The answers in the Kurtz story and elsewhere range from “we all failed” (CNBC’s Charlie Gasparino) to “we did our jobs but nobody listened” (various) to some combination of the two:
“Did we not accent that enough? Put it above the fold, or on the cover of Fortune, or lead off the television shows?” asks Fortune Managing Editor Andy Serwer. “Yeah, that’s probably true.” At the same time, he says, “if we had written stories in late 2000 saying this whole thing’s going to collapse, people would have said, ‘Ha ha, maybe,’ and gone about their business.”
For business journalists, as well as for their readers and viewers, the question “where was the press?” in the run-up to the greatest financial calamity since the Great Depression strikes me not as one question among many, but central to assessing whether journalism has anything, anything at all, to learn from this historic implosion. If journalists are watchdogs, what does this mean? If journalists are not watchdogs, then what are we?
Unfortunately, answering the question is not going to be so easy as simply rounding up opinions. In reality, no one knows where the press was because no one’s really checked yet. What was written and aired over major financial news outlets in the years leading to the spring of 2007, when the crisis burst fully into public view with the collapse of the Bear Stearns hedge funds, that’s all out there, waiting in electronic data bases for someone with the time, patience, and stomach, to sort through it all.
And, as much as some journalists would like, it won’t be as easy rummaging through the archives to find the good stories—and they are out there—that gave clear and eloquent warnings of certain bad practices in the lending industry and on Wall Street.
Certainly, there will be a list of heroes. Mara der Hovanesian and Peter Coy of BusinessWeek will no doubt find their way onto it, as will Diana B. Henriques, Richard A. Oppel Jr., Patrick McGeehan, Gretchen Morgenson, and probably others at The New York Times, and Scott Reckard of The Los Angeles Times. The Wall Street Journal’s James R. Hagerty and Ruth Simon will be there, I’m sure. Bloomberg’s Jonathan Weil will make it on the first ballot, as will the Journal’s John Hechinger, the author of this, and note the date:
Best Interests: How Big Lenders Sell A Pricier Refinancing To Poor Homeowners —- People Give Up Low Rates To Pay Off Other Debts, Putting Houses at Risk —- `Bill Collector Was on My Back’; 7 December 2001
I’ve already written about reporter Mike Hudson here and here. Cognoscenti, meanwhile, point to Sandra Fleishman’s work in The Washington Post and, especially, to Richard Lord, author of American Nightmare, for his work at Pittsburgh City Paper.
Have your own favorite? Send them to dean@deanstarkman.com.
But assembling a list of good stories strikes me as a little too simple. This isn’t about individuals, after all, but news organizations and the business press as an institution. Any fair measure of press performance will have to take some measure of the record in its entirety. What was the business-press narrative about, generally speaking? What else was written about Wall Street and the financial-services industry? Who was on the covers?
Were the good stories the rule or the exception that proves it?
It will also be important to reconstruct the news cultures created by senior editorial leadership, which, it should not be doubted, sets the tone and sends the unspoken-but-unmistakable message to reporters as to what kind of stories are in favor and which are not. If you don’t think this is important, you haven’t worked at one of these places. We’ll never know what wasn’t done. There will be no list, for instance, of goats, the mid-level types who responded to unspoken signals from above and sat on valuable stories, kicked away ideas, and shied away from confrontation.
And, I’d argue, if you’re really going to do this right, a fair assessment will also have to take into account what was in the available public record and match that—keeping in mind the benefit of hindsight—against the priorities adopted by the leading news outlets.
You are on to something here, and it involves the state-federal relationship when it comes to finance. I read today that former New York investment banker Goldman Sachs is seeking a New York rather than federal bank charter. Hmmm. Why would this former go-go company do this just weeks after the federal government agreed to make it a bank in order to save it from a Lehman-like meltdown? And I note that the federal government has come to the aid of insurance companies that are chartered and registered by the states. It took the collapse of AIG for the states to realize they couldn't underwrite AIG's more than $1 trillion in failed investments, even though AIG was supposed to be a company with more than $1 trillion in assets. There is now talk I hear about making federal insurance companies. We have an insurance industry which has created and now manages a large part of the $64 trillion in derivatives through the credit default swap market, yet it is only backed by a few billions in state funds in the event it defaults. Who defaults on an insurance policy, you may ask. We might soon see.
Last point is that we have a secret derivatives market operating in the United States that Joe Six-Pack knows nothing about. Look somewhere for a quote on a credit default swap and see if you can buy one, if you want to see what I mean. Billions have been made on this market and pocketed by the elite players who are in the know about it. But Joe Six-Pack only gets to pick up the costs when it defaults and collapses, threatening to bring down the economies of the western world.
Posted by edward allen on Tue 14 Oct 2008 at 02:22 PM
I can tell you exactly where the failure was. The problem was that republicans were raising concerns about lending practices and we have a media that sides with democrats (come on, let's be honest here) and goes against anything pushed by republicans. Of course, the media should be pushing back on both parties far more than they do.
We also have a media that refuses to let any third parties have equal time so voices who are 100% accurate on the subject (Ron Paul) are too oftenlocked out of discussions or portrayed as a kook because he doesn't follow any party line.
This is all problems of the press and in an optimistic view should be able to be fixed by the press, but I don't believe that can happen when the country is divided so sharply party line, which is also the fault of the press by turning even the slightest story into an 'us vs. them' conflict.
If, as some have said, journalism died in 2008, than it was by suicide. Unfortunately the poison that killed journalism has in the process severely wounded this entire country.
That's a massive problem when you consider the two party system has proven to be corrupt and unwilling to do what the public wants (like not passing a bailout bill or staying in Iraq).
Posted by Tim on Tue 14 Oct 2008 at 03:08 PM
You're trying to be a comedian here right Tim? The MSM has been firmly in the pocket of GOP hacks since the Reagan revolution. There is no liberal/democratic press to speak of outside os a few shows on TV like Rachel Maddow and Keith Olbermann, and the occasional piece in the NYT.
GOP hacks continually spin the same crap over and over again - Democrats are tax ands spend, liberal, big government socialists whereas the GOP is small government (now there's a real joke).
This mess was caused by a lack of regulation so you can't have it both ways, if it's the democrats fault then obviously they aren't big government as deregulation doesn't fit into that model but it sure does fit the supposed GOP model now doesn't it. Don't let the fact that the deregulation that brought this mess on the world was written and sponsored by Republicans get in the way of that theory though.
Posted by Doug Alder on Tue 14 Oct 2008 at 10:17 PM
More tedious navel-gazing by a media critic. Trying to blame the media for this fiasco is like trying to blame a tourist for the Chicago fire. This disaster was caused by lax (or nonexistent) regulation and greed, same as most financial meltdowns. Both were amply covered in the news media. But here's the sad truth: People didn't care because they routinely ignore news that they don't want to hear. Mortgage rates were LOW, loans were PLENTIFUL, and home prices were SOARING. No one wanted to take away the punch bowl from the party just because of some skeptical news coverage. Stop pretending that the news media can cause or cure all ills. It's solipsistic in the extreme.
Posted by m.a.s. on Wed 15 Oct 2008 at 12:22 PM
More tedious navel-gazing by a media critic. Trying to blame the media for this fiasco is like trying to blame a tourist for the Chicago fire.
This disaster was caused by lax (or nonexistent) regulation and greed, same as most financial meltdowns. Both were amply covered in the news media.
But here's the sad truth: People didn't care because they routinely ignore news that they don't want to hear. Mortgage rates were LOW, loans were PLENTIFUL, and home prices were SOARING. No one wanted to take away the punch bowl from the party just because of some skeptical news coverage.
Don't assume that the news media causes or can cure all ills.
Posted by m.a.s. on Wed 15 Oct 2008 at 01:03 PM
Thank you for a truly sad, wonderful article.
A couple things that might interest you.
Credit Default Swaps are, in their current formulation, insurance fraud. They are insurance on bond devaluation events (ratings downgrades and bankruptcies). But you can't sell your fire insurance policy to someone else! And you certainly can't sell 20 copies of your fire insurance policy, all around town! It's should be regulated like any insurance market.
But what's much lower on the radar, and what is bound to be the avenue for some _really_ malicious/criminal activities is what is called "dark pools of liquidity."
POSIT, Pipeline, Millenium, and at least a half dozen more companies run off the books trading venues. You and I can't trade there, so it is an exclusive (and therefore elitist ;) market. RegNMS says that you can't trade outside the box (if you want to buy at 21, you _have_ to buy from everyone selling at a price under 21, even if it is Joe Schmoe from Kalamazo selling at 20.90). But if you trade through any of these "dark pools" no one knows! It is all, as far as I can tell, under the table.
Is the best price in one of these dark pools? You and I will never know because we aren't a registered broker/dealer. Is someone violating trading regulations by trading through a dark pool? Neither you, nor I, nor anyone knows how oats, green peas, and barley, grows.
I sound glib. There is _no_ legitimate reason for these entities to exist.
Recent reports say more than 5% of all trades move through these institutions.
Posted by Joshua Simeon Narins on Sat 18 Oct 2008 at 08:14 PM