Is the Financial Crisis Also a Crime Story? What Happens When Reporters Pursue the Wrong Narrative in Covering Financial News? It Is a Personal Story with Deeper Implications
Schechter, Danny, Nieman Reports
My 2006 investigative film, In Debt We Trust: America Before the Bubble Bursts, exposed subprime lending and abusive credit practices and warned of the dangers of a financial meltdown. Some friends and critics dismissed the documentary as alarmist, calling me a "doom and gloomer."
I confess that I felt very alone as I probed what was an unfashionable subject in our then bubble-promoting news media. Reporting on an impending financial crisis at a time of economic boom didn't fit the prevailing story line. Yet it was clear that our economy had changed from a focus on production to consumption. Debt fueled our growth, and hedge funds and private equity companies were in command. Main Street had given way to Wall Street.
In my essay, "Investigating the Nation's Exploding Credit Squeeze," published that spring in Nieman Reports, I laid out my findings and appealed to financial journalists to take a look at these issues. Few did. Perhaps my message was ignored because of my lack of "standing" as a financial journalist since I was not then at a mainstream outlet. I had attended Cornell University's School of Industrial and Labor Relations and the London School of Economics and I produced the first prime-time investigation for ABC News on the savings and loan crisis. Still I wasn't an "insider," a member of that club of self-styled experts who worked for financial media. Many of those "experts" had experience on Wall Street or had graduated from the leading business schools, which suggested to me that their reporting perspective might be embedded in the corporate narrative.
In an interview I did with Georgia's former Governor Roy Barnes for "In qDebt We Trust," he made observations about Americans at large that also spoke to the blinders so many journalists were wearing. "It is shocking to me that intelligent people, educated people, have not taken time to think about this. We cannot sustain over an extended period of time these high levels of debt," Barnes told me, "... and there is an end to the amount of credit ... in other words, when it gets so leveraged, it will create an economic crisis so deep that it will threaten us as a nation.... And nobody seems to be concerned about it."
I continued my investigation. In 2007, I published "Squeezed," a collection of essays and blog posts, as an e-book. Then a year later, before the collapse of Lehman Brothers, a book I wrote called "Plunder: Investigating Our Economic Calamity" went to 30 publishers, all of whom rejected it. The reason: The topic was not of significant interest.
Soon after, the ground began to shift. In March 2008, Bear Stearns, the nation's fifth largest investment bank, crumbled and JPMorgan Chase bought its remains quickly in a fire sale, with intervention by the Federal Reserve. When the markets seized up, reporters began paying more attention. CNBC correspondents appeared on NBC with more frequency, as explainers, not as investigators, which was in part a sign of newsroom cutbacks. Warnings from experts were reported--such as the 2007 statement by the National Association for Business Economics: "The combined threat of subprime loan defaults and excessive indebtedness has supplanted terrorism and the Middle East as the biggest short-term threat to the U.S. economy."--but were rarely reinforced by follow-up stories or by genuine debate. Reading or watching the news in the spring and summer of 2008 offered little sense of an impending crisis. Talk of economic dangers--largely confined to business sections and op-ed columns--rarely became newsworthy in ways that would register with the average American. Nor did presidential candidates during that election year talk much about Wall Street's responsibility, job loss, or home foreclosures.
In thinking about why financial issues didn't gain the traction they deserved, I return to a maxim I learned at ABC News. …