Tuesday, September 30, 2008

My Comrades-in-Journalism Are At Fault, Too

Already, there is a massive amount of finger pointing about who is to blame for yesterday’s failure of the rescue package in the House. Democrats blame Republicans, Republicans blame Democrats, dogs blame cats and vice versa. Alas, my former brothers and sisters toiling in business journalism’s verdant field must shoulder their share of the blame, not for yesterday’s vote but for not really covering what led to the need for such a vote.

So, to help former colleagues still covering business news for a living, I offer a few observations about the current financial crisis that may improve their coverage in the future because there are some inconvenient truths they need to face squarely and fix successfully.

The business media claims to cover business, and its reporters cover nothing more closely than Wall St. Your knowledge is what separates you from other beat reporter; it is why there is a business media. But the beat covered by many publications, reporters and editors has collapsed.

For business reporters, editors and producers, there are only two options when considering what happened, neither particularly pleasant.

Two Reasons

If you provided appropriate, arms-length scrutiny of the financial-services industry, including investigative work, opinion, analysis and rigorous beat reporting that provided decision-makers and readers with fair warnings of the coming collapse, the coverage was ignored by people who could have stopped it in time. Or, you didn’t do the job in the first place.

The answer is a complicated mix of the two. But that means the best case for the business media is that what it writes doesn’t matter or get read, so why bother?

It pains me to say so, but there was a failure of journalism in the Wall St. crisis, as big and devastating as journalism’s failure during the run-up to the Iraq war. Had reporters been digging through the underlying documents of credit swaps and the other convoluted financial products being created, my hunch is that a lot of the current problems might have been avoided as few of them could have withstood the bright light of public scrutiny.

Sadly, you did not do your job.

Best And Brightest

The current generation of business reporters is probably the best-educated and most sophisticated ever. Everyone knows they are entirely capable of providing the needed scrutiny and requisite scepticism, if properly directed. This didn’t happen so there is a leadership deficit in newsrooms.

True, business journalism has been thinned of its most experienced ink-stained wretches, as has happened on nearly every other major beat, thanks to the media’s financial troubles. Investigative reporting is a thing of the past. We all paid a price paid for this and it is another issue for editors and publishers to work through.

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.” For some reason, Bloomberg boasts of its supremacy in covering the markets that just blew up; it missed the story entirely. Oh well. By the way, the good folks at Business Week, Forbes and Fortune are culpable, as well.

Coming Criticism

Criticism of business publications and networks is harsh already and will get more biting. Much of the criticism will be unfair, driven by ignorance, opportunism and an anti-business bias on the left along with a congenital anti-journalism bias on the right. Some of it will be very fair.

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 are bearing 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 people who lost their homes. Basically, the massive foreclosure crisis is simply a wholesale transfer of wealth from the bottom to the top. British and European newspapers and networks have done a better job of covering this in the US than have our own, home grown, media.

The second part is the extended recession we are entering. Millions of people will lose their jobs, their health care and their hope for the future. There is a lot of talk about “Main Street” but too little coverage of what is occurring to the people who read or watch your coverage yet live off of Manhattan Island.

Third is the losses suffered by pension and mutual funds from Wall Street’s sale of billions of dollars worth of defective and possibly fraudulent products. It will be hard for the business media to explain this, but it will be much harder for their readers who are seeing the value of their mutual funds, 401(k) plans, IRA’s and other savings schemes disintegrate before their eyes.

Falling Resources, Rising Responsibility

The last decade has seen a dramatic decrease in journalism’s resources, unfortunately occurring just as journalism’s responsibilities have increased.

The disemboweling of the SEC, the Office of Thrift Supervision, the Comptroller of the Currency, bank examiners, the Commodity Futures Trading Commission, the Justice Dept. and other key federal agencies, piled more and more responsibilities on the press – responsibilities it did not recognize in time that it had and was not prepared to shoulder in any event.

At least three times since the turn of the 21st century, the only business activity so unique, special and important that it is specifically protected by the US Constitution, failed the country miserably: Reporting on what was in the Patriot Act, the lies being fed to the nation to trumpet the unnecessary Iraq war, and now the collapse of the financial sector.

These aren’t trivial matters; indeed, providing tough, independent, in-depth reporting on them is the reason journalism exists. But when owners, publishers, reporters, editors and producers collectively fail to do their job, our nation is less free and, in the case of the current crisis, a lot poorer.

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