Ask journalists what went wrong and you get a whole lot of lame excuses. The problems of S&Ls were too dull, too arcane, too complicated for the broad-gauged machinery of daily newspapers. No responsible official predicted the collapse. It wasn't a hot political issue. No one really cared because most depositors were insured. Democrats and Republicans joined in the coverup because both parties had a hand in the mess.

Yet there was something more. Fully understanding how the press botched the story requires a brief lesson in the culture of the newsroom. A basic fact of newspaper life is that political reporters work on one side of the room and financial reporters on the other. They inhabit vastly different worlds. Political reporters are obsessed with campaign strategy and consultants, polls and negative ads, fund-raising and focus groups. Financial reporters worry about the markets, interest rates, deficits, unemployment, corporate profits and government regulation.

.... Until the early '80s, the business desk was a backwater at most newspapers. It was seen as a haven for hacks content to rewrite corporate press releases and chronicle upticks in the stock market. Few newspaper people knew or cared much about the strange language of municipal bonds and pension funds. But business staffs began expanding as editors came to understand that economics played a fundamental role in almost everything newspapers covered, from airlines and autos to Hollywood and high tech.

.... Another bureaucratic fact of newspaper life is that the operation is geared toward getting tomorrow's paper out. Beat reporters are busy chasing day-to-day developments. The big stories at the time were the booming real estate market and the record low unemployment in some parts of the country; S&Ls were just a blip on the horizon. The only way a newspaper could have plumbed the depths of the S&L crisis was to break off a couple of reporters from their daily duties.

.... On the surface, at least, the S&L debacle was tailor-made for newspapers. It was far too abstract to make good television, a medium that relies on colorful visuals and 90-second summaries. Only major newspapers had the resources and investigative know-how to tackle a story like this. Unfortunately, with the political reporters exploring grand themes and the business reporters immersed in regulatory details, they were like blind men feeling different parts of the elephant.

With no prominent villain to follow, the press got lost in the fine print, seemingly intent on burying the reader in details.... It finally took Henry Gonzalez, the eccentric congressman who had endured so many snickers, to turn "the Keating Five" into a shorthand phrase for Washington influence peddling. Gonzalez, who had become the House Banking chairman after

St Germain's defeat, held more than 50 hours of hearings into Lincoln's collapse. Although the hearings covered familiar ground, they made front-page news and all the networks. Now there was some drama: Gonzalez demanded Danny Wall's scalp and raised questions about the five senators, whose campaigns and causes had received $1.3 million from Keating.

.... In the weeks following the Gonzalez hearings, the media couldn't get enough of the story. The Bush administration raised its estimate of the S&L bailout to $164 billion. Neil Bush, a director of a Denver S&L that had handed out millions in loans to insiders, was blamed in part by federal regulators for its $1.6 billion collapse. Now the headline writers had another symbol to go with the numbers--the president's son, caught up in the greed decade. Taxpayers were fuming over a bailout whose ultimate cost would climb to more than $500 billion.

.... But the S&L mess seemed to recede as the political year heated up. George Bush and Bill Clinton were no more interested in discussing the banking situation than Bush and Michael Dukakis had been four years earlier. Bush had no desire to linger on one of the lowlights of the Republican reign -- he, after all, had chaired the task force under Reagan that had pushed the deregulation of S&Ls -- while Clinton had invested money with an Arkansas businessman whose S&L later went belly up. This time, however, the major-party candidates had to share the stage with Ross Perot, who loudly complained that the administration was planning a big "December surprise." And this time the press would not let the matter slide. During the third presidential debate, Gene Gibbons of Reuters asked the candidates about "rumblings that a commercial bank crisis is on the horizon."

For now, at least, there seems to be a bit more willingness in the media to confront the unthinkable, a bit more skepticism about official reassurances. We have, after all, been burned too many times. But it won't be clear until the first scandal of the Clinton administration whether the watchdogs of the press have regained their bite or are just howling a little louder.

Howard Kurtz
from Media Circus