At the time, remember, the Journal was in the middle of an unnecessarily protracted and, apparently, bitter contest to succeed Managing Editor Paul Steiger. In March, a new editing team on the Money & Investing section, which had the main responsibility for subprime, was announced but didn’t take over until later.
In mid-April, Marcus Brauchli was named to succeed Steiger and began to reshuffle the main newsroom. So, they were busy.

Two few weeks later, Rupert hits the fan. News Corp. announced its bid for the Journal’s parent, Dow Jones & Co., touching off a tumultuous summer of front-and-back stabbing among senior managers and editors, and creating fear, loathing and uncertainty for everyone else.

That went on until the end of July, when Dow Jones’s controlling Bancroft family agreed to the News Corp. deal. Meanwhile, the subprime story is about to engulf the financial world in mid-August.

The trouble with being the Journal is that there are certain stories you have to own. Subprime is one. I’d argue, subprime is the Big One.

Add to mix the long-term story: the Journal’s parent has been in a decade-long decline, underperforming even its media peers.

The talent train at the Journal has for years generally headed in one direction: outbound.

Now, The Audit has learned, Polk-Award winning Michael Hudson, who was reporting on subprime back when most business reporters thought it meant a tough steak at Smith &Wollensky, has left the Journal to write a book, among other projects. Too bad.

All of these factors have not created a lively, carefree atmosphere, put it that way. Tense organizations press.

Well, maybe now things will calm down. Whoops! There goes the C.E.O.

These, Audit readers, are institutional issues. Creating a stable environment for journalism, having the right people in the right place at the right time, allowing them freedom to maneuver, that’s what senior management is supposed to do.

As for the correction, read it yourself; it’s short enough.

Corrections & Amplifications:

This article was based on incorrect information that the Merrill Lynch & Co. had engaged in off-balance-sheet deals with hedge funds in a possible bid to delay the recognition of losses connected to the firm’s mortgage-securities exposure. In fact, Merrill proposed a deal with a hedge fund involving $1 billion in commercial paper issued by a Merrill-related entity containing mortgage securities. In exchange, the hedge fund would have had the right to sell the mortgage securities back to Merrill after one year for a guaranteed minimum return. However, Merrill didn’t complete the deal after the firm’s finance department determined it didn’t meet proper accounting criteria. In addition, Merrill says it has accounted properly for all its transactions with hedge funds.

To readers who are not partners at Gibson, Dunn & Crutcher, the correction suggests that a single fact in a story published three weeks earlier was wrong. In fact, the main premise of the story collapsed. To say a story “was based on incorrect information” is a lawyerly way of saying it is “baseless.” This highly engineered correction is really a retraction in disguise.

The issue is precisely the one the WSJ presented in the original story: how does that phrase go?—“whether there was an attempt to sweep problems under the rug through a private transaction kept out of view of,” in this case, readers. I’m not sure readers were put first here.

And, by the way, I give zero credit to the fact that Merrill was apparently satisfied with the wording. That outfit is in no position to play the victim publicly, and its media staff is smart enough to know it. Its interest is in keeping the S.E.C. off its back. Beyond a carefully worded internal memo,
the bank is wisely laying as low as a snake in a stampede.

Okay, what are the lessons?

First, no more big mistakes, if you can help it.

Second, if you make one, be confident in the correction; err, if you will, on the side of clarity, especially in stories actually about transparency.

Third, as News Corp. takes over, the Journal has two choices: to pull back on financial investigations or to increase its commitment and devote even more resources to them.

I say, double down.

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