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Why Did Financial Journalists Miss the Financial Crisis?

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I'm not a financial expert (I'm not even an Econ major), I'm not a media expert, and I'm definitely not a financial media expert. Most of my exposure to financial journalism comes from getting stuck watching "Mad Money" reruns while I'm at the gym, and of course, watching Jim Cramer get trashed on the Daily Show. But I'm still comfortable saying that I think Financial Times editor Lionel Barber missed the boat in his talk at Yale on Tuesday, titled "Did Financial Journalists Miss the Financial Crisis?"

The short answer to that question, according to Barber, is yes. He pointed to a few specific dangers most journalists failed to pick up on, including deregulation of over-the-counter derivatives and leverage. While counting his own FT as an exception, in particular the talented anthropologist-turned-reporter Gillian Tett, Barber admitted that even the FT failed to provide "sustained coverage" on the economic threats.

But he barely touched on some of the broader criticisms, including the mainstream media's allergy to stories that outline problems of a highly technical, complex nature or stories that might have come off as unnecessarily pessimistic when the credit bubble was still growing. And before making any of the above admissions, Barber first pointed out "by way of mitigation" that most political leaders, regulators, and economists were all starry-eyed cheerleaders of the credit boom, too. Since when do instances of political oversight "mitigate" journalistic oversight? Aren't reporters supposed to be political watchdogs?

I was also disappointed that in a half-hour lecture, Barber spent less than two minutes on another important question: Where do we go from here? In the Q&A session that followed, I was glad to hear a student ask Barber whether certain stories--such as the AIG bonuses, which amount to the tiniest portion of the government bailout--are being over-covered, ignoring larger issues. "Can you give me an example of specific issues that the media isn't covering?" Barber asked in response, then smirked when the student hesitated. That was a little mean. The point is that we're ignorant undergraduates who read the New York Times, which Yale gives us for free: As the journalist from the more specialized FT, Barber should enlighten us! He finally answered, "The media are not carrying the pitchforks. We look for the positive stories, for the signs of recovery...for the shades of grey. But you can't ignore the public mood." (After the talk, I asked Barber whether financial journalism is improving where it had previously failed to deliver, and got more of answer. He said that the issue of what states were actually going to do with the bailout money wasn't getting enough coverage.)

The remainder of the questions came from people who seemed to be either economics professors or New Haven residents working in the financial sector, who basically wanted to ramble about their concerns over nitty-gritty economics policies. Following some lukewarm exchanges, Barber finally threw up his hands and said, "I'm going to Washington tomorrow, and I'll convey your concerns."

The lecture was pretty sparsely attended. About 30 people, less than half of whom appeared to be students, were scattered in an auditorium that seats more than 150. (This may be partly because students don't want to schlep themselves over to Luce Hall, which isn't all that close to campus dorms, and because it was pouring outside. Also, Barber read his speech more-or-less verbatim from the slightly abridged version that he curiously posted on the FT website a few hours before doing the live version.) In the editorial workshop later that evening, Barber talked more personably with about 15 students. Perhaps to give the handful of aspiring journalists in the room some rays of hope, he began with why the FT isn't in danger of going under any time soon.

Not all of Barber's reasons were necessarily comforting. There are no jumps in the FT--you never have to turn a page to continue a story. Instead there are a series of blurbs on the front page which Barber calls far superior to "boring" 700+ word stories. (For those of you who are still reading this, I'm passing the 700-word mark right about now). But there is something to be said for being more concise--and the FT's inner pages have longer stories. Other salient points include more openness to double bylines, letting reporters work as a team on a story. In addition, many of the FT's staff reporters have previously worked in the financial sector; those who haven't, Barber places (disconcertingly, he admits) in "the cult of the gifted amateur," as reporters who can quickly absorb specialists' knowledge and ask the right questions. Full-time staff reporters based all over the world also offer a more global perspective at a time when many papers are shutting down their foreign bureaus. And the FT can afford to do all this because it isn't cheap. In fact, the price of the paper on the newsstand has risen from $1 to $2.50--and retail sales have not declined.

Barber brought up none of these points in his talk (he touched on staff training in the Q&A session). That's too bad, because their applicability extends beyond financial journalism to the news media in general: If we think coverage leading up to the financial crisis was bad, Barber told us at the workshop, "Iraq was far worse." The take-away for me is that financial journalists failed because they're in the same straits that most journalists have been in for a while now: Understaffed, facing even more job cuts, forced to slash content, and in some cases, poorly managed and unduly influenced by their revenue sources and by the public.

All the more reason for print media to think seriously about the need for a complete overhaul. In the meantime, I'll be reading the Financial Times more often--that is, whatever they'll give me online for free.