The Watchdog That Didn't Bark

The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism

Copyright Date: 2014
Pages: 368
  • Cite this Item
  • Book Info
    The Watchdog That Didn't Bark
    Book Description:

    In this sweeping, incisive post mortem, Dean Starkman exposes the critical shortcomings that softened coverage in the business press during the mortgage era and the years leading up to the financial collapse of 2008. He locates the roots of the problem in the origin of business news as a market messaging service for investors in the early twentieth century. This access-dependent strain of journalism was soon opposed by the grand, sweeping work of the muckrakers. Propelled by the innovations of Bernard Kilgore, the great postwar editor of theWall Street Journal, these two genres merged when mainstream American news organizations institutionalized muckraking in the 1960s, creating a powerful guardian of the public interest. Yet as the mortgage era dawned, deep cultural and structural shifts -- some unavoidable, some self-inflicted -- eroded journalism's appetite for its role as watchdog. The result was a deafening silence about systemic corruption in the financial industry. Tragically, this silence grew only more profound as the mortgage madness reached its terrible apogee from 2004 through 2006.

    Starkman frames his analysis in a broad argument about journalism itself, dividing the profession into two competing approaches -- access reporting and accountability reporting -- which rely on entirely different sources and produce radically different representations of reality. As Starkman explains, access journalism came to dominate business reporting in the 1990s, a process he calls "CNBCization," and rather than examining risky, even corrupt, corporate behavior, mainstream reporters focused on profiling executives and informing investors. Starkman concludes with a critique of the digital-news ideology and corporate influence, which threaten to further undermine investigative reporting, and he shows how financial coverage, and journalism as a whole, can reclaim its bite.

    eISBN: 978-0-231-53628-8
    Subjects: Language & Literature, Business, Sociology

Table of Contents

  1. Front Matter
    (pp. i-viii)
  2. Table of Contents
    (pp. ix-x)
    (pp. xi-xviii)
  4. Introduction: Access and Accountability
    (pp. 1-16)

    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...

  5. CHAPTER 1 Ida Tarbell, Muckraking, and the Rise of Accountability Reporting
    (pp. 17-37)

    Ida M. Tarbell, a writer forMcClure’s, a general-interest monthly, was chatting with her good friend and editor, John S. Phillips, in the magazine’s offices near New York’s Madison Square Park, trying to decide what she should take on next. Tarbell, then forty-three years old, was already one of the most prominent journalists in America, having written popular multipart historical sketches of Napoleon, Lincoln, and a French revolutionary figure known as Madame Roland, a moderate republican guillotined during the Terror.¹ Thanks in part to her work, the circulation ofMcClure’shad jumped to about 400,000, making it one of the...

  6. CHAPTER 2 Access and Messenger Boys: The Roots of Business News and the Birth of the Wall Street Journal
    (pp. 38-64)

    In a chance encounter near Wall Street around the turn of the twentieth century, Edward Jones, a founding partner of Dow Jones & Co. and a well-known financial journalist in New York, bumped into William Rockefeller, the brother of the oil titan John D. Rockefeller and a high-ranking Standard Oil executive in his own right. The men, who were friendly, got to talking. According to Lloyd Wendt’s 1982 bookTheWall Street Journal, a history of the paper, the exchange went something like this:

    Rockefeller: “Edward, would it mean anything to you to get a little advance Standard Oil news?”...

  7. CHAPTER 3 Kilgore’s Revolution at the Wall Street Journal: Rise of the Great Story
    (pp. 65-99)

    In 1932, theWall Street Journalran a story, datelined San Francisco, that began like this:

    Five years ago, Oliver Twining rarely was early for work. As the chairman on Pacific Bank & Trust Company, Mr. Twining regularly strolled into his office twenty minutes late. “Rank has its privileges,” he would explain.

    Today, however, Oliver Twining is rarely late for work.

    Now self-employed, he operates 14 hours a per day on the corner of Church and California Streets, shouting “Apples for sale!”

    Oliver Twining is just one of many former bankers trying to piece their lives back together in the...

  8. CHAPTER 4 Muckraking Goes Mainstream: Democratizing Financial and Technical Knowledge
    (pp. 100-137)

    In 1991, Michael W. Hudson, a reporter for theRoanoke Times, was interviewing a legal-aid lawyer for a series about poverty in that small Southern city, earnestly asking questions and scribbling copious notes, when the lawyer abruptly stopped the conversation. It’s good to write about poverty, the lawyer said, but you’re missing the most important thing. Hudson, then in his late twenties, was something of a rising star at the 120,000-circulation daily, having done long investigative series, to some acclaim, on the state’s dysfunctional juvenile justice system, abuses in regional adult group homes, and screw-ups at Virginia’s child support enforcement...

  9. CHAPTER 5 CNBCization: Insiders, Access, and the Return of the Messenger Boy
    (pp. 138-164)

    Steve Lipin didn’t fit the profile of a transformative media figure when he took over the mergers and acquisitions (M&A) beat for theWall Street Journalin 1995. His look was studious and his manner remarkably affable and low key, given the stress of his new job. His rise had not been particularly meteoric. He had started in 1985 at the bottom of the business-news food chain, financial newsletters, progressed toInstitutional Investor, a magazine for pension-fund managers, and thenAmerican Banker, another trade. In 1991, he followed his boss to the Wall Street Journal to cover banking. After four...

  10. CHAPTER 6 Subprime Rises in the 1990s: Journalism and Regulation Fight Back
    (pp. 165-193)

    In 1991, Peter S. Canellos, an urban-affairs reporter for theBoston Globe, started to hear from housing activists about a strange new phenomenon emerging on his beat: swarms of home-improvement salesman were turning up on the front porches of elderly homeowners in Boston’s inner city, selling repair work along with a loan to pay for it. The sales pitches tended to be highly scripted and usually deceptive, leaving out basic terms or misrepresenting them altogether. The loans, second mortgages, typically carried high rates, hidden fees, and other onerous terms that were driving residents by the hundreds into foreclosure. This allowed...

  11. CHAPTER 7 Muckraking the Banks, 2000–2003: A Last Gasp for Journalism and Regulation
    (pp. 194-210)

    Demonstrators chanting slogans and carrying signs gathered near the canyons of Wall Street to protest a financial system they believed had run off the rails. They accused it of raking in profits at the expense of less sophisticated home borrowers and of aggravating wealth disparities between rich and poor. Speakers included bereft former homeowners who told tales of deception, hucksterism, bait-and-switch tactics, and defective financial instruments that had left them destitute. After some initial hesitation, politicians also got involved. Andrew Cuomo, a prominent New York

    Democrat, struck a populist tone. “Someone is financing these companies to begin with; someone is...

  12. CHAPTER 8 Three Journalism Outsiders Unearth the Looming Mortgage Crisis
    (pp. 211-240)

    In early 2003, a few months after the Citigroup/Associates settlement, Mike Hudson was driving down U.S. 45, a two-lane road in northeast Mississippi, finishing up a twelve-hour drive from Roanoke across Tennessee, Georgia, and Alabama to Brooksville, a predominantly African American town of 1,100 between Tupelo and Meridian. He pulled to a single-story house built on a slab and was greeted by John Brown, who was in trouble on his mortgage.

    Forty-four years old, Brown was less than five feet tall and barely came up to Hudson’s chest when he greeted him with a smile at the door. Born severely...

  13. CHAPTER 9 The Watchdog That Didn’t Bark: The Disappearance of Accountability Reporting and the Mortgage Frenzy, 2004–2006
    (pp. 241-283)

    The demise of the mainstream media, especially newspapers, has been forecast for decades, but the years following the “Tech Wreck” of 2000—the period of the housing bubble—opened a new, defining chapter. The crash of the technology bubble set off a severe ad recession, particularly at Dow Jones, which had made what the business press would call “missteps” that left it more vulnerable than most publishers. Starting in 2000 and running through the entirety of the mortgage bubble and subsequent financial crisis, the media industry began a revolution from which it has not yet emerged but whose first phase...

  14. CHAPTER 10 Digitism, Corporatism, and the Future of Journalism: As the Hamster Wheel Turns
    (pp. 284-312)

    In early 2009, a few months after the Lehman crash, Robert Thomson, Rupert Murdoch’s pick to lead theWall Street Journal, issued an internal directive headlined “A Matter of Urgency.” The memo discussed the need for the paper’s hundreds of reporters to step up their production of scoops.

    The scoop has never had more significance to our professional users, for whom a few minutes, or even seconds, are a crucial advantage whose value has increased exponentially. . . . A breaking corporate, economic or political news story is of crucial value to our Newswires subscribers, who are being relentlessly wooed...

  15. NOTES
    (pp. 313-338)
    (pp. 339-346)
  17. INDEX
    (pp. 347-366)