Faces of the Crisis

By Alec Klein
March 12, 2009

Mortgage-backed securities. Collateralized debt obligations. Credit default swaps.

Whew.

Such arcane terms must naturally be understood by investigative business reporters trying to unravel today’s financial crisis. And yet, the challenge -as always - is to find a way to tell the story in an understandable and compelling way: through people, not simply by numbers.

For my final project as an investigative business reporter at The Washington Post, before joining Northwestern University, my editors gave me the task of reporting and writing a comprehensive narrative that explained the U.S. housing boom and bust even as it was still unfolding.

One problem: I knew little about the topic. Another problem: I had a couple of months to produce the definitive piece.

Where to start?

I had the benefit of two major advantages. For one, I was teamed with a young, smart and hungry reporter, Zachary Goldfarb, who was willing to put in the legwork as we rushed to make sense of this complicated story. And two, we were assigned to work with Larry Roberts, the Post’s brilliant investigations editor with whom I had worked on many projects. Larry immediately recognized the challenge of telling such a complicated story and came up with a creative solution. He divided the story into a two-track narrative.

Track A, as it was called, would tell the stories of regular people who had experienced the boom and bust on the ground. Larry also envisioned the kind of folks to profile and we reporters went out and found them: a real estate broker; a subprime mortgage lender; and a representative of a municipality who had felt the impact of the meltdown. The track B narrative would tell the stories of the usual suspects: officials at the Federal Reserve, the U.S. Treasury, Congress and elsewhere in officialdom. This dual-track strategy turned out to be an elegant way to tell the story because it allowed us, in the track A narrative, to report the vivid stories, not told before, of ordinary folks who were caught in the financial vortex—but it also allowed us, through the track B narrative, to tell the bigger-picture story among U.S. leaders pulling the economic levers.

So we told the tale of a mortgage broker whose description of the height of the housing mania led the three-part series: “The black-tie party at Washington’s swank Mayflower Hotel seemed a fitting celebration of the biggest American housing boom since the 1950s: filet mignon and lobster, a champagne room and hundreds of mortgage brokers, real estate agents and their customers gyrating to a Latin band.” We also wrote about an executive of a subprime lender, who in the second day of the series told of tense closed-door meetings about ever-increasingly risky loans that eventually collapsed. And in the third and final installment of the series, we went to Florida where a panic-stricken schools superintendent looked on in shock while his funds to pay his teachers were cut off as the financial contagion swept across the nation.

The term “collateralized debt obligation” appeared a single time in the three-part series.

The benefit of the track B narrative was that we were able to also tell the stories of key players, such as Fed Chairman Ben Bernanke, his predecessor Alan Greenspan and other denizens of Washington without inundating the stories with the commentary of officials whom we had all heard from countless times in the media. This is not to say their stories were not important; they were. Indeed, we were able to break new ground about Greenspan’s role and what Bernanke surmised and how the Fed responded in private gatherings.

But a narrative that only told their stories would have missed the opportunity of bringing the color and life of those who were experiencing the calamity first hand. Instead of just talking about the fluctuation in interest rates, we were able to talk about a busboy who made a killing as a mortgage broker. Instead of just talking about the drop in the Dow Jones Industrial Average, we were able to talk about a subprime lender that said it had discovered evidence of fraud in loan documents, such as doctored bank statements. And instead of just talking about the rise in unemployment, we were able to talk about a school district that scrambled to obtain a $10 million loan overnight -just in time to meet payroll.

The three-part series was my last work for The Washington Post before I became a journalism professor, and I wouldn’t have wanted it any other way; after all, I try to impart similar lessons to my students - that is, cut through the clutter, find the exacting detail and tell a story through people, not just numbers.

Alec Klein is a bestselling author, award-winning investigative business reporter formerly of The Washington Post and now professor of journalism at Northwestern University’s Medill School of Journalism.

Copyright © 2009 Donald W. Reynolds National Center for Business Journalism