Sunday, February 22, 2009

Blame the government, sure; but blame the press, too

A former Wall Street Journal writer explains how business reporters failed to report the run-up to the crisis, thus sacrificing any chance of us ultimately finding out exactly how the finance industry screwed us over. It's like a scene out of Fun with Dick and Jane:
Contrast [the Security & Exchange Commission's reporter-tipping investigations of Enron, WorldCom, Adelphia, and Tyco scandals] 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. The spectacle of Lehman employees carrying out boxes of records—on television!—was too much for Jonathan Weil, a Bloomberg columnist who is known for breaking an early Enron story in 2000 while at the Journal. In a column last September, he wrote "Is there anybody left in the government with a pulse? Where's the yellow police tape? How about a cease-and-desist order to prevent document destruction? Can anyone give me a good reason why Lehman offices shouldn't be treated as a crime scene now?"

But the regulatory absence only goes so far as an excuse for the press, says Michael Hudson, who began reporting on subprimes in the 1990s at the Roanoke Times and joined the Journal in 2006. He's now with the Center for Responsible Lending. "It's true the federal regulators disappeared," Hudson says. "But there were lots of state regulators who were going after this in a big way, lots of people on the ground, lawyers, consumer advocates, scholars, who saw what was happening, and the press didn't give them much attention."
Is it arrogance or laziness that keeps the press from asking the same critical questions that others outside of journalism are?

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