By Arthur Alpert
Our next class in the Albuquerque Journal’s unique approach to journalism deals with J.P. Morgan Chase’s loss of a few billion dollars (maybe $2 billion, maybe $3, maybe more) as a result of a hedging strategy gone awry or wrong-way bets, depending on your point of view.
Coming as the nation still struggles to emerge from under the rubble wrought when major financial institutions last pulled down the financial Temple, this has spurred questions.
Even the Senate Banking Committee asked J.P. Morgan chief executive Jamie Dimon to tell them what happened.
The Journal chose to mark that session with a wire story at the bottom of the Wednesday, June 13 Business Page headlined (print edition only):
“JPMorgan Chief to Testify About $2B Trading Loss”.
The story dealt mostly with how “His Wall Street colleagues don’t understand why” he has to testify, to quote from the lead paragraph.
“I kind of shrug,” said Bill Archer, 56, a former co-chairman of Goldman Sachs’s capital markets committee. “That’s just the way the world is.”
Here I do a mental double take. This account is not from the compromised Associated Press in Washington. It’s from Bloomberg, professional specialists in business and finance.
So I reread the eight paragraphs. There’s mention that JPMorgan has lost $27 billion in market value since the loss became public. Also, there are five federal probes underway and renewed discussion of curbs on bankers’ trading.
The burden of the story, though, is many Wall Street leaders just don’t understand what all the fuss is about.
So I search for the original piece. This takes time because Bloomberg’s own headline is quite different, but when I find it, well, it casts the story in a different perspective:
And, as it turns out, Bloomberg’s story is a lot longer; Journal editors lopped off 20 of its 28 graphs. Probably that was for lack of space, but it cost Journal readers some interesting content:
- The view that JPMorgan may be too big to manage.
- That its own risk management controls were lacking.
- That JPMorgan refused to talk to Bloomberg reporter Max Abelson for the story. (Dimon had first characterized the loss as a “tempest in a teapot.”)
- Discussion of Volcker rule (prohibiting banks from proprietary trading) that JP Morgan and other major banks are fighting to water down.
- The view from the Mercantel Center at George Mason University (financed by the Koch brothers) that more regulation is not the answer.
Finally, the editing means Journal readers also missed this:
“Dismissiveness is dangerous,” according to Simon Johnson, a former International Monetary Fund chief economist who teaches at the Massachusetts Institute of Technology.
“Complacency was at the heart of the problems that almost brought down the system,” he said. “No one considered that there was a serious problem.”
Well, given what the Journal published and what it hadn’t room for, I couldn’t wait to read its report next day on Mr. Dimon’s testimony before the Senate Banking Committee.
But there wasn’t any.
From other sources, we know that Dimon apologized, blaming himself a lot.
And, that the Senators threw softballs. (This may have had no connection to the millions Dimon’s company has contributed to Senators and the $522,000 to members of the banking panel.)
Now Dimon’s reception and testimony was all over the national press, including the Wall Street Journal. Naturally, Bloomberg covered it, too.
But the Journal had lost interest.
Later in the week Dimon appeared before the House Financial Services Committee where members of both parties posed a few tough questions.
Didn’t impress Journal editors, though. No story.
Regulators told that House panel they learned about JPMorgan’s losses in derivatives after the fact, from the newspapers. Dimon commented on the difficulty of effective regulation.
Nope, still not newsworthy, according to the Journal.
So the only story the Albuquerque Journal ran on JPMorgan’s losses and Jamie Dimon’s testimony focused on how other Wall Street executives didn’t understand what they did wrong.
Thus, fellow students, we arrive at the end of another lesson in the Albuquerque Journal’s take on journalism or “How to tailor the news to fit management’s editorial agenda.”
Next class, let’s discuss the Journal’s marginalizing of economic ideas it dislikes. To prepare, re-read that same June 13 issue with particular attention to Robert Samuelson, Micha Gisser and Kenneth Brown.