The Journal Goes Frontline

A (mostly) well-done mini-documentary on the financial crisis

If you visited The Wall Street Journal’s website yesterday, you saw it touting a three-part in-house video called “The End of Wall Street: An Oral History.”

First of all, applause for the ambition shown here. This, for a newspaper (until Web revenues push past print revenues, I’ll still call it that), is a major motion picture.

The production values are surprisingly good. A lot of time was spent. The bigshots were interviewed. News Corporation has clearly poured some money into Web video. I can remember some cringe-inspiring Web video efforts there just a year or two ago under the dithering Dow Jones regime.

We open with modern-enough (if a bit trying-too-hard) jump cuts and shaky camera shots, news clips and great B-roll of the Wall Street area itself overlaid with ominous-sounding music—all deep bells and piano. But it’s an irritating contrivance to put thin stripes over every news clip, and there’s a whoops moment later when the shots on Wall Street suddenly include the U.S. Supreme Court.

The video is a joint production with WSJ Books and prominently features Dave Kansas, the paper’s former Money & Investing editor who’s writing a book titled, coincidentally—and clumsily—enough, “The Wall Street Journal Guide to the End of Wall Street As We Know It”.

It hits a wrong note early on by focusing on Fannie Mae and Freddie Mac first, as if they were the key players in this crisis, when we know that they were not.

It corrects course by then focusing on the easy money that came from incredibly low borrowing rates from the Federal Reserve and how Wall Street took on loads of debt and created instruments like collateralized-debt obligations that it didn’t really understand. Then, the ratings agencies, who were key enablers of the debt bubble in giving AAA ratings to instruments stocked with subprime mortgages.

My old boss and the current Money & Investing editor Ken Brown has a good synopsis here:

And so the amount of borrowed money in the U.S. Increased tremendously over those years. Anyone who could sign his name to a piece of paper could get a $300,000 mortgage. nobody really cared if they could pay it off because it was getting sold and sold and sold in different structures to different people who really didn’t understand what they were buying.

And WSJ blogger Heidi N. Moore makes a good point:

They got involved in instruments and securities that they didn’t quite understand. but the pressure was so high to be able to get high returns and to do as well as the next guy, that they all followed suit, without really examining closely what they were getting into.

And Dennis Berman makes a fascinating historical comparison of the credit-default swap market to 18th-century parlors that took bets on whether a ship going out to sea would ever come back.

In the second part of the series, the Journalistas put blame on regulators, Alan Greenspan, the credit-ratings agencies, and the complexity of securitization.

Kansas is certainly right here when he says:

The regulators were too interested in watching Wall Street succeed and going from riches to riches.

But that doesn’t mention that there was a distinct ideology, ascendant for nearly three decades (including the Democratic Clinton years), behind the regulators’ hands-off approach.

Deputy Managing Editor Dan Hertzberg is solid here in calling out Alan Greenspan:

Alan Greenspan says, “Oh, I’m surprised the banks didn’t have better risk controls. Well, the purpose of a regulator is that the banks do have better risk controls and that they’re aware of what’s going on.

As is Economics Editor David Wessel:

The reason it was so uncomfortable to see Alan Greenspan testifying before that House committee and saying that basically what I got wrong was my fundamental understanding of how the system works. So the things we got wrong were not details. The things we got wrong were major checks and balances and safety valves in the global financial system.

But then there’s a big hole where the whole production jumps to September 2008 and the decision by the government to let Lehman Brothers fail. Where’s a discussion of the vast crookedness in the mortgage industry, fed by and encouraged by Wall Street? I don’t get much sense from this video of the gigantic CDO machine that stretched from Orange County to Wall Street. But then, this is somewhat characteristic of the Journal’s coverage overall.

In the third part there’s a moving moment when Berman talks about having his faith in our nation’s institutions utterly shaken—but then, in the same breath as he blames banks and regulators, also blames the rest of us as consumers.

That’s quickly followed by Moore’s assertion that:

The flat screen TVs and the two homes and the two cars—we all thought we could participate in that.

And Kansas piles on:

For too many years people borrowed too much, spent too much, lived beyond their means, and the time of reckoning has come to all of us.

This everyone-is-to-blame worldview is almost an article of faith among business journalists generally, not just those at the Journal.

Sure, there are lots of people who over-borrowed to buy things they didn’t need—not that the money wasn’t handed out like candy after a heavy bombardment of marketing—but the big problem, which goes unmentioned here, is wage stagnation for everybody but the top one or two percent. I’m not denying that lots of us have overspent, but real wages have gone nowhere over the last four decades, and declined over the last several years. It costs a fortune to go to college and a mini-fortune to pay for health care every year. Don’t you think that’s a bigger structural, macroeconomic problem than folks buying HDTVs on their credit cards?

(Audit Recommendation: News Corporation should buy all staffers copies of Two-Income Trap by bankruptcy experts Elizabeth Warren and Amelia Warren Tyagi or give everyone an hour to read this M.I.T. study.)

That said, I do like that the documentary is straightforward in pronouncing how bad things really are. You can see it in the reporters’ faces and hear it in their words: It’s like they’re somewhat shell-shocked covering a war gone very bad.

All in, it’s a great effort by the Journal’s new media team and an interesting look at what its news team can do when unleashed from the written word. It’s a glimpse of what journalism could become a few years from now.

But first, it’ll have to overcome technical challenges. This piece was supposed to have been posted yesterday, but the video player crashed repeatedly on multiple computers.

So viewers who thought they’d devote half an hour to watch faces made for print (kidding! You’re beautiful—all of you! Don’t ever change!) talk about financial history probably gave up somewhere about five minutes into it, which is when the player crashed on us for just the second of at least fifteen times.

Fortunately for you, I’m paid to do this kind of thing, so I persevered through five crashes to watch it in its entirety (helpful hint: when it crashes, you can easily drag the scroll bar to where you left off). You may say I’m quibbling here, but this is $26 billion News Corporation, not, say, an industry trade show! As of 2:15 p.m., the video just flat crapped out.

We’re hoping they’ll fix it. Despite an editorial misstep or two, it’s worth watching.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.