Did the watchdog forget to bark?
The opening panel at the Society of American Business Editors and Writers annual meet in Denver addressed an interesting question: Did 9,000 business journalists blow it when it came to ringing the alarm bells on the financial meltdown?
The five SABEW panelists — The New York Times’ business editor Larry Ingrassia, Columbia Journalism Review critic and former Wall Street Journal reporter Dean Starkman, personal finance columnist Jane Bryant Quinn, Emmy-winning former ABC News investigative reporter Allan Dodds Frank and Greg Miller, a professor at the University of Michigan — agreed that the financial press could have done more. Newspapers, wire services, magazines and television stations could have been more aggressive, and they could have taken more pains to explain why complex things like mortgage-backed securities might matter to the average reader.
But journalists can hardly be accused of “blowing it” when even doomsday pundits like Bob Shiller and Nouriel Roubini could predict only parts of the nightmare scenario that is unfolding in the U.S. economy right now, the panelists said.
CJR’s Starkman, who’s just completed a “deep dive” into the news coverage leading up to the financial crisis, said his report, which will be up for public consumption next month, found that the top journalism outlets didn’t do a good enough job of signalling that the tiny sparks in the housing and securities markets could flame up into a giant financial blaze.
“If the question is, did the business press provide adequate warnings to the public about the crisis, the answer is negative,” Starkman said. His 6,400-word report, which surveyed scores of articles in publications like the NYT, WSJ, Forbes, Fortune and others between January 2000 and June 2007, concludes that the investigative reporting started out strong but then downshifted to “good, but not sufficient,” as reporters wrote about the housing bubble and defective mortgage products, but failed to focus on the lenders.
The Times’ Ingrassia took issue with Starkman’s as-yet-unreleased report, rattling off a long list of stories his paper had done in the early years about “predatory home equity loans (that) were being diced into mortgage-backed securities,” out-of-control mortgage markets and even excess executive pay. “I think the record shows that the press was there in laying the groundwork and ringing the alarm bell.” But, Ingrassia added, there was little more reporters could do if regulators didn’t heed the news and readers didn’t “seem receptive” to it.
Would politicians have done something to avert the crisis if people had cared more and pressed their legislators for better regulation? Which begs a further question — did reporters fail to write stories in a way that would make people sit up and take notice?
Maybe journalists couldn’t do more than they did. “The job of the press is most effective when it stirs people up so they can exert political pressure,” said Greg Miller, who teaches at the University of Michigan’s Ross School of Business. But financial journalism has become much tougher to do in recent years, he added.
“There are no longer just investment bankers doing everything today,” Miller said. “Everyone’s a specialist. No one banker could explain the entire process of how securitization worked. So it’s asking an awful lot of journalists to break it down and explain when bankers don’t know.”
And if journalists do begin to understand how it all works, Miller said a further challenge is: “How do we make this simple enough for people who don’t spend their lives in this to understand?”
The panelists — and moderator Paul Steiger, a former managing editor of The Wall Street Journal who now runs the investigative journalism outfit ProPublica –all agreed that understanding the nuts and bolts of the housing and securities markets and how it all led to the meltdown is a tough call for reporters. But they did take journalists to task for not being enough of the curious skeptics they are supposed to be.
Dodds Frank blamed a “culture of reverence” that has crept up in financial journalism, especially in television outlets like CNBC, for contributing to a dearth of early-warning signals. “What has happened in broadcast journalism… where business is now glamorous but real analysis is switched out for the big-get CEO interview.” Softballing replaced hard-hitting questions, he added.
Journalists also drank the Kool Aid when it came to an unquestioning acceptance of deregulation and free markets that would self-correct as the right way forward for capitalism, said Jane Bryant Quinn. “It became very unfashionable to say we ought to regulate,” said Bryant Quinn, who writes columns for Bloomberg.com and Newsweek. “We drank the Kool Aid, saying free markets are the best, (but) we should have paid enough attention to where the regulatory authorities could fail.”
In the end, a member of the audience reframed the original question in the context of the journalism industry, giving it a darker pall: Did the press not do enough to get the public interested, and therefore the regulators to do nothing, and what does that say about the relevance of the journalistic enterprise? Quite a question to mull over as newspapers and other media struggle to find reasons to justify their existence.
Keep an eye on:
- Verizon and Apple are discussing the possible development of an iPhone for Verizon, with the goal of introducing it next year, people familiar with the situation tell USA Today (USA Today)
- The upfront haul for ABC, NBC, CBS and Fox will decrease 15 pct from the 2008 tally to about $7.7 billion, according to a projection by Barclays Capital (The Hollywood Reporter)
- The fast-shrinking newspaper business set a new standard for job insecurity in the last couple of weeks (NY Times)