The headline on this Bloomberg story says Derivatives Lobby Links With New Democrats to Blunt Obama Plan.
That’s true as far as it goes, but in fact, it’s really Barney Frank who is at the center of this story and his bill that lobbyists and New Democrats are linking to blunt.
Maybe it’s just me. I’d love reaction from other readers. But to me this story fails to spell out basic terms and put them in a reasonable order. A chronology would do. As we’ll see this is not strictly a technical issue for journalism wonks. Writing matters. We can start with the headline: “link to blunt”?
In the end, this is a simple story: Concerned that an Obama plan issued in August was too strict, New Democrats and Wall Street banks approached Frank, who produced a watered-down draft, prompting Obama administration officials to object.
But that’s after an hour of parsing, and that’s not how the story reads.
It’s a pity because, as is so often the case, Bloomberg produces valuable information.
It identifies the New Democrats (they are not, by the way, the same as Blue Dogs, Wikipedia says, but are DLC types) and shows how they and the usual Wall Street suspects, JPMorgan Chase, Goldman Sachs, etc., found common cause. Both descended on the House Financial Services chairman, who duly issued draft legislation that omitted a key provision to require standardized derivatives contracts be traded on public exchanges.
The story also notes that the Obama administration—in the form of Commodity Futures Trading Commission Chairman Gary Gensler and Henry T.C. Hu of the Securities and Exchange Commission—pushed back, saying that it “created too many loopholes and had the potential to exclude all hedge funds and corporate end-users from oversight.”
How and whether the loopholes described here relate to the exchange/no exchange issue is not explained. This is another writing problem.
The story goes on to say that:
Derivatives dealers became concerned that Obama’s plan didn’t adequately define “alternative swap execution facility” and that, in the end, regulators would write rules making them similar to exchanges, people familiar with the lobbying effort said. Over the last two months, the banks pressed to have Frank’s draft allow standardized trades to be executed privately via telephone, as they’ve been traded for decades, as long as they are reported to regulators, the people said.
Later we are told:
Unlike Obama’s plan, Frank’s bill doesn’t require derivatives users or dealers to execute standardized over-the- counter contracts on a regulated exchange or trading platform, which would force greater price transparency. Instead, it gives them the option to decide if they want to use an exchange or a trading platform, or merely report the transaction to regulators by the end of the day.
Okay, but this story could have benefited from a simple spelling out of terms: First there was a plan. Then there was lobbying. Then there was a bill, which was not like the plan. Also it is not clear to me how the exchange/no exchange issue, which seems to be key, would effect so-called end-users, the non-speculator corporations who need derivatives to hedge their risks.
Finally, this story lacks the much-derided “nut graph,” the one that explains the larger meaning of it all. In this case, the larger meaning isn’t that large: Moderate Democrats and Wall Street want the same thing, albeit purportedly for different reasons.
And there’s the rub: when the writing isn’t crystal clear, the point is often missed. In this case, the story is about the struggle for the soul of Barney Frank, right? Now there is an under-reported theme of the financial crisis. And even if it’s not about Frank’s actual soul, he is clearly at the center of this story, not the New Democrats, who are acting in deeply unsurprising ways.
Too often, I’m on my way to praising a Bloomberg story and find myself squinting like I’m reading page 37 of an Ameriquest pay-option ARM. I really don’t think I’m alone.
Again, this is not just for a technical issue for journalists. As I said in a recent post on the banning of the word “but” and other arbitrary rules in the Bloomberg style manual, good investigative writing is as important as investigative reporting. Without one, you waste the other.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.