Capitalism At Risk; Needs More From Journal’s Third Front

Money & Investing is Getting Some Help. It needs it.

Um, excuse me; there may have been a misunderstanding. See, when I took the job of running CJR’s The Audit, I knew I’d be expected to, you know, cover, interpret, critique and generally write about the nation’s business press. But what I didn’t fully understand, I think, was that I’d actually have to, um, read it. I mean, like, almost every day. I spoke to the Great One for the better part of an hour, and I don’t recall him mentioning that duty –- specifically — even once.

Not that I’m complaining. I’m just saying that had I known the job entailed reading that much business news, I would have looked more carefully into Columbia’s health plans, particularly its drug benefit.

Which brings us to today’s item: The Wall Street Journal’s Money & Investing section is getting some new leadership.

The Audit says: Not a moment too soon.

Last month, the paper said in an internal memo that Nikhil Deogun, the paper’s deputy Washington bureau chief, would be taking over the section known internally as the Third Front, which covers Goldman Sachs and other big Wall Street firms, Citigroup and other big banks, American International Group and other big insurers (the operative word here is “big,” and the distinction among those industries is getter ever blurrier), as well as the New York Stock Exchange, the accounting business – basically, the money. He will succeed Dave Kansas, who will head an Internet project.

And today, The Audit reports that Deogun will be joined by Ken Brown, a former Heard on the Street writer and chief of the Property Report, which was The Audit’s old group, though we did not overlap. Both moves are good news for consumers of business news. And remember, the second item you heard here first!

Deogun covered Coke, Pepsi, and Big Food out of Atlanta, then became a mergers-and-acquisitions reporter, and one of the best The Audit has seen this side of Steve Lipin and Robin Sidel, his predecessor and a successor, respectively. That marquee job has served as a launching pad for careers at the Journal, and for good reason: its currency is getting the skinny on high-stakes, high-profile, multi-billion-dollar deals – information that is very valuable. The job is brutally competitive and requires extraordinary diplomatic skills, both among investment bankers, securities lawyers and M&A PR specialists, a pretty sophisticated crew — and, just as important, among the Journal reporters upon whose beats M&A reporters must by necessity trample. Deogun has an avuncular, authoritative demeanor that I would describe as Kissingerian (in a good way; I don’t expect him to authorize a coup at The Financial Times or anything of the sort). He went on to revive a listless Media & Marketing section –- which covers tobacco, food, consumer giants like Proctor & Gamble, News Corp., Time Warner –- before assuming the deputy’s job in the D.C. bureau. One could say he’s a go-getter. He’s 38.

As “Heard” writer, Brown just flat-out excelled at one of the paper’s hardest jobs, requiring a reporter to be smarter than everyone else about a new company and/or industry every time out, and also to traipse (delicately) on other reporters’ beats. He pumped life into The Property Report before jumping to Pzena Investment Management LLC, a New York money manager for the little guy; it requires a mere $10 million to open your own account.

But for two steps forward, the section takes one back: the Third Front’s Phil Kuntz, a rare editor with investigative bona fides, will leave the section for another assignment.

Deogun and Brown have that much more work to do.

I joke — sort of — about the burden of having to read the business press, but, in researching this post, I took it upon myself to read a stack of about two months’ worth of Third Fronts. Regaining consciousness the next day, I found myself lying under a table at the West End bar, an EMT applying defibrillator paddles to my …

Okay, the last part’s not true, and if you think I’m mean, fine. But listen, the Third Front is not just another business page. It is the beating heart of The Wall Street Journal, a paper I happen to love. It is also not a, but the daily window into capitalism’s gearbox. It is the financial world’s agenda-setter, issue-definer, shareholder-defender, regulator-watcher, Wall Street-b.s.-buster, and corporate-accountability machine — written not for NYSE floorbrokers, but for plain folks in Iowa. It is indispensable, no matter how many financial sites sprout on the Web, no matter how good The Financial Times and the New York Times business page become. (And don’t worry, I’ll get to you both soon enough.)

For one thing, the Third Front employs about 35 reporters and editors. Who else can say that? And as for the talent there, well, it’s significant. These are the reporters who uncovered the corporate options-backdating scandal, Richard Grasso’s $140-million pay package at the then non-profit NYSE, the corrupt practice of investment bankers “spinning” valuable IPO shares to corporate executives who hire investment bankers, and countless other original stories. Personally, I’ve still got cleat marks on my face after competing against Monica Langley, et al, on the probe of A.I.G. in 2005 while I was on contract at The Washington Post (though I got my licks in).

But too often lately the page has felt phoned in. The “Heards” lack edge (see: “Even Now, Big Miners Dig Away”) or deal with companies that don’t matter (“Quicksilver Asks Investors to Hang In.” Quicksilver is a skateboard maker with a market capitalization of $1.4 billion, which is about what Citigroup spends annually on sushi. Its closest competitor, we are told, is the nimble yet formidable Volcom Inc. Who cares?) I found a headline that may have been written one million times, (“It’s Small World, After All,” about small stocks); unsurprising display stories (“Fine Wines No Longer Just Tempt Collectors,” about investing in wine, which is not new); or others that just feel random (“Japanese Addiction: Currency Bets”).

Yes, of course, there is excellent work: “SEC Now Takes Hard Look at Insiders’ ‘Regular’ Sales, a follow-up to the options-backdating coverage; “Subprime Game’s Reckoning Day,” predicting – accurately – growing problems in that market; “No Worries: Banks Keeping Less Money in Reserve,” a seriously useful story given today’s deteriorating credit climate; a timely profile of Timothy Geithner, the New York Federal Reserve president, who is charged with minimizing systemic risks posed by hedge funds and others outside the Fed’s jurisdiction; a look at a major oil producer’s recent stumbles, “BP’s next Slogan: `Beyond Probes.”

And — fine! — today’s section is excellent. One story — “Can Asia Control the `Hot Money?’ — looks at efforts to impose anti-meltdown controls (though I would quibble with the idea that the efforts are a “step back” from an openness trend; how about “a refinement?”). And the piece on famed vulture investor betting on a weak housing market, “Why Icahn Is Betting on WCI’s Florida Condos,” would only be of interest to every homeowner and would-be homeowner.

But my overall point is right. For instance, you cannot — you just can’t — publish run-of-the-mill market stories on the Third Front. “Stocks Slip on Housing News, Then Recover Most of Losses”; “Stocks Rise as Fresh Money Offsets Manufacturing Data.” You might as well go with: “Cubs Lose Opener, Drop Nightcap”; or “Partly Cloudy, Temps in 50s Yesterday as High Pressure Moved West to East.” This prohibition is especially important now that the Third Front runs a display ad covering the bottom right corner of the page.

Meanwhile, the Third Front cannot look itself in the mirror and say it is leading the way on executive compensation, which The New York Times has owned, and rising shareholder activism, to name a couple of obvious ones.

It’s clear resources are being spread too thin. My prescription: write less. Don’t worry about pages C2 and C3. There. McKinsey would’ve charged you a bundle for that.

A couple of thoughts: I read that income inequality is at its greatest level since before the Great Depression. Goldman Sachs, meanwhile, paid its employees $16.5 billion last year — an average of $622,000 per employee, down to the pastry chef — then had enough left over to post $9.5 billion in earnings.

Come on, Nik and Ken. Capitalism needs you.

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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.