Institutional Obstacles

Perhaps the most glaring institutional problem resulted from editorial direction of reporting. Reporters do not decide what stories will run in a newspaper; those decisions, of course, are made by editors who must take into account a number of considerations -- first and foremost of which should be the potential significance of the story to the public. In the case of the savings and loan crisis, the editors of the nation's largest newspapers simply failed to gauge the importance of the story.

The conference elicited an intriguing view of the interaction between business reporters and editors and the effects of this interaction on the placement of articles in the paper. Stephen Labaton, financial reporter for The New York Times, read to conference participants a prescient 1985 story by his predecessor, Nathaniel Nash, noting that several hundred bankrupt savings and loans were still open and that several hundred more were expected to go bust in the near future. Labaton acknowledged that there had been "some discussion about putting [the story] on the front page...where it might have been picked up by news organizations and television news departments." Nevertheless, editors at The New York Times decided that this was more a financial story than a national or political story, and should be placed in the business section, which attracts far less public interest than stories in the main section. Though other Nash stories about the crisis appeared in the front section, the story was usually relegated to the business pages. Such placement, although not completely removed from the public eye, indicated the reluctance of the editors to move this story directly to the front pages, the section receiving the greatest public attention.

Locating the story in the front section would have increased its impact, but maximizing its effects would still have required repetition to heighten public awareness. At the conference, Labaton concluded that it was "misleading...to suggest that the story was completely missed until 1989," and he is correct in saying that reporters and editors did not altogether overlook the savings and loan scandal. However, as Michael Waldman, Director of Public Citizen's Congress Watch, explained it, "[t]he magnitude of the looming crisis was absent from the press and the public mind." According to Waldman, "[I]n terms of what resonates with the public, we have to remember that it's...repetition, and the repetition simply isn't there."

Another important institutional stumbling block to more intensive coverage of the crisis is the cost of investigative reporting. Such reporting, especially where a complicated financial scandal is brewing, involves a great deal of money, and editors seldom believe that the effort is worth the cost. In the mainstream press, the financial constraints have led increasingly to "reactive" coverage, instead of the more conventional, but expensive, "proactive" approach. Thus, unknown journalists writing for either local papers or trade publications actually broke the stories, and the mainstream press responded only after official action was taken. Paul Muolo cites this localization of the savings and loan crisis as part of the problem of news coverage of what he believes was "a national story."

Closely related to the financial issue is what Ellen Hume, Executive Director of the Joan Shorenstein Barone Center at Harvard University, sees as a misguided set of incentives and pressures driving the mainstream press. According to her, "the idea of competition and exclusivity...is crazy in this world of instant and multiple communication." In addition, there is no mechanism for correcting errors. In view of the competing pressures to be first and to be error-free, some reporters may be reluctant to take chances on investigative reporting for fear of failure. Hume noted that this "atmosphere" does not lend itself to reporting on complex stories, which often require enormous amounts of time and energy to decipher. Outdated incentives coupled with increasing budgetary constraints create almost insurmountable institutional hurdles for investigative reporters.

Another institutional concern was the extent to which the editors themselves might have obstructed these stories. Conference participants offered two explanations as to why they may have hindered publication. According to Larry Gurwin, editors often do not understand the importance of a story "because they are not doing interviews anymore... they don't know what's going on."

Ellen Hume and Peter Truell offered a somewhat more sinister explanation. According to Hume, the "elite world of good journalism...[has] become too much embedded in the establishment." Hume explained that, in the context of the savings and loan scandal, for example, "it's very hard to convince editors who are having dinner with White House family members that this is a good story." The Wall Street Journal's Truell, who has covered the BCCI story for several years, agreed with Hume, noting "the corruption which is endemic to Washington...and the complete...reluctance of the press and many other people to point to these kinds of conflicts." Truell pointed out, for example, that various members of the media establishment have socialized with major players in the BCCI affair. Moreover, according to Truell, individuals implicated in the BCCI scandal have served on various corporate boards with directors of media companies.

Finally, perhaps the most difficult institutional obstacle for the media is its clouded concept of its own role. Many journalists favor an activist media, the watchdog and whistleblower, the fourth estate scrutinizing the constitutional three. Others prefer to present only the problems, leaving solutions to the political branches, thereby maintaining credibility and objectivity. The former encourages mixing opinion and solutions with fact, while the latter requires, as Hume remarked, "just the facts."

The activist role envisioned for the media may inadvertently create another institutional obstacle to presenting complex news stories by raising the level of public expectation beyond traditional bounds. Hume believes that "the expectations for news organizations are incredibly inflated in this country because the need for someone [to be a watchdog] is so great and other institutions have failed." Hume noted that "news organizations are not meant to carry the whole freight; they're simply to tell the facts and someone else is supposed to be engaged."

On the other hand, the activist approach may stimulate the development of complex stories by encouraging the media to step in where the watchdog groups have failed. Walter Pincus of The Washington Post supports this approach, arguing that journalists have a "responsibility" to "cure something we find to be wrong." As Waldman observed, the BCCI and savings and loan cases involved "corruption of the U.S. government and key players on the most massive scale."

In the old days, S&Ls were just like that little Jimmy Stewart movie [It's A Wonderful Life], the Bailey Building and Loan. They made loans to little home communities and that is all they did. And they were very profitable for many years until interest rates swung the wrong way and thrifts, S&Ls as they are known, were not allowed to make adjustable rate loans which would allow them to max that spread more evenly. So instead, the government deregulated them and let them get into wild and crazy things like real estate and investments in casinos.

Paul Muolo
Senior Editor
National Mortgage News

You not only need time against the problem, but you need to be able to fail. You need to be able to come back and say "I spent six weeks looking at this story and it didn't turn out to be a story."

Ellen Hume
Executive Director
Joan Shorenstein Barone Center
Harvard University

I believe that the S&L collapse and the banking problems and other financial problems that we're seeing really are a monumental failure of institutions of all sorts in our country: the government, obviously, the private sector, and also the press. We really need to parse out what has happened and whether it's still continuing.

Michael Waldman
Director
Public Citizen's Congress Watch