We appreciate the bizpress’s newfound attention to Washington political fights over regulatory and economic policy, and we’re not afraid to say so.
Before the crash, as we’ve also said, the Wall Street and Washington press corps might as well have existed on different planets, so little did one understand the other’s beat. Apart from close, if narrow and generally supine, coverage of the Fed and its monetary role, regulation was a backwater for the financial press, if not for the financial industry, which knew its way around Washington very well, indeed.
In this 2008 story on pre-crash regulatory failures at the Securities and Exchange Commission, for instance, The New York Times candidly (albeit briefly) turned its notebook on itself and the rest of the press when it noted that no media representative attended the fateful commission meeting of April 28, 2004, when the body voted unanimously to loosen capital requirements for big investments banks.
The proceeding was sparsely attended. None of the major media outlets, including The New York Times, covered it.
After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the chairman, William H. Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.
With that, the five big independent investment firms were unleashed.
Happily for the public, the coverage of regulatory plumbing is now officially a hot beat, with bank-regulatory overhaul, very much in the news these days, serving as a good example.
While the MSM has done well generally, the Brits, Financial Times and Reuters, have done especially well tracking the blow-by-blow of proposals coming out key congressional offices and the White House.
The FT’s Tom Braithwaite reported early on Chris Dodd’s intention to push forward with his own bill with or without the White House, and also plumbed Obama’s thinking.
Reuters’s Kevin Drawbaugh and Rachelle Younglai on Monday hinted via analysts at what was to come:
A bill to create a single bank supervisor, possibly with proposals on handling systemic risk and firms seen as “too big to fail,” may come soon from Dodd, analysts said.
The Washington Post‘s David Cho and Brady Dennis yesterday got a good jump with what turns out to be solid info on what Dodd wants:
The legislation, which is still being finalized, would consolidate federal responsibility for banking oversight, now assigned to four agencies, into a single regulator. And, compared with the plan rolled out by the White House, Dodd’s measure would grant less power to the Federal Reserve to curb activities that pose a risk to the entire financial system, the officials said.
And the Journal‘s Damian Paletta adds some useful analysis this morning, labeling the Dodd proposal “extreme,” which is fair, considering it would strip powerful agencies, notably the Fed and the FDIC, of longstanding supervisory authority. The story also sees a clash looming with plans designed by Obama and the House.
The WSJ also has been buzzed around Dodd’s head for a while, as in this bit from last week relaying Dodd’s dim view of Fed supervisory performance:
Senate Banking Committee Chairman Christopher Dodd doesn’t think the Fed “did a particularly good job in using its authority leading into the financial crisis,” his spokeswoman said Wednesday. Mr. Dodd is also concerned that if the Fed is stretched too thin, it “won’t necessarily focus on monetary policy,” she said.
Sure, regulatory overhaul is an obvious story, and no one should get a medal for covering it.
But, then it should have been obvious on past major shifts in regulatory and economic policy, including Glass-Steagall repeal, the Bush tax cuts, the 2005 bankruptcy reform bill, to say nothing of more obscure but nonetheless portentous measures, like the Commodities Futures Modernization Act of 2000 or the SEC move on Wall Street capital requirements mentioned above. And who believes those didn’t deserve more scrutiny?
If it took a financial crisis for the press to see regulation as sexy, we’ll chalk that up as subsidiary benefit.
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.