Press Manipulation: Federal Reserve edition

Summers, Yellen, and the perils of access reporting

At first glance, the Fed chairperson’s race is one for the textbooks: a classic case of spin and counterspin, mostly emanating from unattributed anonymice. This is the spin cycle in its purest form.

First it was Yellen vs. Summers and that other guy, the third tenor. Then it was Summers. Now, it’s not Summers, and probably Yellen, we think.

Readers outside the beltway can be forgiven for feeling dizzy at this point.

The WSJ’s Nick Timiraos summed it all up nicely in a Tweet after Summers, never nominated but all-but-picked, withdrew is his non-nomination.

At times like this, the conventional wisdom looks so right until it looks so wrong.

Given the amount of spin going on here, this is not an unreasonable sentiment.

For the moment, “Push for Yellen to Lead at Fed Gathers Steam.”

Or as the Times puts it:

On Monday, Ms. Yellen became the front-runner by elimination, officials close to the White House said.

Or the Journal:

Federal Reserve Vice Chairwoman Janet Yellen emerged as the front-runner to become the White House’s nominee to lead the central bank, a day after Lawrence Summers pulled out of the contest amid congressional resistance, according to people familiar with the matter.

We can only guess whether the “people close to the White House” and the “people familiar with the matter” are one and the same.

The Summers/Yellen spin contest is one of the rare leak wars to have had, by itself, real world impact. Economists at BNP Paribas, for instance, had predicted a Summers nomination would mean everything from a “less buoyant economic recovery,” higher market volatility, 350,000 to 500,000 fewer jobs, to higher rates on 10-year Treasury Notes. The late August report said, in fact, that some of the increase had already been priced in. And now we see that stocks went up on Summers’s withdrawal.

It’s easy to pick on the press for being led around like a show pony here. A correspondent calls it a case of “group think tied to the White House/press spin cycle.”

That’s only partly true.

First, Ezra Klein had a point that the leak campaign was rather one-sided. Yellen’s proponents, and Summers’s opponents, perhaps they generally weren’t insiders, could afford to be public and vocal, as Joe Stiglitz was the other day.

Summers had Steve Rattner (which may tell you something about why he lost) and Brad DeLong, but mostly he had, as Ezra says, insiders who generally make their views known anonymously.

This isn’t entirely true. Yellen, too, has used “friends” to get her message out, as this Times story attests.

Janet L. Yellen told friends in recent weeks that she did not expect to be nominated as the next chairman of the Federal Reserve.

But the point generally holds.

Second, this really wasn’t a case of “groupthink,” CW, or idle Beltway chatter. That is to say, there was nothing speculative about the reports in the MSM about the Fed nomination and the president’s preferences. We can trust our pals in the press here that the sources were high level and knew what they were talking about: Obama wanted Summers to lead the Federal Reserve. Period.

Obama himself certainly wasn’t shy about publicly defending Summers, as he did in late July on Capitol Hill

And it’s even possible that Obama was one of the leakers.

But even if he wasn’t, his preference was clear. How do you not report that news?

Now the White House is trying to push back on the idea that it was behind this leakapalooza. As the Journal reports (with my emphasis):

“Floating trial balloons generally sucks as a strategy,” said John Podesta, chairman of the Center for American Progress and a White House chief of staff during the Clinton administration. “You’ve got to make your decision and go with it.”

Senior administration officials said the White House hadn’t floated Mr. Summers’s potential nomination as a trial balloon. They say his name emerged over the summer, and Mr. Obama was put in a position of having to defend him amid criticism, which put even more attention on his candidacy.

Privately, Mr. Obama’s aides have said for weeks that Mr. Summers was the president’s preferred choice, even as they said he hadn’t yet made a decision. Lawmakers weren’t consulted about Mr. Summers because he wasn’t a nominee, officials said. Mr. Obama wasn’t prepared to make a decision earlier, they added.

“His name emerged”?—nobody’s buying that.

This was, in fact, what I believe the PR industry calls a strategic leak, one that didn’t turn out so well. Reporters among the Fed and White House press corps were there to relay it. It’s access reporting, but so what? The access people did their jobs—sending out the word from the inside. Again, how could they not?

On the other hand, it’s one of the more vivid reminders of the limits of the access reporting practice, the price of admission as I wrote a couple of years ago.

If the game is seeking information from powerful insiders, as opposed to holding them accountable, the relationship becomes one of dependency. Reporters need insiders more than the other way around, especially in these days of hyper-competition. Another way to look at it is that, with access reporting, by definition, institutions set the agenda, and the press follows.

As Jay Rosen said in another context, access reporting is a genre, and the genre has a cost, and part of the cost, is that sometimes, even often, the press will be led around by the nose, and there’s nothing it can do about it.

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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.