Falling Short

By Alec Klein
May 11, 2009

Their absence was all too noticeable.

In the recently announced Pulitzer Prizes, not one went to a journalist who covered the still unfolding financial crisis, which just happened to be the biggest news story of the year.

The New York Times came close as a finalist in the public service category for “its comprehensive coverage of the economic meltdown of 2008,” and the Times’ Paul Krugman also was a finalist in commentary “for his prophetic columns on economic peril during a year of financial calamity.” The Wall Street Journal staff, too, was a finalist in national reporting “for its highly detailed coverage of the collapse of America’s financial system.” And The Washington Post’s Charles Lane was a finalist in editorial writing for his “succinct and insightful editorials on the nation’s economic collapse.”

And yet, the Pulitzer winners were far afield of the economic crisis: The Las Vegas Sun won the public service category largely for “the exposure of the high death rate among construction workers on the Las Vegas Strip.” The Times won the breaking news category for its coverage of the Gov. Eliot Spitzer sex scandal. The local reporting award went to two papers, including the Detroit Free Press staff for stories about the mayor and his sexual relationship with his chief of staff.

What happened to the business press?

For one, it was late to the financial crisis. As far back as 2006, when subprime mortgages were growing exponentially, there was little skepticism in the news media about the inherent risks in such loans. To be fair, though, there was little skepticism among those who are considered the foremost experts in the field—namely, the then-Federal Reserve Chairman Alan Greenspan and his successor, Ben Bernanke. As a Washington Post investigative business reporter at the time, I and a colleague asked Greenspan last year whether he had mentioned the dramatic growth in subprime loans to Bernanke during their transition two years earlier, and Greenspan told us he did not recall.

But even as recently as March last year, during the Bear Stearns calamity, the financial news media was still playing catch up. A few months later, The Washington Post published a three-part series about the U.S. housing boom and bust that I co-wrote with Zachary A. Goldfarb. The series was part of a package of stories about the economic crisis that the Post nominated for the Pulitzer, but we, like our brethren in the financial press, were simply trying to explain what had transpired, not what was to come.

Such was the case with the financial news media during the last great boom and bust—the dot-com mania that gripped the United States in the late 1990s. I distinctly remember back then, as a reporter for The Wall Street Journal, watching the ticker in bewilderment as shares of Internet startups soared even though there was little or no profit to explain it.

“Irrational exuberance,” Greenspan called it.

It’s true, though, that some of the weaknesses in the dot-com sector were being hidden then from investors and the press alike. But even when financial shenanigans are hidden, the financial news media can do a better job of identifying broader economic currents, especially when the distress is ultimately being felt across America, as it is now. It begins with being prepared. We need more reporters to be comfortable examining Securities and Exchange Commission filings of public companies. We need more reporters to know how to find documents to examine private companies, such as incorporation records and Uniform Commercial Code filings. We need more reporters to know how to use Bloomberg terminals and other electronic tools. We need more reporters to get better sourced in corporate America.

Resources—or a lack thereof—also are to blame. Just as the need for business reporting is perhaps at its greatest, newspapers and other media outlets are cutting back on it, slashing staffs and eliminating entire business sections. What we need now is more business reporting—and investigative business reporting in particular—not less; after all, we are all feeling the impact from the financial crisis, whether it is through layoffs or the plunging prospects of whole industries, and we need reporters to explain it, if not identify the problems before they become, well, problems.

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