But is the patchwork really the “biggest shortcoming” or even such a “big culprit”? Are federal regulators really so powerless? Hell, no.

Other good reporting over the summer revealed Fed regulators to be simply unwilling to use the powers they have. Craig Torres and others at Bloomberg did well writing about government reports and studies, including this dispatch from June:

The U.S. agencies that supervise more than 8,000 banks haven’t censured any them for violating fair-lending laws, three years after Federal Reserve researchers began assembling data showing blacks and Hispanics are more likely to be saddled with high-priced home loans

No violations. Zero.

In October, Bloomberg reported on Congressional testimony that the FDIC gave failing grades in only .3 percent of compliance reviews of bank lending in low-income neighborhoods. When banks don’t lend where they take deposits, as required by law, subprime outfits fill the vacuum.

The FDIC even gave passing grades to banks that the Justice Department later sued for redlining, Bloomberg reports.

Listen, it’s easy to be a critic and hard to make editorial and resource-allocation decisions in real time.

But I think rank-and-file business reporters and editors need to rethink certain assumptions that are, in fact, conservative biases in disguise.

Yes, business reporters harbor conservative economic biases.

This is not so surprising when you think about it, and it’s understandable. Most business reporters and editors now in senior jobs grew up in an era of conservative anti-government ascendance and liberal pro-government retreat, of Prop 13, Thatcher, Reagan, Nafta, Rubinomics, etc. For this generation (my generation), there really hasn’t been another way to run the economy: less government, more markets.

Hooked to an emotion-detector, it’s fair to say, most business journalists would respond positively to words like “markets,” “free trade,” and “deregulation,” and negatively to words like “government program,” “government agency,” and “regulation”

Hey, having a journalistic class aligned intellectually with its sources may be a good thing. The trouble is, commonly accepted assumptions have left reporters disarmed in the face of a story like subprime.

My point is simple: markets don’t always work. That’s why we have regulators. And since we have them, cover them.

1. Dow Jones News Service
23 May 2007

2. Robert J. Shiller, professor of economics and finance at Yale and co-founder and chief economist of MacroMarkets LLC, is a leading housing expert.

3. REVIEW & OUTLOOK (Editorial)
Spitzer Meets His Match
1 June 2005

4. Bank Regulator Cleans House —- New Comptroller of the Currency Makes Supervision a Priority
By Michael Schroeder
19 August 2005

5. Lending Oversight: Regulators Scrutinized In Mortgage Meltdown —- States, Federal Agencies Clashed on Subprimes As Market Ballooned
22 March 2007

6. Some subprime woes linked to hodgepodge of regulators ; ‘Fragmented’ setup can slow response to trouble
USA Today
16 March 2007

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.