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When Comedy Central
talk show host Jon Stewart recently
took on Jim Cramer, host of CNBC's "Mad Money," for faulty
financial predictions, the lens of scrutiny around the current economic
crisis swung back on the media.
Cramer squirmed under Stewart's
fire for several minutes as the comedian indicted him and his network
for not warning viewers about questionable business practices or soon-to-be-toppled
Wall Street titans in the lead up to the financial meltdown.
By contrast, the discussion
among members of the business media in Denver last month was not quite
the stuff of prime-time, but the event raised many of the same questions
as the Stewart v. Cramer affair. The Society of American Business Editors
and Writers convened a panel of five business journalists and an academic
to answer a central question: When it comes to coverage of the meltdown:
Did 9,000 journalists blow it?
While Stewart may hold that
the news media are at least partially culpable in allowing the meltdown
take place, not everyone has the same take on pre-crisis business coverage.
Every panelist at the SABEW conference could name reporters that produced
articles warning about the dangers of the housing bubble, mortgage markets
and executive compensation.
Consensus, however, proved
harder to reach on questions like why such articles failed to raise
on alarm on the coming crisis and whether those stories are enough to
conclude the media fulfilled its role as a watchdog.
One possible culprit might
be a lack of tough questions on television news -- where reporters can
fear losing access to top executives, said Allan Dodds Frank, a television
journalist and president of the Overseas Press Club, at the forum.
"George Bush had harder
shoes thrown at him than [the questions] they throw at the CEOs on CNBC,"
Frank said. "So the whole effect of any probing questions has been
diminished."
And in some cases, journalists
may have focused on the wrong questions, such as, "Is Citibank
too big to fail?"
"Maybe we should have
asked the question, is Citibank too big to succeed? Is it too big for
anybody to understand how they're lending?" Frank said. "It's
our business to try to make the complex simple, but we let them hide
the ball on us too much."
Even with the stories that
did question the mortgage bubble, the vast scope of the business practices
that led to the meltdown eluded the press, said Dean Starkman, who runs
"The Audit," an online critique of the business press for
Columbia Journalism Review. He has recently published a piece analyzing
more than 700 articles written between 2000 and 2007 that warned readers
about an impending crisis.
"The stories written
were necessary but not sufficient," Starkman said in a phone interview
after the panel. "People didn't know lenders were running amok
because they weren't told, and they had no idea these out of control
institutions were being funded by Wall Street. That's why we're so surprised
today."
Starkman concluded that,
very simply, the business press failed to hold big institutions, like
Wall Street, accountable. Though he concedes that some aspects of the
buildup to the crisis were hard to fathom.
"I sort of sympathize
with the business press in sense that anyone really knew how radicalized
these corporations had become. Looking back, they were out of control,"
Starkman said in a phone interview after the panel.
As the problems mounted, the
connections became harder to make, and the story became harder to unravel.
Personal finance columnist Jane Bryant Quinn admitted that though she
wrote quality pieces about risky mortgage practices, "I didn't
think about following the daisy chain back. For example, I never heard
of a credit default swap until all of a sudden it started hitting me
in the head."
Not only were business practices
getting more complicated, but market forces had diminished the incentive
to dig deeper, according to Frank.
"What happened is: as
Wall Street got so complex, we couldn't figure out what they were doing,
and they saw no reason to tell us what they were doing, and the notion
of public interest broadcasters [we] once had -- because they were entitled
to the public airways -- went away with cable, even more so with
the Internet, so you have the quick coverage driving the complicated
analysis out of the marketplace," Frank said.
Add to that the fact that analysis
is difficult to show on television, he said.
"Try picturing or doing
a graphic of a collateralized debt obligation square," Frank said.
"It's a tough sell even if you have the appetite to do that story.
It's impossible."
So as the job of financiers
has become more specialized and more complex, the role of a journalist
covering them must evolve as well -- or regress, in a sense, Starkman
said.
"As we reinvent the media
and financial journalism, my thing is I think we have to not lose sight
of basic journalistic values," he said. When it comes to investigative
reporting, "you need not only just isolated handfuls of reporters,
but that investigative capability needs to be integrated into culture
of newsrooms more, and in the hierarchy of the newsroom."
That's much easier said than
done, Starkman admits. The recent problems plaguing financially-strapped
newsrooms are well-known. Senior reporters and editors who command the
heftiest salaries are often the first ones to take retirement buyouts
as media organizations look for ways to trim
staff.
The dangers of gutting regional
papers are particularly troublesome for financial coverage, said
Greg Miller, who teaches accounting at the University of Michigan's
Ross School of Business, at the Denver forum. Often the regional newspaper's
reporter is the most familiar with local companies identifies suspicious
practices before the national press.
So, as the financial world
gets harder to understand, there's growing pressure for general business
reporters to gain more specialized knowledge, coupled with the need
to become familiar with regional characteristics.
"We have fewer reporters,
and more things to be covered, and yet the things are more and more
complicated," Miller said. "I worry we'll end up with five
national business papers, and we lose the regional knowledge."
Larry Ingrassia of The New
York Times defended how the national media handled the story at the
Denver forum, pointing out many reporters at news organizations who
got the story right. So why didn't anyone listen to them? Some blame
human nature: tuning out warnings while the markets were doing well.
It could also be a matter of
professional courtesy, said Bryant Quinn.
"It became very unfashionable
to say we ought to regulate this, we ought to cap this, we ought to
stop this," she said. "It's very unfashionable generally to
start saying, as an extension of our business coverage, which is part
of this regulation, 'well, where is the Fed? Could they have done something
about it?'"
While Stewart's indignation
focused on Cramer and CNBC, the sentiments have nevertheless prompted
a great deal of soul-searching in the business media as reporters question
what they need to do to help prevent the next financial disaster.
---- By Mariana Minaya, Online NewsHour | 
