Planet Money’s Jacob Goldstein makes a great catch this morning, noting that The Wall Street Journal and New York Times have stories about Wall Street and the delayed installation of Dodd-Frank regulations, but that “they tell very different stories about what the delays mean.” And indeed they do.
The Journal‘s frame is that Wall Street is upset over the delay of derivatives rules and that it’s causing “uncertainty.” Here’s its lede:
Banks, investors and companies are scrambling to cope with uncertainty caused by regulators’ delays in fleshing out the Dodd-Frank financial-overhaul law, amid fears the holdup might disrupt the $583 trillion derivatives market and spark a wave of lawsuits.
The Times, though, points out that it’s Wall Street that is delaying the rules:
The delays come as regulators extend public comment periods on the rules, and as some on Wall Street and in Congress resist the changes…
But the efforts were especially apparent at a hearing last month in Washington related to derivatives. Some of the most powerful players in the derivatives market — which is closely controlled by just a small group of banks — argued that the government should allow a slow pace of changes for rewriting derivatives contracts.
Moreover, no less of a Wall Street friend than Tim Geithner says the banks are throwing up roadblocks to the rules, the Times notes:
On Monday, the Treasury secretary, Timothy F. Geithner, spoke about the Dodd-Frank rules in a speech in Atlanta, warning that there were efforts by groups that oppose the reform to starve regulators of the resources they need to put new rules in place.
“Those in the U.S. financial community who are supporting these efforts to block resources and appointments are looking for leverage over the rules still being written,” Mr. Geithner said.
This is a prime example of the Times out-Journaling the Journal, giving us the context and background we need to get our arms around what’s really going on. The WSJ misleadingly presents the story almost as if it’s a natural disaster—delays that just happen for no reason or, if you read between the lines, government incompetence. But while regulators surely deserve some blame here, their problems are not happening in a vacuum. Here’s the Times:
“There’s an attempt to kill this through delay,” said Michael Greenberger, a law professor at the University of Maryland and a former official at the Commodity Futures Trading Commission, which is in charge of writing batches of the rules. “The difference between eight or nine months and 24 months could be cataclysmic here.”
Let’s reduce these stories to their essences to see more readily what’s going on here.
The Times says banks are trying to run out the clock on regulations. The Journal says banks are upset about uncertainty caused by the delays in the regulations. So we can deduce from looking at the information from both stories that banks aren’t concerned about the delays at all—how could they be when they’re pressing to slow the process down? They’re concerned about the regulations themselves.
In other words, they don’t want them at all, and they’re still “uncertain” if they’ve bought enough politicians and captured enough regulators to seriously water them down or delay them until the Republicans take the White House next year and scrap them entirely.
Which just goes to show you, as we’ve seen before with the Journal, that “uncertainty” is a red flag that an argument is almost surely utterly bogus corporate PR.
The Journal was happy here to regurgitate the spin. Applaud the Times for not buying it.
Further Reading:
“Uncertainty” Trotted Out in the Journal. Business code for “we may not get our way.”
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 rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.