The following is the text of New York Times journalist Gretchen Morgenson’s speech to attendees of the 2015 Page One Awards banquet in Minneapolis on Tuesday.
There is so much about the news business that has changed in recent years, as I need not tell you all. But one thing about my world has not. As a reporter at the New York Times or any big paper for that matter, you’re pretty much guaranteed a front row seat for whatever circus, drama or horror show is going on within the confines of your beat.
Still, when I joined the New York Times in May of 1998, after a long stint at Forbes Magazine, I had no idea that I would be in for 17 years of financial chicanery and crises, each one more damaging than the last. This was a new situation for me. At Forbes, I had uncovered misdeeds here and there, but after I joined the paper it was all mischief, all the time.
Let’s run through some of the highlights. The collapse of Long Term Capital Management in 1998. The internet boom and bust in 2000. The Enron and Worldcom accounting scandals in 2001. The housing mania with its creation and implosion of truly Byzantine mortgage securities in the mid-2000s. Finally, the near-death experience of our nation’s banking system in 2008.
What a run! And I’ve had a ringside seat for it all.
But it wasn’t always the case that covering financial news meant you were essentially a crime reporter. In the 1980s and 1990s, I wrote plenty of articles about companies that were prospering by doing the right thing. Now, however, it seems that every week some new scandal rocks the world of business.
Covering Wall Street, of course, means always having a surfeit of material. In fact, as a beat Wall Street is the gift that keeps on giving. Because the best and the brightest from the world’s top business schools and universities flock there to make their fortunes, fertile minds are constantly devising new ways to create exotic and complex instruments to generate lucrative fees and commissions.
Wall Street designs these things to be obscure and impenetrable, making it difficult sometimes for reporters to understand how disastrous these instruments truly are. But you can be sure of one thing: As middle man on these transactions, whether or not they make money for their clients, Wall Street pockets a pretty penny.
Of course they want to protect those profits. And they don’t appreciate having the practices that generate them exposed to the public. As a result, any reporter who practices in-depth, penetrating journalism doesn’t win friends who inhabit corporate boardrooms or sumptuous corner offices. Neither does it win them praise from people in high places.
Nevertheless, it always surprises me how easily rankled top executives get by straightforward and accurate reporting about their companies. Their thin skin is truly remarkable, a result I suspect, of having surrounded themselves with “yes” men and women. With none of their subordinates willing to speak truth to power, these executives are unprepared when such comments come in from outsiders. They find it difficult to cope with even the smallest or the fairest criticism.
Happily, though, my occasional run-ins with less-than-professional corporate types are vastly outnumbered by the emails, cards, phone calls and letters I receive from supportive readers. Sometimes I’ll hear from a reader who says I saved her money by warning about a problematic investment or coming disaster. Other times, I get emails thanking me for explaining the way the world really works. As I often say when responding to these messages, they really keep me going day to day.
Enough about me. For the remainder of my remarks tonight, I’d like to talk about a couple of issues that I think are of crucial importance both to those who practice journalism today and to those who consume it. One is the state of play in the battle between access journalism and accountability journalism and the other is the war against transparency as practiced by our federal government.
Let’s start with what’s going on in Washington. I was very encouraged when President Obama swept into office promising to run his government openly and with transparency. But instead, as The Times public editor Margaret Sullivan wrote: This has been an administration of unprecedented secrecy and unprecedented attacks on a free press.
My colleague James Risen narrowly escaped having to go to jail because he refused to identify a confidential source in a national security case. Last year Risen called the Obama administration the greatest enemy to press freedom for the way it treats journalists and whistleblowers.
He is not alone in his view. In a study earlier this year, Reporters without Borders said the United States had fallen 3 places to 49th in the ranking of press freedom across 180 world nations. That ranking puts us behind such countries as Namibia, South Africa, Chile and Niger. The report said the U.S. had earned that woeful place on the list because of our government’s increased efforts to track down whistleblowers and sources of leaks, particularly relating to national security.
I don’t cover national security, so I have not come under the same pressure that my colleagues in Washington have. But I have seen first hand how closed and controlling our government is. The first time I encountered this was back in 2008 when the story of the economic disaster moved from Wall Street, where it had developed, to Washington, where it was supposed to be fixed.
It is not always easy to get the skinny on what Wall Street is up to. But getting to the bottom of the mortgage crisis was a cinch compared with trying to understand the truth in our government’s response to the crisis.
First, my colleagues and I saw obfuscation when we tried to truth squad the government’s claims of having helped troubled borrowers. This was an crucial message for Treasury to send to America, because with Tim Geithner at the helm, the government was appropriately criticized for throwing billions of rescue dollars at Wall Street while doing little to help struggling Main Street.
So, back in 2009, Treasury announced with great fanfare a new program to prod banks into changing the terms of borrowers’ mortgages to help those who were having difficulties stay in their homes. Several months after this loan modification program was instituted, my colleagues and I at the paper went to Treasury to get some figures on how many borrowers had been helped. We wanted an update because earlier programs like this one had failed miserably.
Well, you would have thought we were asking for the secret formula for Coca-Cola. We wrangled, we pestered, we ranted; no numbers were forthcoming. Often our phone calls would not even be returned. Finally, the figures started to trickle out. Surprise! They weren’t that great. And this was why Treasury had stonewalled us when we requested information about the program.
More recently, I’ve seen another example of the government trying to cloak its actions. The extreme secrecy began with a lawsuit filed against the government by shareholders of Fannie Mae and Freddie Mac, the mortgage finance giants that are wards of the state. These shareholders sued after the government changed the terms of those companies’ bailouts in 2012 and began funneling all of their profits into the Treasury’s general fund. The plaintiffs contended that siphoning off those profits was an illegal taking of private property by the government.
In response to the lawsuit, the government has demanded an extreme level of secrecy surrounding documents the judge has ordered it to produce. Those documents would shed light on how the decision to divert the profits was made, an important question given that the 2008 law written by Congress to handle the company’s problems was supposed to stabilize them and let them build up capital after the crisis receded.
And yes, the crisis has receded. As of the most recent quarter, Fannie and Freddie have returned to the government $40 billion more than they drew from taxpayers. And the money spigot continues to spout. But the companies have not been able to build up the capital they need to forestall another rescue.
The shareholder case is still in its early stages. But the government’s desire to keep a tight lid on its documents is remarkable. Indeed, the Justice Department is even asserting presidential privilege to keep 45 of the documents permanently confidential. These materials — emails, draft memos and news releases — were created by officials at the Treasury Department and the Federal Housing Finance Agency, the overseer of Fannie and Freddie since they collapsed in 2008.
After I wrote about this unusual assertion of presidential privilege, the DOJ went further. It asked the judge to put under seal additional lists of documents that the government will withhold because of various privilege claims. In short, the DOJ is asking that its privilege assertions be privileged.
I’m not a court reporter, but this is a first for me. And the lawyers who are litigating the case for the Fannie and Freddie shareholders say they’ve never seen anything like it either.
For the government’s part, it has said that these documents, which date back as far as 2008, must be kept under wraps because they may roil the markets. That is completely absurd.
What it really looks like is the government thinks it has something to hide in this case. Whether the judge will allow it to keep these documents confidential remains to be seen. But this is certainly not how a government that was going to be the most transparent in history behaves.
My second issue is closer to home — and it concerns the state of journalism today. That is, the rise of access journalists — those whose stories help their hidden sources promote themselves and their views — and the decline in accountability journalists. These are the folks who seek to hold powerful people responsible for their actions. Who, as the saying goes, seek to afflict the comfortable and comfort the afflicted.
As the newspaper business has caved in on itself, the lure of being an access journalist has never been stronger. It is far easier to write stories that benefit a powerful source than it is do the kind of work that requires you to take on armies of spinmeisters and take enraged phone calls from high-level players. Along with the sharp decline in ad revenues and profits in our business comes the temptation to pursue stories that aren’t likely to alienate advertisers. While I do not see this at The New York Times, it is a real threat to readers across the country. It could mean they will not get the truth about questionable doings in their city halls, state legislatures and even our nation’s capitol.
For journalists, of course, the lure of access to the highest echelons of business and government is highly attractive. Being on a first-name basis with top CEOs seems exciting. Hobnobbing with them seems to elevate a lowly reporter to a rarefied level.
But it is far too challenging to report truthfully from inside the tent or within the confines of the sumptuous party. After all, you might not be invited back if you write something critical.
For some, this proximity to power is irresistible. Speaking personally, though, I don’t want to attend the lavish parties given by or for the people I cover. I don’t want an invitation to their clubs. I’d rather spend the time with my family.
More important, if you want to gain respect inside the journalistic community and even from those you cover, that’s far easier to do by being a tough but fair reporter than it is by being a stenographer to CEOs. Lloyd Blankfein and Jamie Dimon may not like me, or what I write, but I’m pretty sure that they respect me.
I will concede, however, that it is far easier to resist the draw of access reporting when you cover business than it is for those covering Washington. That’s why I thank my lucky stars that I wound up a business reporter instead of the political scribe I had hoped to become all those years ago. I now know how clean business reporting is compared to political reporting because there is so much more public information available to help you tell your story even if a company or its chief doesn’t want you to. Regulatory filings are a goldmine for business reporters and they mean that you don’t have to rely for your information on powerful people who have a horse in the race.
Of course there are access journalists in business reporting. But the point is, you don’t have to be one. In Washington, it’s much tougher to stand outside the party with your nose pressed up against the glass and still be able to write about what’s going on.
What I fear, though, is that the high cost of investigative reporting will further limit its production in our era of hollowed-out newsrooms. It takes time and lots of money to conduct in-depth reports on barbaric working conditions in Asia, on corrupt state and local politicians, even on secretive corporate or government practices. We’ve already seen a decline in statehouse reporting as regional papers have been decimated by the shift to the subscriber-pay business model. And I’m afraid that trend will only continue.
Readers may enjoy watching cat videos. … I’m a cat video fan myself. But they also need to know about the complex Wall Street creations that may blow up their pensions or 401(k)s. They need to know about past crises so they can be on the lookout for those coming down the pike.
Most of all, readers have to be confident that someone will be there, shining the light on dark corners where dubious practices flourish. Ferdinand Pecora, the firebrand prosecutor who investigated and incarcerated Wall Street in the 1930s, put it beautifully in his memoirs of the aftermath of the Great Crash. “Legal chicanery and pitch darkness were the banker’s stoutest allies,” he wrote. “Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism.”
I know that I am speaking to the choir here, but we all must remember how important it is that we keep our spotlights fierce. Whether pointed at government or the private sector, they must be always be on and always at the ready.
