When I received a very kind offer from an ex-colleague at CBC Radio, journalism professor Janice Neil, to offer my perspective on the media’s coverage of the finance crisis of 2008, the following questions were put to me: How did the media do in helping the public understand the issues that were before it? Where (if applicable) did the media fall short? That was what was asked of me. But I believe that the more fundamental question is whether the media was even interested in performing this important public service. The answer, I’m afraid, is a resounding “No!” – which is exactly why the media failed as miserably as it did in providing informed, balanced reporting and commentary. It just wasn’t interested in doing so.
A couple of points before I really get going. Number one is that most of the comments I’m making pertain to North American media. I think that our good friend and neighbour, the United States, is four-square to blame for the mess that we’re currently in, and if the problem is to be solved the solution will have to come from that country. But coverage on both sides of the border was equally flawed. Point number two is that when I speak about the media, I’m talking about the mainstream, mostly for-profit television and print outlets with which we’re all familiar – the ABCs, CNNs, New York Times, and Time magazines of the world.
The wheels came off the coverage very early. The first – and biggest – error was the unwillingness to objectively define the problem. In a nutshell, here it is: Over a short period of time, an exceptionally large number of American citizens defaulted on legally binding commitments into which they had entered voluntarily. The media blabbed ad nauseam about the avarice of mortgage brokers and culpability of investment bankers. But that’s a case of same as it ever was. What was never discussed was that it takes two to tango – and the greed of Wall Street was at least matched, and I would argue exceeded, by the greed of Main Street.
Why the asymmetry? A couple of reasons. There is a process of self-selection about who gets into the media business in the first place. (And make no mistake about this – it is a business as much as building houses or making mortgage loans.) It appealed to the sensibilities of those who work in the Fifth Estate to portray everyday folk who walked off the street into various lending institutions and, in many cases, lied through their teeth to get loans they could never hope to repay, as victims. That’s one interpretation; perhaps they were victims. Yet how many times did we see an investigative journalist randomly select twenty-five defaulted mortgages to determine how many people committed fraud to get the loans in the first place? Not quite as sexy as railing at Citigroup or decrying AIG Insurance’s investment policies. And to my knowledge no one has ever won a Pulitzer Prize revealing the deceptions of everyday Joes and Janes, so perhaps by expecting the minimum, I ask for too much.
Another factor exacerbated the bias. There was a Presidential election in 2008, and the media did what it had to do to ensure the victory of Barack Obama. I made it clear earlier that I believe that the United States of America was the architect of this financial disaster. Furthermore, if one man is to blame it is President George W. Bush. But in mid-September when he stepped forward with a plan to buy $700 billion in mortgages, he was actually doing the right thing. (Even a blind squirrel occasionally finds a nut.) But the coverage doomed the plan from the very start.
First, the lending institutions had been portrayed for months as Snidely Whiplashes. There was so much anger against the banks that it was impossible to have a sensible discussion about how to make the best out of a bad situation. Furthermore, every time I looked or listened, the $700 billion number was presented as if this were an unrecoverable expenditure. Nothing could have been further from the truth. The original proposal was clean and simple: purchase $700 billion dollars worth of mortgages at their market values. Assuming that real estate prices will recover (and they always have before), this could have actually generated revenue for the U. S. government. How many times did you hear that interpretation of the bailout package? I thought so.
The media wanted business to be the villain. So it presented a simplistic, one-sided argument about what led to the mess. The media wanted to see Democrat Barack Obama elected. So it helped sink a proposal, put forward by a Republican, which could have stemmed the bleeding. The media got what it wanted. The public didn’t get was the reporting it deserves.
Michael Hlinka reports on business issues of the day for CBC’s Metro Morning radio program. He holds an MBA from the Unviersity of Toronto and is a CFA charterholder. He is on the faculty at George Brown College’s financial planning department.