Objectivity in the media has always been a very debatable and contested issue even among the most experienced professional journalists and academics, but so far those discussions have centered on everyday beat and political reporting, and not financial journalism.
That’s a mistake because financial journalism today, especially as it is practiced on TV by the major financial journalism outlets (CNBC, CNN, FOX Business) is so blatantly pro-Wall Street and unquestionably pro-capitalist that it has tainted coverage of the financial and investment industries, including the pattern of ever-increasing and larger scandals by some of the world’s largest investment institutions.
Worse, this myopic, unquestioning and jingoistic pro-Wall Street position taints nearly all investment news commentaries and story selections. Listen to any coverage about the populist positions of Senators Elizabeth Warren and Bernie Sanders, who both are against the buttressing of “too-big-to-fail” banks, re-instituting Glass-Steagall and support the adoption of a fiduciary standard in everyday financial services sales transactions, and the media is largely silent, dismissive about the need for reforms or decidely pro-big bank.
Naïve Questions
Here’s an example of this in action:In an interview today on Bloomberg, a radio commentator interviewed Katrina Brooker, the reporter who wrote the story, “Why Elizabeth Warren Makes Bankers So Uneasy and So Quiet,” dealing with the excessive power banks hold over the U.S. financial system. As cited in the article,“What Warren wanted to talk about was an item tucked into page 615 of a 1,603-page spending package: the repeal of section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Known as the swaps push-out rule, section 716 required banks to set up separate subsidiaries, not backed by the government, to trade certain derivatives. If the rule stood, it would generate huge administrative costs for the big banks.”
To anyone familiar with the two parties involved, this is not a surprising conclusion, but one of the Bloomberg interviewer’s first questions was whether Senator Warren is “right” about her anti-big bank positions? This question showed the interviewer’s pro-Wall Street prejudice, naivite, and a gross omission of reading Bloomberg’s own business wire, which in the past few months has carried stories about:
— Los Angeles has sued Wells Fargo, accusing the bank of driving its employees to open unauthorized customer accounts, charging them “bogus” fees and damaging their credit,” according to the Los Angeles Times.
–Deutschebank to pay $2.5 billion to end LIBOR price fixing probe. Bloomberg–the LIBOR and PIBOR and current trading scandals in the U.S. and Europe that attempted to manipulate the world’s most liquid markets;
–Barclays Plc was fined twice by British financial regulators for manipulating the price of gold on June 28, 2012 and a day after the bank was fined a record £290 million for manipulating the London inter-bank offered rate (LIBOR). According to the U.K. Financial Conduct Authority, Barclays was guilty of “failing to adequately manage conflicts of interest” with its customers between 2004 to 2013.” That must have been some 11-year-period.
–“Britain’s biggest banks are poised to set aside as much as 1.2 billion pounds ($1.8 billion) more in the fourth quarter to compensate customers sold insurance they didn’t want or need, with Lloyds Banking Group Plc hit hardest.” Bloomberg News
–“The U.S. Department of Justice is pressing for Citigroup Inc.’s main banking subsidiary to plead guilty to a felony tied to the rigging of foreign-exchange markets.” Bloomberg News
–“HSBC’s Swiss banking arm helped wealthy customers dodge taxes and conceal millions of dollars of assets, doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities.” The Guardian
–“Prosecutors Are Still Digging for Evidence. Swiss prosecutors raided the Geneva headquarters of HSBC’s private bank looking for proof that the Swiss private banking division of the world’s second largest bank helped clients launder money and evade taxes.” Fiscal Times
–“The US Financial Industry Regulatory Authority (FINRA) has fined 10 major banks, including Goldman Sachs and Morgan Stanley, $43.5 million for letting analysts fake research on Toys “R” Us in return for investment banking deals.” RT.com
–In March 2015, the U.S. Justice Department sought about $1 billion each from global banks being investigated for manipulation of currency markets, according to Bloomberg News. “The figure is a starting point in settlement discussions, with some banks being asked for more and some less than $1 billion. One bank that has cooperated from the beginning is expected to pay far less, one of the people said. Penalties of about $4 billion are on the table,” the report said. Not only are the banks involved among the largest in the world (Barclays Plc, Citigroup Inc., JPMorgan Chase & Co., Royal Bank of Scotland Group Plc and UBS Group).
Were all these stories unrelated incidents of big bankers manipulating global financial systems? Or were they part of the business-as-usual fabric intent on breaking global financial regulations because the penalties were far less than the ill-gained trading profits?In almost all of these cases, the answer is yes.
Banking scandals exist due to combinations of encouraging corporate cultures, the reality of huge payoffs for all immediately involved, weak penalties, lax outside regulation, greed, the use of threats, societal disregard and harsh penalties for those who protest the criminal activity. If all of those characteristics sound like the driving forces seen in “Goodfellas,” you would be right.
So while TV financial reporters buttress the existing financial system and continue their ongoing pro-Wall Street, pro-capitalism mantra unchallanged, they are out of touch with the American public.
A 2014 survey finds that after the 2008 banking and mortgage fraud-inspired recession, banks and investment firms are held in low esteem by average Americans. According to the AP-NORC Center and the GSS staff using the 2014 General Social Survey shows that ”a significant majority of Americans do not have a great deal of confidence in either banks or major companies, but confidence has rebounded slightly from all-time lows in 2010, but more than 4 in 5 still lack much confidence.”
Distrusting Banks and Bad Reporting
Why do average Americans distrust banks and financial institutions?
The obvious reason is the recent, sever financial crisis. This major recession first broke out in the US the summer of 2007 and peaked the autumn of 2008. During this period, it destroyed $34.4 trillion of wealth globally by March 2009, when the equity markets fell to their lowest points, according to the Roosevelt Institute. In short, the American public seems to trust their own experiences (as seen in their own destroyed home equities and decimated savings-retirement accounts) versus how the nation’s largest banking and financial institutions are portrayed in mainstream financial journalism.
So given this background, why does the mainstream financial media remain unabashed boosters of the status quo and the infallibility of capitalism?
One answer may be that false beliefs love a vacuum. When people don’t know about alternative political-economic systems or the benefits of a single-payer medical system (often called “socialized medicine” by FOX News), or the real meaning of “too big to fail banks,” they rely on false beliefs shaped by others pushing a conservative-libertarian political versus a journalistic-educational agenda.
The other tried-and-true reason is advertising. No less than Rupert Murdoch said during his 2011 Comcast merger hearings that “This merger continues the strengthening of our various marketing opportunities to the benefit of advertisers who use all types of vehicles to get their message across to consumers whether it be through television, print or other marketing operations.”
This would include other advertisers and conservative political causes with large ad budgets that fed into the Wall Street Journal, the daily diary of Wall Street since its inception and FOX News propaganda programming. Not unexpectedly, FCC Commissioner Meredith Attwell Baker joined Comcast as a lobbyist after the merger’s approval, according to the UMass-Boston’s William Joiner Center. There is also a good amount of media arrogance involved, as well as institutionalized language and jargon which is meant to mystify the investing process and give more authority to the people who can manipulate the jargon on TV.
That’s one reason why so many non-financial on-air TV types keep asking the same questions to financial experts about the Fed, interest rates, corporate earnings, bond yields, hot sectors, “the next new thing,” and the dangers of regulation. If all of this is kept in perspective, the answers to these important questions only affect a very small percentage of investors, yet they continue to comprise the majority of on-air interviews.Then, there are also intentional misrepresentations. One good example comes from Larry Kudlow on CNBC who famously said the LIBOR scandal had no victims.
While the theory of the practice of journalism in a democratic society is not discussed these days outside of journalism school, the American people would be better served if they were exposed to some of the basic ideas about journalism in a democratic society.
These discussions are unfortunately mostly confined to some journalism schools, but no less than Thomas Jefferson has said that freedom of the press consists of the right to publish with impunity, truth, good motives and for justifiable ends. (As cited in the 1966 book, Freedom of the Press from Zanger to Jefferson, by Leonard Williams Levy.) Based on that criteria, FOX and CNBC have their work cut out for them. Another good explanation about the role of the press comes from a very unlikely source, Mao Zedong, who in a talk to the editorial staff of the Shansi-Suiyuan Daily newspaper on April 2, 1948, said:
The role and power of the newspapers consists in their ability to bring the Party programme, the party line, the Party’s general and specific policies, its tasks and methods of work before the masses in the quickest and most extensive way. ”If we add financial TV journalism to Mao’s statements, we can see how the Party program, that is the prevailing pro-Wall Street, Ludwig von Mises conservative economic viewpoint and popular mantra of always investing in an every-ascending bull market with ever present new buying possibilities always on the horizon, dominates daily financial broadcasts.
But for the few professional on-air financial reporters who suspect that their system is broken, here is something from Henry Kissinger who gave some advice to reporters on his 1974 diplomatic negotiating missions. Kissinger said “Most reporters are trained to get the hot scoop. But it is more useful if you have an ear for tone. You must listen for nuances.” (Chicago Tribune, Jan. 20, 1974.)And as the American public has said in its surveys, the volume of the nuances around the present financial system is deafening.
The big problem is that the too-big-too-fail banks are not in the best interests of the country and that, as Jamie Dimon of JPMorgan has said, another financial crash is inevitable. Maybe that’s why the big banks are afraid of Elizabeth Warren and other financial populists. There may be a big power shift underway. There is nothing as powerful as an idea whose time has come.
