We Didn't Mention the Impending Financial Crisis Because You're too Dumb to Understand

Mike Riggs | October 6, 2008

Or something akin to that is the narrative forming in Howard Kurtz's Washington Post column on the role journalists played in the financial collapse. The response from new WaPo chief Marcus Brauchli is but one gem of many, many awkward admissions of culpability:

Still, he says, "I regret that when I was at the Journal, we didn't keep the focus on some of these questions, including the possible moral hazard posed by the structure of Fannie Mae and Freddie Mac. These are really difficult issues to convey to a popular audience. . . You do have an obligation as a journalist to push important issues into the public consciousness. We also have to remember you're pushing against a powerful force, which is greed."  

Greed? Greed kept them from reporting skeptically on Fannie and Freddie? What does that even mean?

Via Romenesko. 

Comments

|10.6.08 @ 10:35AM|#

Greed kept them from reporting on the market collapse? What does that even mean?

It's a weasel word for weaseling out of a responsibility that he himself claims he has to the public. What do you expect from these people, honesty? True self-reflection?

|10.6.08 @ 10:36AM|#

I read the quote differently. Sounds to me like he's saying that greed is a powerful force and that's one of the reasons it's incumbent upon journalists to push against it.

|10.6.08 @ 10:46AM|#

I read the quote differently. Sounds to me like he's saying that greed is a powerful force and that's one of the reasons it's incumbent upon journalists to push against it.

Agreed. He'd do well to admit that his paper, like many, have outsourced their journalistic duties to the white house press secretary and other press releases.

|10.6.08 @ 10:58AM|#

Yeah. It was either that, or people in the papers wanted to allow a meltdown in order to allow the forming of The United Socialist States of America?

Federal Dog|10.6.08 @ 10:59AM|#

It's a Freudian slip. Journalists do not profit by alienating the wealthy, and the journalists' greed stopped them from reporting known malfeasance by the wealthy.

Alan Vanneman|10.6.08 @ 11:04AM|#

It's remarkable that Brauchli pretends that the WSJ's readership is a "popular" audience. But Brauchli has a history of buckling before the powerful--most spectacularly when he allowed Rupert Murdoch to break all the promises he made about respecting the WSJ's journalistic integrity (and allowed Murdoch to pay him handsomely to do so).

Actually, the case against FM1 & FM2 was well-known--Alan Greenspan had been bashing them pretty regularly. And it's not like the Journal hadn't done good reporting in the past. The WSJ's frequent articles on Bear Stearns' frequent problems was one of the main factors that led to the firm's collapse. It's very difficult to find any meaning in Brauchli's statements at all. Not a good sign for the WP that they chose this guy for their leader.

Amakudari|10.6.08 @ 11:09AM|#

These are really difficult issues to convey to a popular audience.

Fannie and Freddie are government-backed entities with the public goal of increasing the availability of mortgage finance based on political whims. They have unreliable financial reporting and guarantee half of US mortgages. They charge low fees on risky mortgages they don't understand and may not be able to cover losses in a downturn. They contribute heavily to politicians that are responsible for their funding and business strategy at the taxpayer's expense.

How is that hard? WSJ readers are business types anyway, and that's a pretty lay explanation.

|10.6.08 @ 11:11AM|#

Doesn't a journalist take complicated matter and make it understandable? Tom Friedman is a particularly grotesque example with all his insufferable simile. Surely a quality journalist can distill something complicated into WSJ-level language.

|10.6.08 @ 11:12AM|#

The problem with the national media is two fold. First, none of them are very bright or know very much. Very few journalists have any kind of specialized knowledge in the fields they cover. As a result, they are very dependent on the "experts" for information. Since don't know anything, they really have no idea if the "experts" are telling them the truth or not.

The second problem is that because they are so dependent on experts in the field for information politicians for access, they really can't afford to be that subversive. Journalists hang out with politicians and know them and it is all a nice cozy club in Washington. Hell, half of them are married to politicians or important bureaucrats. Can you really expect Andrea Mitchell to give you an unbiased report on the economy or the failure of the fed in stopping the housing bubble when she is married to Allen Greenspan? I don't think so.

What happens is that the media become complete dupes for whatever prevailing wisdom is coming out of Washington. The prevailing wisdom early this decade was that Fannie and Freddie were doing great and the only people who said the opposite were evil conservatives bent on making sure that black people couldn't move into their neighborhoods. So, that is what the media reported. They didn't know enough to question the orthodoxy and even if they did, they are so provincial that they wouldn't have known the right people to talk to to get the story and wouldn't want it because it would make enemies among thier friends, relatives and sources.

|10.6.08 @ 11:16AM|#

You would think the media would learn from this and instead of just reporting this meltdown, look for future stories and get ahead of things. How about a little reporting on the financial condition of state and local pension funds throughout the country? That would interesting little time bomb to talk about. I am not holding my breath.

Brian Defferding|10.6.08 @ 11:17AM|#

John, well said. The other problem is how Joe Voter responds to it as a way of authority. "I saw it on the news" is still a line many use as reliable reference. Obviously all news is biased, but yet many of us still take the mainstream media for granted as a reliable source of information.

Don the libertarian Democrat|10.6.08 @ 11:26AM|#

I read the comment to say something like even if they had reported on the possible negative consequences of these investments, people would have still invested in them because they wanted to make money, i.e., because of greed. In other words, people were swept up in the frenzy of the market. It doesn't seem too hard or difficult to report now that people got screwed by these things, you can read the Reason posts on ratings agencies and Kling on CDF's. It does sound to me like the reporters aren't that bright, at least not bright enough to convey difficult subjects to their readers, which is the sign of a good reporter and the sign that they actually know what they're talking about.

Gilbert Martin|10.6.08 @ 11:33AM|#

"You would think the media would learn from this and instead of just reporting this meltdown, look for future stories and get ahead of things. How about a little reporting on the financial condition of state and local pension funds throughout the country? That would interesting little time bomb to talk about. I am not holding my breath."

I have seen some reporting of govt pension fund problem in places like Forbes magazine but it certainly isn't widely reported.

The same can be said for the massive unfunded liabilty for Social Security and Medicare.

|10.6.08 @ 11:37AM|#

Greed? Greed kept them from reporting skeptically on Fannie and Freddie? What does that even mean?

What do you mean, what does that mean? It's self evident. Everything bad that is happening in the economy is happening because of greed and deregulation. We have to pass more regulations and outlaw greed. Then everything will be good again. You know, just like after the New Deal.

David|10.6.08 @ 11:45AM|#

The WSJ is done. Has been for a long time. But especially now that they've become bailout whores.

Invisible Finger|10.6.08 @ 11:47AM|#

Greed probably meant that their ad revenues, and resultant salaries, were going up so why kill the goose that's laying golden eggs.

Of course, it's hubris and stupidity to deny that the golden goose existed while counting on said goose to live forever.

|10.6.08 @ 12:04PM|#

"What do you mean, what does that mean? It's self evident. Everything bad that is happening in the economy is happening because of greed and deregulation. We have to pass more regulations and outlaw greed. Then everything will be good again. You know, just like after the New Deal."


What is an easier story to tell, greedy bankers destroy capitalism or a complex story of how government regulation, greed, unitended consiquences and stupidity produced the crash? Option number one and that is what they are going to tell.

|10.6.08 @ 12:30PM|#

Warren

What do you mean, what does that mean?......You know, just like after the New Deal.

Nice snark.

Two other quick thoughts: Journalists, like lawyers and politicians, should really consider a more ethical line of work...like crack whore (Reason staff excepted, of course) *huge guffaw*

The rating agencies had a LOT to do with this mess.

"Sir, that is NOT a diamond, that is a cat-turd. Oh, yes sir, I totally forgot that the investment firms pay us ungodly amounts of money to locate diamonds. Yes, sir, I know that true diamonds are getting harder and harder to find. My bonus this quarter? Why do you bring that up? Oh, I see. You know, in retrospect, I believe that is a diamond, after all."

|10.6.08 @ 12:36PM|#

I think Marcus is merely siding with The Hammer, here; prices should only go up, and a "responsible" journalist should avoid rocking the boat, or otherwise impeding the upward climb of the DJIA.

|10.6.08 @ 12:41PM|#

Caught a bit of the Charlie Rose show over the weekend. He had on Kearns Goodwin, Cokie Roberts and some other journalist I can't remeber - all were bemoaning the fact that the Congress should have acted on the first round of the bailout bill, and that the only reason the hoi palloi were overwhelmingly against the bill was that they "just didn't understand" the issues like people we know do. Some diversity of thought.

classwarrior|10.6.08 @ 12:44PM|#

Greed in this context means keeping editorial content in line with what the owner's fellow corporate elite want people to think about the economy. Happens all the time.

|10.6.08 @ 1:01PM|#

"Caught a bit of the Charlie Rose show over the weekend. He had on Kearns Goodwin, Cokie Roberts and some other journalist I can't remeber - all were bemoaning the fact that the Congress should have acted on the first round of the bailout bill, and that the only reason the hoi palloi were overwhelmingly against the bill was that they "just didn't understand" the issues like people we know do. Some diversity of thought."

The group think that goes on in the media is really bad. It isn't jus this subject and it effects the public. You really can't have an intelligent conversation with most people about things like "renewable energy". This weekend I was talking to an otherwise very educated and smart friend about alternative energy. I proceed to explain the problems with wind and solar and how we are not quite where they could replace coal and nuclear and he looked at me like I was nuts. To him and to most people who just casually read the media, alternative energy is entirely ready to go and only greedy oil companies are keeping it from happening. My redneck relatives out in Kansas have a much better understanding of issues and a much more open mind about things than my highly educated Washington friends.

Paul|10.6.08 @ 1:40PM|#

Journalists... bah!

They still think the Stock Exchange is the economy.

Michael Ejercito|10.6.08 @ 2:10PM|#

Journalists... bah!

They still think the Stock Exchange is the economy.

If that was true, then Nixon's wage and price controls were a rousing success.

|10.6.08 @ 3:16PM|#

Capitalists will sell us the paper by which we shall regulate them.

voxpo|10.6.08 @ 3:51PM|#

Couldn't this be read as referring to the difficulty of pushing against the need/desire to sell advertising (which is harder if articles are less flashy)? Just a thought.

|10.7.08 @ 3:34AM|#

Perhaps the WSJ would still be Murdoch-free if Brauschli had ever bothered to read it. The WSJ editorial page had huge amounts of coverage on the risks of Fannie & Freddie from 2002 on, with lots of detail on their corrupt accounting and swollen, risky portfolios. I'm pretty sure that the news columns were reporting on this too, although not as aggressively as the editorial page.