Reporting the financial crisis: A media failure?


The financial crisis exploded this year, but the media industry has published its business sections, websites, TV programmes and magazines for eons. Did the press fail to shine a bright enough spotlight on the dismal economic outlook? Were financial journalists too dazzled by the glittering market to predict the coming storm?

“We were all greedy and everyone is to blame,” said Jason Schenker, the president of Prestige Economics.

The first anniversary of the collapse of Lehman Brothers, 15 September, has come and gone. The failure of this financial services firm is widely viewed as the largest bankruptcy in the financial history of the United States.

Policymakers, bankers, journalists and ordinary people watched, read, discussed and Tweeted their surprise about the collapse of one of the most well-known worldwide banking institutions – whether they understood the implications or not. The collapse triggered dramatic turmoil in global finance. For the first time in 60 years the economy’s growth ceased; the world’s accounts consequently find themselves looking far different.image

For the past 15 months, financial coverage has dominated the information spectrum. It has consumed broadcast, print and online media arenas that attempt to aggregate the voices of the most respected business end economics editors.

But what was happening in this media space before the economic breakup? What was the focus of financial journalists? Did a glittering market blind them all? Above all, has financial journalism played the role it was expected to?

These topics were up for intense scrutiny at Covering the Crisis, an EJC Interface conference on the role of media in the financial crisis. Bankers, top financial journalists, politicians, social scientists and financial regulators from both sides of the Atlantic gathered on 9 and 10 November in Brussels to search for answers to all these questions. The result was a long-awaited and riveting debate. It was captured live here and here.

“At the end of the day we must remember the importance of journalism and the importance of making it right,” said Eithne Treanor, the moderator of the conference.

Indeed, it is an unquestionable principle; this article does not aim to question Treanor’s assertion but instead to describe the complex context in which financial journalists work and to analyse the main challenges to good financial journalism.

The role of financial journalists should not differ from that of journalists covering politics, culture or sports. We all must write well. We must analyse information in a clear, fast, concise and accurate manner.

Financial journalists in particular must try to see the turmoil coming. Their task is not necessarily reactionary. They must track and advise their audiences about coming events and trends. Then, in the aftermath, they must follow events and make sure longterm implications are covered.

Challenges everywhere

The connection between coverage of the financial world and events impacting the economy don’t seem to have run on parallel tracks. One of the best metrics of the economy is the Gross Domestic Product (GDP), the total value of all the goods produced in a country in a given period of time. According to The Changing Narrative, How the News Media Have Covered the Slowing Economy, media outlets tended in recent years to be slow to track GDP figures and inform the public about the declining economy. If reporting about the GDP was erratic, coverage of other related key economic indicators was even more unpredictable.
That said, the complexity of economic issues appears to be one of the most crucial problems for journalists covering the crisis. It can especially confuse the audience.

But are financial journalists at equal risk when they try to simplify a complicated subject? Could that also be dangerous?

Sources are another major challenge for financial reporters. It is essential to dig into and examine important data before making it public. Some questions asked in Brussels: Have journalists been too condescending with their sources? Have they accepted market logic as the only logic?

Journalists might have become too close to their sources. In some cases, the interests of their newspaper might have manipulated reporters. However, many journalists are currently working under the pressure of a 24-hour news cycle. They have to compete with one another. Timing has become so crucial that journalists might not have time to distance themselves from their own sources.

With regard to sourcing, most speakers at Covering the Crisis accepted that business journalists are stuck in an unfair competition. Journalists all normally stumble upon the barriers set up by public relations staff. PR staff aim to protect the interests of the companies they represent. The growing distance between the journalism industry, which is insufficiently funded, and public relations teams, often sophisticated and powerful lobby machines, is worsening the confrontation between the interests of the two. Who win will this battle? Only the future will tell.

We must all agree that responsibility and professionalism are principles any journalist has to keep in mind when doing her job. Any information requires a detailed verification procedure before it is published. Damian Tambini, a senior lecturer at the London School of Economics, states in his report, What is Financial Journalism for? Ethics and Responsibility in a Time of Crisis and Change, “financial journalists have particularly difficulty reporting rumours.”

Tambini is of the opinion that mainstream and political journalists could take a more relaxed approach to their stories because the effects on the political scene “are not so immediate and measurable as the impacts on financial markets.”
Could it be the amount of responsibility for financial markets that separates financial journalists from the others?

The case of British bank Northern Rock is an example of how a particular institution can collapse following a news report, in this case one crafted by the prestigious BBC reporter Robert Peston. Never-ending queues of customers waiting desperately to be able to withdraw their savings from the bank stood as a testament to how much mass hysteria can be triggered and exacerbated by a financial report. Since the media are often referred to as the “fourth estate,” journalism must be aware of its powerful and social responsibility.

As such, financial journalists have to avoid panicking markets for petty reasons. But they should never have scruples about telling the truth.

To this respect the audience at Covering the Crisis acknowledged that financial journalism requires a high level of training. Specific knowledge is needed to analyse data in depth and to accurately convey that data correctly to the public. At this point, journalists have to find the balanced way — unfortunately not very specifically addressed in this conference — to make the financial information appealing to a layman audience as well as to highbrow readers and academics.

Steve Schifferes, former BBC News Online economics correspondent, observed that academics have been “quite absent from this debate” and ultimately “journalists have defined the parameters and have raised the questions more than the academics.”

Had academics, bloggers and other social networks been more present in financial coverage prior to and early on in the crisis, the subject would have been addressed from all perspectives, all walks of life. If this crisis has brought any tests for the future, they would include: how to make the readers care and how to shrink the gap between audiences and newsrooms.
On the other hand, had individual citizens understood the complexity of the crisis, they would have felt empathy for the difficulty of the journalist’s role.

Who is to blame?

In times of turbulence there is always an attempt to assign blame, to look for victims and villains. These terms may be too simplistic, though, as we are going through a profound reshaping of how capitalism and markets work. This shift has its roots in globalisation and the world economy.

“We are all greedy and everyone is to blame, on ‘Main Street’ to Wall Street,” said Jason Schenker, the president and chief economist of Prestige Economics. From financial institutions to construction companies to policymakers and consumers, some have profited from the crisis. Media companies receiving advertising revenues from troubled lenders.

And in regards to the banking system, could it function if it was not based on greed? This subject could trigger a very interesting discussion.

True, financial journalists might have been too close to the subjects they covered. Perhaps the interests of their papers manipulated them. Danny Schechter, executive director of, got it right in Brussels when he said that the media industry has gone “from telling to selling.”

It must be understood journalists are people, with investments. They take a major interest on seeing the market be optimistic, seeing their salary go up and not loosing their job. “When doing financial journalism, you really have to think financial,” said Christopher Hughes, Assistant Editor for BreakingViews.

Journalists with their own investments know that what they cover will impact their own lives. Does that make them loath to sound alarms?

The public did not sound the alarm. Individuals normally take information in their own way. Some did take it in and reacted one way, but most ignored any warning signs. The reason might be because it is in our nature to believe prosperous times will last forever.

Or, in the words of Mark Gilbert, London bureau chief for Bloomberg, “people were not watching what was coming because the crime until it has been committed” is not a crime.

Bottom line

Will this financial crash and the attempts to counteract it lead to real changes? Or will potential solutions simply skim the surface of the problem and fail to repair the flawed system? Is the crash destined to happen again, years after the memories of all that happened have been erased?

In ancient Greek, “Krisis” referred to the point on which a plot turns toward either death or triumph. Let’s hope this pivotal moment is not wasted; that future generations do not repeat our mistakes of the greed, fear, passivity and ignorance.
The lesson journalists must learn is one that cannot necessarily be implemented right now. A bedrock of investigative reporting must be formed. Sadly, it has little chance to form while the market and, consequently, resources in the newsrooms, are dwindling.

Advances in technology have made journalism more efficient than ever before. But many an editorial management team, concerned about timing and competition, has prioritised productivity over quality.

Financial journalists have to be better trained. They need to be free from the pressure of their sources. They need to be given more time to dig into stories. They need to have time to develop deeper connections with editors, academics and social networks.

For all that to happen, it may be the time to think about a different business model on which our profession can rely, one that provides it a better sustainable funding system.

An economic model not for media companies but for individual journalists could also be very interesting. Would it be possible a new funding system supporting individual reporters who could train themselves, have access to all multiple media and reach a wide audience? If mainstream media companies have so far been unable of creating such a scheme, it may be not the right time to pursue further more centralisation.

We live in a global world where practically all events can somehow be covered in real time. Since everything is interlinked, our stories can generate threads that connect all the world. If we are given the chance to report financial stories well, it would make our job much more worthwhile and in the public interest.

Flickr images from users chrisjohnbeckett, tais, dominicspics and hitthatswitch