As a service to the business-news trade, The Audit would like to offer a few observations about the current financial crisis that may prove helpful in coverage going forward. Our list of some inconvenient truths:
1. Your beat just blew up.
From a journalistic standpoint, what we are experiencing today is the equivalent of the city hall reporter arriving for work one day to find the mayor and city council being led out in handcuffs. If the business press were, say, a nuclear industry reporter, this is having most of the reactors on your beat melting down to China. What to tell the boss?
The business press purports to cover business and nothing so closely as it does Wall Street. This is the area business reporters claim to understand. This knowledge is what separates a business reporter from other kinds of reporters. It is why there is a business press. So the beat covered by many publications and thousands of reporters and editors has collapsed.
2. To say, “your beat just blew up” is not to assign blame. It isn’t the end of the discussion but only the beginning.
3. The crisis presents a moment for reflection. For the business press, there are only two options when considering what has happened here, neither particularly good. Either the business press institutionally provided appropriate arms-length scrutiny of the financial-services industry, including investigative work, opinion, analysis and rigorous beat reporting that provided decision-makers, including readers, with fair warnings of the coming collapse, and it was ignored, or it didn’t do the work in the first place. We know that the answer is some combination of the two. But, if we accept the foregoing logic, then best case for the business media is that what it writes doesn’t matter, in which case, why bother?
4. As journalists, we have to believe journalism matters. Therefore, there is a high probability here of journalistic failure.
5. The current generation of business reporters is probably the best-educated and most sophisticated ever. Everyone knows it entirely capable of providing the needed scrutiny and requisite skepticism, if properly directed. So it seems we have a leadership problem.
6. That said, it is undoubtedly true that the ranks of business journalism have been thinned of its most experienced hands due to the media’s financial troubles, and investigative reporting has become the domain of a surprisingly small elite. There has been a price paid for this. Again, this is an issue for business media leadership.
7. Business media outlets that claim to provide authoritative coverage of Wall Street during good times should be first in line for scrutiny now. These would include any publication with the words “wall” and “street” in its name, as well as anything named “deal,” “New York,” “business,” “investors,” and for that matter, “times” and “day.” Bloomberg also apparently boasts supremacy in coverage of the markets that just melted. Oh well. And Forbes and Fortune, you’re in this, too.
8. For any one near Wall Street, including journalists who cover it, the need for a bailout, whether it eventually passes or not, should be the source of some embarrassment. For U.S. taxpayers to be responsible for one nickel of any of this is a disgrace. I know this is known in the business media but it needs to really sink in, to be internalized. Taxpayers had nothing to do with any of this. My impressionistic take is that coverage and opinion reads more like “it’s a disgrace, but we have to save the economy” or even “it’s a disgrace, but taxpayers might not have to pay as much as it first appears.” No, there are no buts. This is a disgrace.
9. Criticism of the financial media is already harsh and is bound to get harsher. In many cases, though I hope not here, it will be unfair, driven by ignorance, opportunism, anti-business bias on the left, anti-journalism bias on the right, what have you. On the other hand, as the messy process of finger-pointing begins, it is worth remembering that the bailout is only part of the hardship ordinary people must bear for the financial-services industry’s excesses. The first part comes in the yet-to-be-measured equity loss, not to mention mental anguish, borne by most of the four million or so foreclosees. In essence, this is a wealth transfer from the bottom to the top. The third part is the extended recession we are likely to enter. The fourth part is by pension and mutual funds hurt by what was essentially Wall Street’s sale of billions of dollars worth of defective products. It will be hard for the business media, but much harder for their readers.
10. Journalism is something but it isn’t everything. The last eight to ten years has seen dramatic decrease in journalistic resources just as journalism’s responsibilities have increased. The retreat and disempowering of the Securities and Exchange Commission, the Office of Thrift Supervision, the Comptroller of the Currency, Fed bank examiners under Greenspan, the Commodity Futures Trading Commission, the Justice Department, and other key federal agencies, piled more and more responsibilities on the press—responsibilities, I would argue, it did not recognize and was not culturally prepared to shoulder.
There’s more, but that’s enough for now.
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.