The Failure of the Business Press
February 11, 2009 1:25 PM Subscribe
How Could 9,000 Business Reporters Blow It? A former Wall Street Journal writer dissects why business reporters bought the bull—and missed the biggest story on their beat.
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from the linked Mother Jones article:
FOR CASUAL readers of business coverage—that is, most of us—the past 18 months have been a crash course in things we never knew existed but that, we are told, have already done us all irreparable harm. Not only are the problems catastrophic, goes the somewhat frustrating message, but it is already too late to do anything about them—other, that is, than pay for them.
[...]business journalists as a rule are as smart, sophisticated, and plugged-in as they seem. And yet that army of professional business reporters—an estimated 9,000 or so nationwide in print alone—for all practical purposes missed the biggest story on the beat. Why?
In addition to examining the question of why the mainstream business press mostly failed to recognize, predict, or properly understand the current financial crisis, the author of the article, Dean Starkman--who worked as a Wall Street Journal staff writer for eight years ending in December 2004 and now critique[s] the business media full time at the Columbia Journalism Review
--also addresses the dismal failure of the financial regulators:
IT WASN'T JUST the media abdicating their watchdog role: Just as financial news outlets were weakening, regulators were also abandoning the field, leaving business reporters starved of the investigative leads they rely on.
In 2002, the [FTC] announced a then-record $240 million predatory lending settlement involving Citigroup's giant subprime units, and covering no fewer than 2 million customers. Since then the FTC has brought no major consumer lending cases. Zero. The last such case brought by the Office of the Comptroller of the Currency, against Providian National Bank, came in 2000.
It is worth remembering that prior to the Enron, WorldCom, Adelphia, and Tyco scandals earlier this decade, the SEC had already opened formal investigations into each doomed company—forcing disclosures that tipped off investors, yes, but also providing road maps and official cover to the financial press. (The problems at Enron, a special case, were first uncovered by a short seller, who tipped off reporters.)
Contrast that with the most recent disasters: Bear Stearns, Lehman Brothers, AIG, Fannie Mae, and Freddie Mac had all collapsed before the SEC had even launched an investigation....