Today the Weekend Reader brings you The Watchdog that Didn’t Bark: The Financial Crisis and the Disappearance of Investigative Journalism by Dean Starkman, editor of the Columbia Journalism Review and fellow at The Investigative Fund at The Nation Institute. Starkman argues that the institutionalization of muckraking from the 1960s and the investigative culture of journalism have worn off. This has led to silence and unreported stories of corruption, as made evident in the years that preceded the 2008 financial crisis.
You can purchase the book here.
The U.S. business press failed to investigate and hold accountable Wall Street banks and major mortgage lenders in the years leading up to the financial crisis of 2008. That’s why the crisis came as such a shock to the public and to the press itself.
And that’s the news about the news.
The watchdog didn’t bark. What happened? How could an entire journalism subculture, understood to be sophisticated and plugged in, miss the central story occurring on its beat? And why was it that some journalists, mostly outside the mainstream, were able to produce work that in fact did reflect the radical changes overtaking the financials system while the vast majority in the mainstream did not?
This book is about journalism watchdogs and what happens when they don’t bark. What happens is the public is left in the dark about and powerless against complex problems that overtake important national institutions. In this case, the complex problem was the corruption of the U.S. financial system. The book is intended for the lay reader—not journalists, not finance aficionados—but those whom the historian Richard Hofstadter called the “literate citizen[s].” That would be anyone who wonders why an entirely manmade event like the financial crisis could take the whole world by surprise.
Few need reminders, even today, of the costs of the crisis: 10 million Americans uprooted by foreclosure with even more still threatened, 23 million unemployed or underemployed, whole communities set back a generation, shocking bailouts for the perpetrators, political polarization here and instability abroad. And so on and so forth.
Was the brewing crisis really such a secret? Was it all so complex as to be beyond the capacity of conventional journalism and, through it, the public to understand? Was it all so hidden? In fact, the answer to all those questions is “no.” The problem—distorted incentives corrupting the financial industry—was plain, but not to Wall Street executives, traders, rating agencies, analysts, quants, or other financial insiders. It was plain to the outsiders: state regulators, plaintiffs’ lawyers, community groups, defrauded mortgage borrowers, and, mostly, to former employees of financial institutions, the whistleblowers, who were, in fact, blowing the whistle. A few reporters actually talked to them, understood the metastasizing problem, and wrote about it. You’ll meet a couple of them in this book. Unfortunately, they didn’t work for the mainstream business press.
In the aftermath of the Lehman bankruptcy of September 2008, a great fight broke out over the causes of the crisis—a fight that’s more or less resolved at this point. While of course it’s complicated, Wall Street and the mortgage lenders stand front and center in the dock. Meanwhile, a smaller fight broke out over the business press’s role. After all, its central beat—the one over which it claims particular mastery—is the same one that suddenly melted down, to the shock of one and all. For business reporters, the crisis was more than a surprise. There was even something uncanny about it. A generation of professionals had, in effect, grown up with this set of Wall Street firms and had put them on the covers of Fortune and Forbes, the front page of the Wall Street Journal and the New York Times, and the rest, scores of times. The firms were so familiar, the press had even given them anthropomorphized personalities over the years: Morgan Stanley, the “white-shoe” WASP firm; Merrill Lynch, the scrappy Irish Catholic firm, often considered the dumb one; Goldman, the elite Jewish firm; Lehman, the scrappy Jewish firm; Bear Stearns, the naughty one, and so on. Love them or hate them, there they were, blessed by accounting firms, rating agencies, and regulators, gleaming towers of power. Until one day, they weren’t.
Critics contended, understandably, that the business press must have been asleep at the wheel. In a March 2009 interview that would go viral, the comedian Jon Stewart confronted the CNBC personality Jim Cramer with the problem. Stewart said, in effect, that business journalism presents itself as providing wall-to-wall, 24/7 coverage of Wall Street but had somehow managed to miss the most important thing ever to happen on that beat—the Big One. “It is a game that you know is going on, but you go on television as a financial network and pretend it isn’t happening,” is how Stewart framed it. And many understood exactly what he meant.