BROOKE GLADSTONE:
From WNYC in New York, this is NPR’s On the Media. I'm Brooke Gladstone.
BOB GARFIELD:
And I'm Bob Garfield. We got to work on Monday knowing well that the lipstick week was over. This time, the news was serious. The OTM staff went about our business of looking for news organizations to blame, but as we pored over the exhaustive coverage, we thought, you know, these stories are really good – really thorough, really clear – mortgage-backed securities based on mortgages that never should have been underwritten, creating a house of cards now utterly flattened.

Could it be that we were going to have to bite our tongues and actually praise the media? Well, yes and no. In some ways, the circumstances reminded us of 9/11, heroic, all-consuming coverage of the devastation, with not too much attention to the so-called root causes.

At The Columbia Journalism Review, however, business press critic Dean Starkman was paying lots of attention to root causes. Dean, welcome to the show.
DEAN STARKMAN:
Nice to be here, Bob.
BOB GARFIELD:
Let's start with the praise. I looked at The Wall Street Journal, The New York Times, The Washington Post – incredible.
DEAN STARKMAN:
Yeah, it is kind of heroic in a lot of ways. This is a full-scale emergency and they're acting like it. This morning I've been thinking that being a business press critic right now is sort of like being a critic of the London Fire Department during the blitz. The city’s on fire, and they're scrambling as fast as possible, and that’s all you can do at this point.
BOB GARFIELD:
But while the firefighters are scrambling around going from exploded house to exploded house, what isn't getting done?
DEAN STARKMAN:
You know, there’s no sort of gaping obvious story that they're not doing. I mean, they're covering the markets, they're covering the institutions, they're covering the fallout, and they're doing a pretty good job in defining sort of how different all this is and how different the actions and roles being taken on by the government are.

The Times has an excellent headline: “New Role for Fed, Investor of Last Resort,” which is just [LAUGHS] unbelievable, and absolutely right. I'd say as the dust settles they're going to have to, obviously, reevaluate how the government is basically transforming itself on an ad hoc basis and look a little deeper into that.
BOB GARFIELD:
Can you try and – as best as you can in layman’s terms – to explain what the government did to create the conditions under which this collapse has occurred?
DEAN STARKMAN:
I wish I knew more, and that’s my complaint and that’s my criticism. But sure, I mean, we've been operating under a sort of a policy framework in which deregulation has been the major theme. It started under Carter, continued under Reagan.

And the Clinton era is a bit of an anomaly but, you know, it certainly wasn't reversed then, and obviously continued apace now.

I'd say that that whole sort of question hasn't really been adequately explored, to say the least. As I say in a piece, there are at least a couple of laws that probably need further exploration - Graham-Leach-Bliley, which essentially revoked Glass-Steagall, the Depression era law that separated commercial banks from investment banks.

And the second was the Future Modernization Act – “Future” singular, and that was passed in 2000, sort of in the throes of when everyone was worrying about Bush v. Gore, and that blocked the federal regulation of certain securities known as derivatives.

BOB GARFIELD:
One of the problems is that the reader’s eyes quickly glaze over. It’s just very difficult to communicate subjects that are a) so technically complicated, and b) which involve such enormous sums of money.

I remember back in the savings and loan debacle in the '80s, when this multibillion-dollar fraud was, you know, on the front page of the business section and maybe below the fold on page one, but never got to the top of page one of, say, The Washington Post until the Resolution Trust Corporation ran up a 60,000-dollar charge on copies of documents. That infuriated Americans.
[LAUGHTER]
Sixty thousand dollars!
DEAN STARKMAN:
Right.

BOB GARFIELD:
Does not the scale and the scope of this financial collapse make it hard to communicate the particulars to the audience?
DEAN STARKMAN:
Sure, it’s a big problem. And you asked about, well, it must be very difficult, of course, for readers to follow what a CDS, credit default swap is, let alone a collateralized debt obligation or mortgage-backed security, for that matter.

My point, I think, on this is that if the general public on page one is trying to come up to speed with something that complex, clearly something has gone very, very wrong. And I think the press has some sort of explaining to do. I mean, it really never should get to this point where we're trying to bone up on credit default swaps.
BOB GARFIELD:
Interestingly enough, though, in your piece you did kind of reduce this to its essence in a way that is not esoteric at all. Permit me to reduce it still farther. The government took the cops off the beat and the criminals ran wild. Is that an exaggeration?
DEAN STARKMAN:
The first part is dead accurate. Not only did the government take the cops off the beat, the few cops that were left were utterly disempowered and they existed in a culture where they really didn't count. And to the press’ shame, I think, they sort of accepted regulators as pygmies in the financial landscape.

The criminals ran wild will be the question to answer, but deceptive practices in the lending industry essentially came to characterize that entire business.
BOB GARFIELD:
The government, as you've said, has for now more than two decades deregulated in support of the vaunted free market. How do we cover that question from this point forward?
DEAN STARKMAN:
I would urge, I guess, that business reporters and editors sort of rethink some of the assumptions that they grew up with as they entered the business. And I was part of it. I said at some point that if you gave a typical business reporter a lie detector test they would have a positive response to words like, you know, the market and trade and those types of things, and have a negative reaction to regulation and government program and government, in general.

Going forward, you know, I hope that business reporters at least understand that there are other points of view.
BOB GARFIELD:
Dean, let me ask you one more thing.
DEAN STARKMAN:
Mm-hmm.
BOB GARFIELD:
In covering the balance of the free market and the government’s responsibility to regulate against criminality [LAUGHS] -
DEAN STARKMAN:
Right.
BOB GARFIELD:
- you've detected some - what you call “false balance.” Now, we see false balance a lot in political coverage. How has it manifested itself on this story?
DEAN STARKMAN:
Actually, a couple of very interesting examples of false balance. Back in the day – and no one remembers – but back in 2003, New York had an [LAUGHS] attorney general named Eliot Spitzer. And he was going to war with the comptroller of the currency, and the war was over whether or not New York State anti-predatory lending laws could apply to nationally chartered banks.

What happened was that almost all the states’ attorneys-general picked up on this issue – and this is 2003, 2004 [LAUGHS], 2005 – and they're seeking to rein in nationally chartered banks and their lending practices in the subprime category.

The press, predictably, and kind of shamefully, I think, treated this as some sort of ping-pong match between Eliot Spitzer and the Bush Administration. I'm telling you, beneath the fight between officials there were a lot of signs that something was sort of rotten going on between lenders and borrowers. That’s a pretty good, you know, sort of smoke signal to the press to go out and explore the issue more deeply, and they really didn't.
BOB GARFIELD:
Hmm, so close but so far.
DEAN STARKMAN:
Kind of amazing.
BOB GARFIELD:
Dean, thank you very much.
DEAN STARKMAN:
You’re awfully welcome.
BOB GARFIELD:
Dean Starkman edits The Audit, which assesses business coverage for The Columbia Journalism Review.