But this is supposed to be the part about the Journal’s good stuff. Kara Scannell and Susanne Craig wrote the defining story on Securities and Exchange Commission chairman Christopher Cox. We knew he was passive. This story shows him to be certifiably Hooverian. On missing a key call on the Bear Stearns bailout:
In an interview, Mr. Cox said the time of the call changed overnight and no one told him.
On missing another key meeting, at which officials discussed, among other things, a Fed plan to lend funds to investment banks, “a radical shift that took the central bank into the SEC’s turf,” the story says:
Mr. Cox says his participation wasn’t required. “Because [the Bear Stearns loan] was the Fed’s money, they were chiefly responsible for the terms,” said Mr. Cox.
The SEC, which typically has five commissioners in all, had two vacant seats. Paul Atkins, one of Mr. Cox’s two remaining fellow commissioners, was traveling overseas and wasn’t informed about developments. He was furious, a person familiar with the matter says.
Mr. Cox says commission approval wasn’t warranted. He instead worked with his staff on “very intense and rapid” decisions.
The weekend after the Bear Stearns bailout, Mr. Cox headed to the Caribbean for a scheduled family vacation. He worked throughout, he said, staying in touch with SEC staff when needed.
The next week, as Mr. Cox returned from his trip, the Treasury Department unveiled a proposal to overhaul financial-services regulation. It called for dissolving the SEC and handing its Wall Street brief to another federal body. (6)
And a word about the Journal’s Wall Street coverage: No one has been better at getting inside the boardrooms of the fallen firms—Bear Stearns and Lehman Brothers particularly. I recognize the industry involved in, and the value of, the three-day Bear Stearns series that ran in May, even if it’s not my cup of tea. The level of detail found in the Morgan Stanley (7) and Lehman (8) coverage is remarkable.
Kate Kelly’s page one tour de force of November 1, 2007, which chronicles
how Bear’s then chief played bridge and smoked pot while two subprime hedge funds collapsed, is a journalistic achievement of the highest order.
This, after she and her colleagues beat the world in explaining the significance of the funds’ collapse in real time. (9)
This year, the Journal’s coverage of Lehman was unmatched. It signaled the bank’s balance-sheet problems in the spring and after its fall dug deep into what its management knew and when it knew it.
A story on October 8, “The Two Faces of Lehman’s Fall,” (10) established facts of unquestioned value.
The ailing securities firm quietly tapped the European Central Bank and the Federal Reserve as financial lifelines. On Sept. 10, one day after Lehman executives calculated the firm needed at least $3 billion in fresh capital, the firm assured investors on a conference call it needed no new capital at all. Lehman said its massive real-estate portfolio was valued properly, but Wall Street executives who have seen it say it was overvalued by more than $10 billion. As hedge-fund clients began yanking their money from Lehman, the firm assured them it was on solid financial footing.
None of those sentences was easy to pry loose. Each represents a scoop in itself, and all carried a degree of risk for the paper.
The Journal broke the news that Lehman executives were under federal investigation for possibly misleading investors about its financial condition (see footnote 10), just as it reported the feds were probing AIG executives for the same reason. (11)
Ah, well. It’s not easy being the global financial news leader in a time of global financial crisis.
And I’m not even going to mention the not-getting-it pieces, like the not one but two stories this year on “shopaholism” (12, 13) that recycle hackneyed myths about middle-class debt woes.
If you’re keeping score—and I’m afraid that’s what this is about for some—the Journal has been beaten on Citi, Goldman, Paulson, the Federal Reserve bailout, and AIG; it has won on the SEC, Lehman and Bear Stearns, and held its own on Fannie, Freddie, regulators and Greenspan.