After squeezing health care reform through Congress in recent weeks, the Obama Administration is moving on.



MALE CORRESPONDENT: Health care is done, so what’s next?

FEMALE CORRESPONDENT: I think it seems clear financial regulatory reform cracking down on -

MALE CORRESPONDENT: Financial regulation, which I think is going to be the next big issue on the President’s agenda –

[END CLIPS]

BROOKE GLADSTONE: Next up, retooling government regulation of the financial system, in an effort to head off future meltdowns. But if, as we reported last week, most Americans have a hard time understanding health care, what are our chances of cutting through the emotions and preconceptions that fog the debate over financial reform? National Public Radio’s Adam Davidson has spent the last two years breaking down the economic crisis on, for example, the Giant Pool of Money episode of This American Life and on NPR’s podcast Planet Money, and he uses clear, simple language to explain the complicated. But he says financial regulation has proven resistant to even his brand of explanatory journalism.

ADAM DAVIDSON: Most topics I've covered, there’s a Cliff Notes version that at least helps you understand the bigger stuff you don't understand. I find that when you simplify [LAUGHS] regulatory reform, you distort it so much that you don't understand it at all. I have not found a way to tell the story narratively, where you’re simplifying it but retaining the essence of it.

BROOKE GLADSTONE: Is it about the conventions of journalism that make this subject so hard to tackle?

ADAM DAVIDSON: I think that there are many things in the conventions of journalism that make it hard to tackle, but I also think it is the subject itself. One of the formative journalistic experiences in my life was covering the war in Iraq, and you had all these ethnic and religions groups that most people hadn't heard of – Sunnis, Shiites, Kurds - and they're fighting for things most people didn't know about. It turned out that was actually not hard to get across, I found. Then the financial crisis became the main focus of my work, and I thought, oh, boy, this is totally different because at least in Iraq you had things like guns, bombs, political parties. You had words that we know. Here is a financial crisis about subprime mortgages and collateralized debt obligations and interest rate variations due to risk spreads. I mean, the language is totally opaque. Well, with a lot of hard work we were able to translate the words and help the average person at least get a good, solid understanding of what was at stake for the various players in the crisis, why the crisis might have happened, who made mistakes. But regulatory reform is just another level of impenetrability. We just have not been able to, in a four-minute radio story, in an hour on the radio, in writing long explanations on the blog, we have not found a way to convey it in anything like a piece of journalism that a non-expert consumer can pick up and get value out of.

BROOKE GLADSTONE: I used to have a linguistics teacher who said to me that if you can't put something into words then you really don't understand it.

ADAM DAVIDSON: [PAUSE] I might really not understand it. [LAUGHS]

[BROOKE LAUGHS] I mean, it’s very, very complicated. And the more I delve into it, the more I realize nobody fully understands it. Also, it’s not just that it’s too complicated. It’s counterintuitive. The more someone tells you this is a morality play, this is about bad bankers and good ordinary citizens, the more they're lying to you.

BROOKE GLADSTONE: We see a lot of people getting ripped off. We see the banks suffering very little as a result of mistakes that they made. Why isn't it a morality play?

ADAM DAVIDSON: I guess the way to put it is not that it’s not a morality play, but it is thousands of morality plays. You cannot say that bankers are one group and citizens are one group. That’s nuts. We know on the citizen side, just probably from any family picnic, that citizens are responsible, citizens are irresponsible. Well, banks are too. You have investment banks, you have commercial banks, you have small banks, you have large banks, you have hedge funds. You have all sorts of people doing all sorts of different things on Wall Street, and there is no one agenda. And there certainly is a [LAUGHS] morality play to be told. There are certainly names of people who clearly did things that are probably immoral and probably should be punished. I'm just saying [LAUGHS] it’s not a simple morality play, and there is no piece of regulation that is good for banking. It’s good for one part of banking.

BROOKE GLADSTONE: In the case of regulation – this is a binary argument – generally you have the Democrats, or the public advocates on one side, portrayed as wanting more regulation, and then on the other side you have the Republicans, who feel that the market works better the less the heavy hand of government is intruding into it. Right?

ADAM DAVIDSON: I think that is the frame. Yeah, I think you’re right, that that is a core frame that lots of people have, but that’s exactly wrong. For example, Democrats, yes, they generally pay lip service to being against the banks but where is the center of power of banking in America - New York, Connecticut, Boston, Democratic strongholds. And you have many, many big city Democrats who are extremely close to Wall Street, to the banking system, to the insurance system. And who are some people who are extremely skeptical and always have been for hundreds of years of these big city Northeast bankers? Rural areas, especially in the South. That’s a very longstanding trope in American politics, and you have lots of Republicans from those districts. So when you actually look at how they vote, the legislation they craft, where they get their money, how they exercise their power in the financial system, it’s quite clear that it does not break down in that way.

BROOKE GLADSTONE: Another sort of simple frame we hear a lot is whether or not this is an overhaul.

FEMALE CORRESPONDENT: Well, a massive, massive financial overhaul is now on its way to the full U.S. Senate.

MALE CORRESPONDENT: The Obama Administration and Democrats in Congress said Wednesday that an overhaul of financial regulation was the next legislative priority.

FEMALE CORRESPONDENT: Senator Christopher Dodd, the chairman of the Senate Banking Committee, will unveil legislation today to overhaul the nation’s financial regulation system.

ADAM DAVIDSON: There were an awful lot of people who are experts on banking regulation who had hoped that this would be an opportunity to look over our system and overhaul it. Nobody ever designed the U.S. financial system. There was a crisis in 1907. Congress responded with the Federal Reserve Act of 1913. Then there was a crisis in the ‘30s. Congress responded with a whole host of reforms. Basically they respond to the last crisis. They do so in a way that’s extremely political. So I think there was some hope that we would do something like what the British did in the '80s, which is say, forget it, we're getting rid of all the history and we're startin’ from scratch. We're not doing anything like that. The basic structure of our financial system will be close to identical. There will be some tweaks but it’s just not fair to call it an overhaul.

BROOKE GLADSTONE: There’s another problem with reporting this story. You spoke with former Senator Ben Campbell of Colorado who was on the Banking Committee, and he said this about regulation:

BEN CAMPBELL: Oh God, it’s boring. Yeah, that’s right. I was on banking for four years in the state legislature and on banking a short period of time in the Senate, and I - I think it was the most boring thing I ever did.

[LAUGHTER] Let’s just say nothing - I didn't understand some of that stuff.

BROOKE GLADSTONE: Do you think the sheer soul-sucking tedium of it is part of the problem?

ADAM DAVIDSON: It’s all about slight adjustments in interest rates and various legal schemes. Yes, it results in massive, huge impacts on all of our lives. It means our financial system is more or less fragile. It means our economy grows or doesn't grow. But it [LAUGHS] is so, so, so boring. And we have tried. We have used songs. We've used theater sketches. We've interviewed over a hundred economists, trying to find the ones who can just really nail an explanation in a clear, concise way. And, honestly, like we've picked off pieces, we've told little elements of it, but the big “here is what regulation is all about and we're going to tell you how it works” we have not been able to crack. I feel like I have seen the edge of what journalism can accomplish, of what journalism is capable of, and the bulk of financial regulatory reform is on the other side [LAUGHS] of that edge.

BROOKE GLADSTONE: Adam, thank you very much.

ADAM DAVIDSON: Thank you, Brooke.

BROOKE GLADSTONE: Adam Davidson reports for Planet Money, a co-production of NPR and This American Life.