB: I think that’s an entirely legitimate criticism of the press. There are two faults here, one of which I alluded to in the Yale speech. We got a piece of this, a piece of the puzzle, just as the economists did. Some of them talked about global imbalances, but they didn’t talk enough about leverages. Some of them talked about leverages, but didn’t pay enough attention to global imbalances. Some talked about failures in regulation, but then they didn’t think about the other bits.

Reporters, you have somebody talking about CDOs, but then they’re working in their channel. And that’s again when great editors…say, “If this is working there, trace it back.” The other point is, for us, here in America, we are concentrated. We cover the machinery of government in Washington, and we cover the big banks. We don’t tend to go grassroots up. That’s a lesson for us. That’s an important lesson for all of us. I don’t think there was a malicious dereliction of duty. It’s just that we tend to work with the institutions covering what the manager is doing, strategy. [Now] we have, actually, particularly during this recession, a reporter assigned to covering what is happening at the bottom end, unemployment.

TA: Looking forward, how are you going to cover this brave new world of finance?

LB: We are going to have a series which is going to be online and in print looking at how the world of investing has changed because of the crisis. We’re deliberately trying to look forward. I think it’s very important especially these days as traditional media is very challenged, you’ve got to deliver more than analyzing the news, reporting the news. Obviously we’re going to be covering the regulatory battle from Washington. But we’re going to be looking very clearly at who are the winners and losers on Wall Street. And there’s still a huge job to explain. Everybody was saying the traditional investment-banking model was dead, that was just conventional wisdom a year ago. Well maybe not —who says so? If you look at what’s happening now. But then there’s a big job to explain why is it that Goldman for example is going to have record profits and revenues this year. Just explain it. Don’t go along with just easy, “they’ve got a great culture,” then they’ve got these wild allegations of having people in all the high places so the system is tilted toward them. Look, there’s less competition than there was. Actually with all these extraordinary fiscal and monetary measures that have been taken this year, with less competition, those that survived, they were going to do well. There’s still a big question about how solvent the banking system is. We’re going to look at all that.

And also, critically, which is harder for American news organizations to do. For us, we can say, maybe the world is changing a bit. Look at the new balances of power. China is not going to replace America as the locomotive of growth. But China is increasingly informed as a financial, economic and political player. Look at the Gulf. The Gulf bailed out the Western banking system, or lots of banks, with private capital. That’s again a new, we’ve got to write about this as well.

TA: The WSJ under Murdoch, is it trying to be like FT or the NYT? I can’t decide.

LB Well, I think that they are practicing the sincerest form of flattery—I think they are! They are clearly adopting the lessons that we’ve learned, and they’re adopting some of the tactics and some of the approach that we’ve taken. Their stories are shorter. They’re trying to catch up on global news coverage. And yeah, I think they are trying to be a bit more like us.

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.