What Watchdog? How the Financial Press Has Failed the American Public
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From revelations about this week’s hasty, multibillion-dollar bank settlements to AIG’s brief threat to sue the federal government for its own $128-billion bailout (which the company contends wasn’t as generous as other bailouts), 2013 is already shaping up to be another year of government-backed wins for Wall Street.
As the New York Times’ Gretchen Morgenson wrote, “If you were hoping that things might be different in 2013 — you know, that bankers would be held responsible for bad behavior or that the government might actually assist troubled homeowners — you can forget it. A settlement reportedly in the works with big banks will soon end a review into foreclosure abuses, and it means more of the same: no accountability for financial institutions and little help for borrowers.”
This type of clear condemnation of Wall Street and its lack of accountability remains a rare voice in mainstream media, with few willing to join Morgenson and Rolling Stone’s Matt Taibbi on their crusades against banking abuses.
The lack of outrage or investigation by mainstream media comes in stark contrast to the public response to the settlement announcements. The comments sections of settlement-related articles are bursting with scathing comments--including demands for both criminal prosecution for bankers and more investigative journalism in the U.S. In an LA Times poll, 94 percent of respondents said that this latest settlement agreement lacked appropriate transparency.
So if readers are hungering for more information and outrage, why is the mainstream press so soft on Wall Street? Is it the last three decades' rampant media consolidation, which has put 90 percent of the nation's media in the hands of only six major corporations? (That's down from 50 companies in 1983.) What about the increasing magazine and newspaper ad revenue coming directly from Wall Street? Or perhaps it's even due to a redefinition of what constititues financial journalism?
Pulitzer Prize-winning investigative journalist Dean Starkman, whose 2009 Columbia Journalism Review article “Power Problem” outlined just how badly the financial press failed in the lead-up to 2006, has some ideas.
Laura Gottesdiener: Thanks, Dean, for taking the time to talk. To start simple: In your mind, what’s the role of the press--if it’s doing its job?
Dean Starkman: To me, journalism is particularly important because it is the oxygen of democracy. At its best, it is the main thing that is capable of explaining complex problems to a mass audience.That’s its most critical role--and its most difficult task.
Looking back over the 20th century, the great stories are the ones that pull the curtain back on things that are truly complex, baffling and dangerous problems. I’m thinking particularly of an iconic story that journalists stand up and salute: the Standard Oil series from 1902-1904. This knowledge allowed the public to participate in the question of trusts, and the rest is literally history. The government filed an anti-trust case, and Standard Oil was broken up in 1911. That’s the gold standard, the benchmark for journalism.
LG: So how does this relate to today’s financial press?
DS: The financial system is almost deliberately complex; there’s that famous quote by the head of Morgan Stanley, when he said something along the lines of, “We create things that people don’t understand on purpose.”
To me the business press is put on earth to help the public understand complex problems, and certainly the mortgage frenzy was one of them. And that’s where I have a bone to pick with the financial press.
LG: That’s a nice way of putting it. In your piece you call the lead-up to 2006 a “general system failure” for the media, and wrote that the post-crash reporting gave the “short shrift to the breathtaking corruption that overran the mortgage business.” You also diagnosed the financial press today with Stockholm Syndrome.